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The Liability Shield is Down, But Few COVID-19 Lawsuits Have Been Filed Against Businesses

  • Stimulus bill passed this week does not include liability protections for businesses, schools, or other entities
  • Liability protections proved to be a major stumbling block to reaching a bipartisan agreement, and were ultimately discarded along with a similarly controversial proposal for state and federal aid
  • Challenges for plaintiffs have so far limited the number of COVID-19 negligence lawsuits against businesses, but small businesses would be more vulnerable in such litigation due to difficulties in meeting legal costs

One of the sacrifices made to win approval for a recent economic stimulus bill was the scrapping of a liability shield against COVID-19 lawsuits. While this action has raised concerns that businesses will be more vulnerable to claims of negligence and other inappropriate actions during the pandemic, few of these claims have so far materialized.

The $900 billion measure was passed by wide margins in Congress last week and signed into law by President Donald Trump on Sunday. While the original proposal brought forward by a group of bipartisan lawmakers included a moratorium on COVID-19 lawsuits, this was ultimately dropped along with funding for state and local governments. These issues proved to be a major point of partisan disagreement as Congress attempted to craft another round of relief following the expiration of several key provisions over the summer.

One national lawsuit tracker found that more than 6,800 lawsuits related to COVID-19 have been filed during the pandemic. However, the vast majority are challenges to capacity limits and other safety restrictions, suits filed by prisoners contesting their living arrangements, issues regarding insurance claims or job terminations, or other matters. Only about 270 relate to a death, personal injury, or workplace safety; many claims have been sent to the workers’ compensation system rather than the courts.

Lawsuits have currently been concentrated on businesses with enclosed spaces and an alleged lack of safety precautions, including cruise lines, meatpacking plants, nursing homes, and warehouses. These typically represent large companies rather than small businesses.

Anyone seeking to file a claim related to COVID-19 faces an uphill battle. Contact tracing in the United States has not been robust enough to pin the source of an infection on an individual business, school, or other entity. Plaintiffs may also experience challenges in accusing a defendant of being negligent, since recommendations such as mask rules changed over the course of the pandemic and it may be difficult to prove that the defendant knowingly flaunted restrictions.

Still, there have been concerns that small businesses could still be demolished by the legal costs that larger companies are better able to absorb. The Associated Press recently cited the example of the Big Moose Inn in Millinockett, Maine, which hosted a large wedding in August that led to the state’s largest COVID-19 outbreak: at least 180 infections and eight deaths, most in a nursing home.

The estates of at least three of the deceased have indicated that they plan to sue the inn for negligence. The inn’s attorney contends that the business was trying to abide by restrictions by taking actions such as breaking the wedding party into two groups that met the capacity limits then in place, and that the outbreak could have been caused by other nearby events.

Proponents of a liability shield are looking to limit COVID-19 lawsuits to cases of “gross negligence,” saying this would encourage businesses to reopen rather than close or restrict operations due to fear of litigation. Senate Majority Leader Mitch McConnell has said he will insist on liability protections in any new stimulus bill brought forward after President-elect Joe Biden takes office on Jan. 20.

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