For the week of March 30, 2020
Written By Cheryl Woodin, Keely Cameron and Tim Heneghan
The onset of the COVID-19 pandemic has thrown the global economy and social framework into turmoil. The impacts of the pandemic will inevitably be reflected in class actions, with new COVID-related class proceedings having already been commenced in the United States and Canada. Litigation arising out of the pandemic is still in its early stages but we already see a spectrum of claims ranging from more conventional product and misrepresentation-based claims to proposals for novel, or simply spurious, uses of the class action procedure.
At Bennett Jones, we are committed to keeping our clients up-to-date on developments in the class actions field as they navigate these uncertain times. This update provides a weekly snapshot concerning the impacts of the COVID-19 pandemic in the class actions space.
Consumer Representation Actions
- Target Corporation, Germ-X and Purell have each been named in U.S. class actions for false advertising about their hand sanitizers. The actions against Target and Germ-X were commenced in California. The action against Purell was brought in Ohio. Each of the companies' advertisements included representations that its sanitizers killed more than "99.9% of germs", with the Germ-X advertisements adding that its sanitizer offered "Coronavirus/Flu Prevention". The Purell action arose following a warning letter from the U.S. Food & Drug Administration regarding Purell’s marketing representations. The Germ-X plaintiffs similarly rely on an FDA warning letter to buttress claims that no "adequate and well-controlled studies" support Germ-X's representations that alcohol-based hand sanitizer can prevent COVID-19 and other viruses.
Price-Gouging Actions
- Amazon has been named in a Florida class action claiming that the company charged unconscionable prices for products such as toilet paper and hand sanitizer following the Florida government's declaration of a state of emergency because of COVID-19. The plaintiff alleges that Amazon charged $99 for a 36-pack of toilet paper and $199 for a two-pack of 1-litre hand sanitizer bottles.
Negligence and Breach of Contract Actions
- In Ontario, Fairbnb Canada published its unissued statement of claim alleging that the defendant condominium corporations exposed residents to COVID-19 by permitting illegal short-term rentals in their buildings. The plaintiffs sought $500,000 in damages on behalf of the proposed class. In apparent response, the defendants released a notice to condominium owners forbidding short-term rentals until the state of emergency was lifted. Satisfied with this step, Fairbnb announced by press release that it would halt its class action.
- In British Columbia, a plaintiff has brought a consumer protection class action in the Federal Court against Swoop, Westjet, Air Canada, Air Transat and Sunwing. The claim has been brought on behalf of all persons who entered into a contract of carriage with any of the defendants prior to the declaration of a global pandemic, only to have their flights cancelled due to COVID-19 related travel restrictions. The plaintiff alleges that the defendants' failure to provide full monetary refunds in connection with the cancelled flights amounts to a breach of contract.
- An action has been commenced in California against Princess Cruise Lines Ltd. alleging gross negligence for allowing a cruise to proceed despite allegedly knowing that the ship was contaminated with the novel coronavirus. The plaintiffs also allege that the company did not do enough to prevent an outbreak of the virus.
- EF Institute for Cultural Exchange, Inc., a U.S. company that provides tours for schools, has been named in a California action for refusing to provide a cash refund for trips that were cancelled as a result of COVID-19. The contracts between the plaintiffs and defendant included a clause that enabled the defendant to cancel tours for public health issues and allowed it to issue a voucher for the value of the monies paid less certain fees. The plaintiffs allege that the clause constitutes an unfair business practice.
- In Nevada, a class complaint, having political dimensions, has been brought on behalf of 32 million American small businesses seeking monetary relief from various entities of the Chinese government in relation to their response and purported cover-up of the COVID-19 pandemic. The complaint asserts that the Chinese government acted improperly in its initial suppression of whistleblower Dr. Li Wenliang, and that the government's lack of transparency with the World Health Organization slowed the global response to the pandemic.
Shareholder Actions
- A federal securities class action has been brought in Florida on behalf of individuals who acquired securities in Norwegian Cruise Lines from February 20, 2020, to March 12, 2020. The claim alleges that Norwegian and certain individual executives made materially false and misleading statements about the threat of COVID-19 during the class period in their efforts to entice customers to purchase cruises. As a result, the plaintiffs allege that the company's business and operations were false and misleading during all relevant times.
- Investors in Inovio Pharmaceuticals, Inc. have started an action in Pennsylvania claiming that Inovio violated federal securities laws by making false and misleading statements saying that the company had developed a COVID-19 vaccine "within three hours" of receiving the virus's DNA sequence. This resulted in Inovio's stock price increasing from $4.28 to $19.36 between February 28, 2020, and March 9, 2020. The company's stock then fell significantly once the company clarified it had designed a vaccine construct, a precursor to a vaccine and not the actual vaccine.
In addition, class action litigation may also give rise to insurance and coverage litigation. In the United States, Oceana Grill, a New Orleans restaurant, has started an action against Lloyd's of London seeking a declaration that the "all risk" commercial general liability policy provided by Lloyd's covers losses incurred because of the state-ordered business closure. Similar applications have been filed by the Choctaw Nation of Oklahoma and Chickasaw Nation Department of Commerce against Lloyd's and other syndicates seeking declarations that their losses and expenses related to the COVID-19 pandemic are covered by their "all risk" insurance policies. Though these claims are not class actions, they raise issues that might be relevant in a coverage dispute arising from the defence of a class action.
Bennett Jones is committed to protecting the rights of its clients during these unprecedented times. If you have any questions regarding the information in this article, please contact a member of the Bennett Jones Class Action Litigation group. In addition, please visit our COVID-19 Resource Centre for other COVID-19-related materials.
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