By Celeste Bott

Law360 (April 8, 2021, 8:33 PM EDT) -- Several state attorneys general are challenging a provision in the coronavirus aid package that bars states from using federal funds for state tax cuts, Carnival says passengers suing over its handling of COVID-19 cases on its ships aren't entitled to a jury trial, and Baylor University has dodged claims from students seeking tuition refunds after classes shifted online during the pandemic. 

While courts across the country are altering procedures, restricting access and postponing certain cases to stem the spread of the coronavirus, the pandemic has also prompted a wave of litigation across the country.

Here's a breakdown of some of the COVID-19-related cases from the past week.

Product Liability

Thermo Fisher Scientific Inc. urged a New Jersey federal court to toss TruGenX's $1.5 million complaint over purportedly faulty COVID-19 testing supplies, arguing Wednesday that the molecular laboratory is suing the wrong supplier.

In its motion to dismiss, Thermo Fisher claimed it never entered into any contracts to provide supplies to TruGenX for coronavirus testing, despite it being named as a defendant in TruGenX's lawsuit seeking reimbursement for equipment that allegedly caused inaccurate testing results during the height of the pandemic.

Thermo Fisher went on to tout the "impressive quality record" of the products at issue in the complaint and accused TruGenX of trying to dodge the more than $3.75 million it owes for the supplies. The company also alleged that TruGenX failed to identify the specific transactions at the heart of its breach of contract claims, saying its fraud claims should be tossed because they're duplicative of the breach claims.

Employment

Caesars has asked a California federal judge to order the Rincon Band of Luiseño Indians' former casino manager to arbitrate a dispute over his alleged forced resignation when he complained about a COVID-19 reopening plan, saying he signed an arbitration agreement when being hiring at the company.

Caesars Enterprise Services LLC and Caesars Entertainment Inc. argued Tuesday that Darrell Pilant, the former senior vice president and general manager of Harrah's Resort Southern California on Rincon Band land, entered into a valid and enforceable arbitration agreement when he accepted his position in September 2016 at a base salary of $315,000 per year. Pilant's lawsuit should now be stayed pending arbitration, Caesars said.

Pilant's wrongful termination claims allege that Caesars constructively terminated him after he opposed the casino resort's reopening plan due to his concerns about the health and safety of employees.

And a Pennsylvania woman claims a Pittsburgh butcher shop improperly fired her rather than accommodate panic attacks brought on by her co-workers' criticism of her allegedly putting them at risk of contracting COVID-19, according to a federal lawsuit filed Monday.

Rebecca Hammond alleges her co-workers at Strip District Meats, a butcher shop and wholesaler, acted cold and critical of her after she took time off in November to get tested and quarantine following her wedding. That triggered panic attacks that caused her to miss an afternoon of work, but when she asked her boss for an accommodation for her anxiety disorder, she was fired because she had "walked out" and the company allegedly lacked "resources" to help her, the suit says.

Hammond claims the shop's refusal to accommodate her and her subsequent firing were violations of the Americans with Disabilities Act and the Pennsylvania Human Relations Act.

In New Jersey, a former store manager at Estée Lauder sued in state court alleging the high-end cosmetics company discriminated against her when it fired her for requesting accommodations for her asthma, which she says makes it difficult to wear a mask full-time.

Denise Tatler's Thursday suit claims Estée Lauder violated the New Jersey Law Against Discrimination when it refused to accommodate her disability and chose not to bring her back to work after furloughing her at the outset of the COVID-19 pandemic.

Although other managers and employees were allowed to work from home, she was not given accommodations afforded to her under the state civil rights law, Tatler says. And according to the suit, the decision to fire her was made in retaliation for her asking to either work from home or do her job, sans mask, from the back of the store and away from customers for part of her shift.

Public Policy

The American Civil Liberties Union of South Carolina has sued the state's governor, saying his "dangerous" directive that nonessential state employees return to the office will put an unfair burden on women, racial minorities and workers with disabilities.

The advocacy group's Monday suit seeks an injunction barring Gov. Henry McMaster's order, saying the directive ran afoul of the state constitution and a law that spells out the governor's powers during emergencies. The suit alleges nonessential employees were expected to return to work starting March 15 and no later than early April, even as COVID-19 case numbers in the state remained exponentially higher than when the workers were first ordered to stay home last year.

The order provided little in the way of accommodations, the group said. Although high-risk individuals can request to work from home until they have a chance to receive the vaccine, the order does not consider that some might not be able to get vaccinated for medical reasons, the ACLU said.

And the First Circuit questioned Monday whether New Hampshire state legislators waited too long to challenge the House speaker's rule prohibiting virtual votes during the COVID-19 pandemic, since most of the challengers are or soon will be vaccinated against the virus.

The panel wondered what good it would do to tell Republican Speaker Sherman Packard to let members claiming a disability to participate virtually if all of those bringing suit are inoculated.

Israel Piedra of Welts White & Fontaine PC, arguing for the all-Democratic group of legislators with underlying conditions suing under the Americans with Disabilities Act, told the court that some of the lawmakers have not received both doses or gone through the appropriate waiting period to be considered fully vaccinated.

Native American

The Shawnee Tribe has asked a federal judge to order the U.S. government to give it a larger share of COVID-19 relief, saying the D.C. Circuit has reversed the judge's dismissal of the tribe's suit claiming it was denied a fair disbursement of coronavirus relief bill funds.

The appellate court has ruled that U.S. District Judge Amit P. Mehta wrongly found that the U.S. Department of the Treasury's allocation of COVID-19 funding for tribal governments in Title V of the Coronavirus Aid, Relief and Economic Security Act wasn't reviewable under the Administrative Procedure Act, the tribe said Friday in a motion for summary judgment. The ruling remanded the case to Judge Mehta for entry of a preliminary injunction favoring the Shawnee, it said.

The Shawnee Tribe was joined by the Miccosukee Tribe and the Prairie Band Potawatomi Nation in a bid for declaratory judgment under the APA, asserting that the government ignored metrics that would have accurately captured tribal population numbers and instead used incorrect data to underallocate Title V funds to the tribes.

And five tribes, six states and one congressman urged the high court to uphold the D.C. Circuit's ruling that Alaska Native Corporations aren't tribal governments and shouldn't receive tribe-designated CARES Act funding, going against Treasury Secretary Janet Yellen's interpretation.

The government and multiple ANCs are asking the U.S. Supreme Court to determine whether ANCs are considered tribes, contesting an appellate court's interpretation of the 1975 Indian Self-Determination and Education Assistance Act. The classification impacts whether they get part of the $8 billion in funding allocated for tribes.

The states — Utah, Oklahoma, Louisiana, Minnesota, Montana and South Dakota — argued in their joint amicus brief that counting ANCs would essentially double Alaska Native populations since citizens of federally recognized tribes, who also benefit from ANCs, were already counted for the population-based CARES Act distribution.

Tax

A Missouri federal judge declined a request Monday to undo St. Louis' rules on nonresident tax refunds for days worked outside of the city, rejecting the claim of individuals that they would suffer irreparable harm over denied refunds.

Following a hearing, U.S. District Judge Catherine D. Perry issued a bench ruling rejecting the motion by a proposed class of nonresidents for a temporary restraining order against the city and its revenue collector, Gregory Daly, to undo the limits on nonresident refunds of the city's 1% earnings tax.

Mark Boles, Nicholas Oar and Kos Semonski filed a memorandum Friday, urging Judge Perry to undo Daly's guidance and additional documentation requirements for refund requests, which they say effectively limited tax refunds to nonresidents traveling for work, violating the state and U.S. constitutions. However, Daly told the judge Monday that the motion could not be granted because the court lacked jurisdiction to reach the merits of the case, citing the federal Tax Injunction Act's prohibition on federal courts from hearing state and local tax claims when there's a state court remedy.

Kentucky and Tennessee have sued the Treasury Department in Kentucky federal court over part of the recent coronavirus aid package that prohibits states from using federal funds for state tax cuts, arguing the provision was unconstitutionally vague and coercive.

In a Tuesday complaint, Kentucky Attorney General Daniel Cameron and Tennessee Attorney General Herbert H. Slatery III argued that it would be unconstitutional for the department and its secretary to enforce the restrictions on federal dollars stemming from the American Rescue Plan Act.

The attorneys general said the restrictions usurped state authority and taxing powers in violation of the U.S. Constitution by coercing states to effectively cede their taxing power to the federal government using federal relief for the coronavirus pandemic. The provision was impermissibly broad and ambiguous, they said, and was unrelated to the legislation's goal of providing pandemic relief.

Missouri's Republican Attorney General Eric Schmitt also took issue with that provision, telling a Missouri federal court that a broad reading of it in the American Rescue Plan Act would irreparably harm the state by letting the federal government trample on Missouri's sovereign ability to set its own tax policy. His brief claimed that anything but a narrow interpretation of the law would violate the Constitution's 10th Amendment and spending clause.

Schmitt lodged his complaint Monday, taking aim at the act's so-called tax mandate that prohibits states from using the recent $350 billion cash infusion to "directly or indirectly offset ... [states'] net tax revenue" via state laws or regulations, or through rate cuts, rebates, deductions, credits "or otherwise." States that don't comply with the provisions would be required to repay funds equal to the amount of tax cuts they gave.

Hospitality

Cruise operator Carnival Corp. urged a California federal judge Monday to ax a jury demand from a proposed class of Princess Cruise Lines passengers alleging the companies allowed passengers aboard a ship while knowing that travelers on a previous voyage had exhibited coronavirus symptoms.

In an 11-page memo, Princess and its owner, Carnival, argued that the proposed class is not entitled to a jury trial because admiralty is the only basis in their suit for federal jurisdiction.

Passengers who claim to have contracted the coronavirus say that they either tested positive soon after disembarking from the Grand Princess ship early last March or that they met the Centers for Disease Control and Prevention's definition of a "probable case" while still aboard the ship or soon after disembarking, according to court documents.

In the April 2020 suit, the proposed class alleges that Princess and Carnival allowed more than 2,400 passengers to board the Grand Princess in late February while hiding that at least two passengers from the previous trip had COVID-19 symptoms.

Consumer Protection

The company behind the Ultra Music Festival in Miami is facing a proposed class suit alleging ticketholders were denied refunds for the canceled 2020 event and instead were offered transfers for 2021 or 2022 and free "upgrades" that come with onerous releases of legal rights.

Gabriella Petroka, who sued March 31 in state court, says Event Entertainment Group Inc., which puts on the Ultra Music Festival each March, put off refunding ticketholders for the 2020 event by telling them that it was merely postponed until 2021 instead of canceled because of the COVID-19 pandemic.

But Petroka said a different iteration of the annual event was already expected to take place in 2021, and Ultra has since confirmed to Miami that the event will not happen this year.

In Texas, a federal judge has dismissed a proposed class action seeking tuition reimbursement from Baylor University after the school moved classes online due to the coronavirus pandemic, finding that the private school never promised in-person classes to its undergraduate students.

U.S. District Judge Alan D. Albright on Wednesday adopted U.S. Magistrate Judge Jeffrey C. Manske's January recommendation to dismiss Baylor student Allison King's claims for breach of contract.

Judge Manske wrote that a financial responsibility agreement King entered into with the school when she paid tuition never promised in-person, on-campus education and that its merger clause gave the school leeway to change its education methods.

And Grubhub urged a Colorado federal judge Wednesday to reject a bid from Illinois restaurant owners to intervene in a settlement ending a Colorado action accusing the food delivery giant of falsely claiming that competitor restaurants are closed during the coronavirus pandemic, arguing that the Illinois restaurants' intervention would "only serve to prejudice extensive settlement efforts."

Mergers & Acquisitions

A Pittsburgh-based online ticketing and marketing company didn't repay the bank backing a corporate credit card account it used to stay afloat during its sale to a venture capital firm amid the pandemic, the bank claimed in a lawsuit filed in Pennsylvania state court.

TriState Capital Bank said it had extended a $1 million line of credit to ShowClix and its affiliated companies, but was left with unpaid bills despite ShowClix's September 2020 acquisition by Vector Capital in which creditors were supposed to get repaid from the proceeds of the sale.

The April 1 complaint, filed in the Allegheny County Court of Common Pleas, included claims of breach of contract and unjust enrichment against ShowClix and its affiliates, and breach of fiduciary duty against its executives.

Cybersecurity & Privacy

Respondus Inc. got hit with yet another lawsuit claiming the online testing company's automated proctoring program collects and uses Illinois test-takers' biometric data without first obtaining their informed consent.

Illinois student Phillip Bridges and recent college graduate Cheng Wu claim in their federal court suit that Respondus has violated the state's Biometric Information Privacy Act by failing to explicitly disclose that its remote proctoring tool Respondus Monitor scans, collects and uses test-takers' facial geometry and other biometric identifiers while they're taking an exam on its platform.

Respondus prides itself as a software company that has served as a pioneer of online test-taking applications for nearly 20 years, according to the students' suit. But in reality, the company simply "provides sophisticated digital surveillance technologies to third parties, such as schools, that wish to monitor college and high school students during academic assessments," they allege.

While coursework and exams have long been offered online, many colleges and other institutions were forced to turn to companies such as Respondus during the COVID-19 pandemic to continue administering assignments and tests, according to the suit.

Insurance

A Marriott hotel owner has sued its insurance broker in South Carolina federal court, alleging the broker's malpractice cost it $1 million in communicable disease coverage for pandemic-related losses.

Provost Associates LLC, which negotiated the insurance for the Marriott hotel in Spartanburg, also did not give notice to FM Global of the hotel's claim for business interruption losses, according to the suit. That Marriott hotel closed its doors under government orders to stop the spread of the coronavirus.

The Spartanburg Marriott owner alleges that Provost and its agents left the hotel with considerably less coverage in 2020 than in 2019. Provost did not accurately communicate the availability of relevant coverage for events like the pandemic, according to the suit.

And Highgate Hotels LP has sued nine insurers including a Liberty Mutual unit in New Jersey state court, alleging they improperly refused to cover its losses at properties across the country with respect to the COVID-19 pandemic under an insurance program affording $600 million in coverage.

The Texas-based hospitality company, which runs hotels under the Westin, Hilton and other brands, said Tuesday the coverage denial was in "blatant disregard" for its contractual rights after the business was forced to restrict its operations in more than a dozen states as a result of government orders aimed at curbing the spread of the coronavirus.

A number of Chicago restaurants, including The Angry Crab, Tommy Gun's Garage, City Rock Korean Kitchen and Perilla Korean BBQ, sued Society Insurance Inc. on Wednesday in Illinois federal court in a bid to seek coverage for losses stemming from the pandemic.

The restaurants insist that the presence of the coronavirus on, or near, their premises created dangerous conditions that rendered the spaces "unsafe and unfit for its intended use," and that such a loss qualifies them for coverage under their policies with Society, according to the suit.

Factory Mutual Insurance Co. has asked a Connecticut federal judge to toss ITT Inc.'s $750 million coverage suit for business interruption losses, saying cases across the country have shown neither the presence of the coronavirus nor government shutdown orders cause a "physical loss or damage" to property.

The New York-based manufacturer for the aerospace and energy industries can't recover under an all-risk policy, Factory Mutual argued in a motion to dismiss, saying the policy excludes damages for contamination and arising from the policyholder's inability to fully use its property.

In California federal court, a U.K. insurer claims LA Fitness can't exercise any of its $100 million in coverage for business interruption losses at its 700 gyms, saying the chain suffered no "direct physical loss of or damage" caused by the COVID-19 pandemic and government shutdown orders.

Beazley Underwriting Ltd., which insured the primary layer of a $500 million policy, argues in Tuesday's complaint that the owner of LA Fitness is not covered for business income losses from closing its gyms across the country under government orders to help slow the spread of the coronavirus.

A New York City art gallery told the Second Circuit that a lower court erred in ruling that a unit of The Hartford isn't obligated to cover its pandemic-related losses, urging the appeals court to interpret what it called a contract ambiguity in the policyholder's favor.

In a brief, the Guy Hepner art gallery said its interpretation that an all-risk business interruption policy covers COVID-19-related losses is reasonable. It maintained that its insurer, Sentinel Insurance Co., has a duty to cover its losses resulting from state closure orders.

Guy Hepner claimed that the phrase "direct physical loss" — which has been heavily debated in many similar COVID-19 coverage disputes around the country — can be reasonably read to include a policyholder's loss of the ability to use a property for its intended purpose.

And Treasure Island LLC is attempting to force production of "phantom" documents in its coverage suit for pandemic-related losses, Affiliated FM Insurance Co. told a Nevada federal court Monday, saying the Las Vegas casino and resort was trying to divert attention from the likelihood that its case won't survive an upcoming ruling.

In Missouri, a college urged a federal court Wednesday to reject Zurich's bid to toss its proposed class action seeking COVID-19-related coverage from its $100 million policy, saying the policy covers virus losses and the contamination exclusion only bars cleaning costs but not contamination losses.

Lindenwood Female College of Saint Charles said it has sufficiently alleged that the coronavirus physically existed on and damaged its property. The policy's contamination exclusion does not even include "virus" as an excluded cause of loss, so Zurich cannot deny coverage by asserting the exclusion, the college said.

Zurich specifically removed "virus" from the contamination exclusion through a "virus deletion endorsement" when it issued Lindenwood the Zurich Edge policy, which promised policyholders broad and flexible coverage, the school said.

The time, money and effort to locate and produce documents and communications with in-house and outside counsel is disproportionate to Treasure Island's needs, Affiliated FM said in a partially redacted response. Affiliated asked a Nevada federal court to reject the casino's third motion to compel the information.

Also this past week, federal judges have thrown out coverage suits brought by a California restaurant chain against Affiliated FM and a Boston restaurant owner against Strathmore Insurance Co. 

--Additional reporting by Dave Simpson, Daphne Zhang, Shawn Rice, Bill Wichert, Melissa Angell, Joyce Hanson, Nathan Hale, Christopher Cole, Alyssa Aquino, Chris Villani, Alexis Shanes, Jeannie O'Sullivan, Abraham Gross, Lauraann Wood, Matthew Santoni, Carolina Bolado, Rachel Stone, Paul Williams, Katie Buehler and Diamond Naga Siu. Editing by Breda Lund.

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