COVID-19 Class Actions Weekly Round-Up for the week of April 6, 2020

As detailed in last week's round-up, the COVID-19 pandemic has already led to a flurry of class actions in the United States and, to a lesser extent, in Canada. New claims activity has continued over the past week. Most frequently, these claims have arisen in connection with alleged breaches of contract, often after businesses have been forced to temporarily close their doors by emergency government order.

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. The purpose of this update is to provide a weekly snapshot about the effects of the COVID-19 pandemic in the class actions space.

Negligence and Breach of Contract Actions

In California, a 24 Hour Fitness member sued the nationwide gym chain after it continued to collect monthly fees despite gym closures. The claim is brought on behalf of all 24 Hour Fitness members in the United States, alleging negligent misrepresentation, breach of warranty and unjust enrichment along with several statutory causes of action.
In New York, members of the New York Sports Club have brought a similar claim against the club and its owners. The club collected monthly membership fees on March 1, only to close in accordance with government orders on March 16. The plaintiffs allege that the lack of access to the club represents a breach of contract, as does the club's failure to suspend membership charges, grant cancellation requests or provide any compensation in exchange for previously-received membership dues which went “unused”.
In Arizona, students and parents from many of the state’s universities have started a class action against the body that governs the schools and decided to close dormitories due to the pandemic. The claim states that despite the defendants' “constructive eviction of students”, there has been no offer to refund students for the unused portion of their room and board. When refunds have been offered, the plaintiffs suggest that these refunds have not been commensurate with the plaintiffs’ losses. The plaintiffs base their claims in breach of contract, unjust enrichment and conversion.

Actions Against Employers

Employees of the United States federal government started a class action in connection with the government's alleged failure to adequately protect its employees against COVID-19 exposure. The claim, which was brought in the U.S. Court of Federal Claims, alleges that the federal government has provided neither protective equipment to employees who come into close contact with COVID-19 nor the hazardous duty pay owed to class employees under federal regulations.

Insurance Actions

A Canada-wide class action has been commenced in Saskatchewan against certain insurers on behalf of Canadian business owners who allege they have been denied business interruption insurance during COVID-19. One of the representative plaintiffs is a Regina-based restaurateur, who claims to have lost over $100,000 in reservation and event cancellation fees since closing in mid-March.
Two claims have been filed in Illinois against a Wisconsin-based insurer over the insurer's denial of “business interruption” claims. Both claims allege that their insurance policies provided coverage for losses incurred because of a ‘necessary suspension’ of operations. They seek breach of contract and declaratory relief.
- The plaintiff business owners in the Big Onion Tavern Group action all operate in the greater Chicago area. In their claim, they note that if the defendant had wanted to exclude pandemic-related losses it could have done so with an express exclusion at the front-end—as other insurers have purportedly done with other policies.
- The plaintiffs in the Billy Goat Tavern I action seek to represent a class of all “similarly situated businesses” in Illinois. In trying to establish direct physical loss to their property, as required under their insurance policy, the plaintiffs assert that COVID-19 “rendered the covered property at the premises...unsafe and inaccessible for dine-in customers”.

Business Interruption Actions Against Governments

In Pennsylvania, business owners have brought a class action seeking declaratory and injunctive relief against the state government, alleging that orders requiring Pennsylvania businesses to close without providing for compensation were unconstitutional. The suit does not contest whether the closure orders were “prudent” or within the state government's authority, but that the failure to provide compensation for the diminution of value in property violated the plaintiffs’ due process.

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.

More in this Series

COVID-19 Class Actions Weekly Round-Up - For the week of June 1

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For informational purposes only

This publication provides an overview of legal trends and updates for informational purposes only. For personalized legal advice, please contact the authors.