United States: Class Action & MDL Roundup – Spring 2021

COVID-19 Litigation

The numerous class actions filed in the wake of the COVID-19 pandemic continue to work their way through the courts. In this section, we highlight some of these recent decisions and provide updates on some of the trends that have been developing.

Employee WARNs That COVID Is Not a Natural Disaster

Benson v. Enterprise Holdings Inc., et al., No. 6:20-cv-00891 (M.D. Fla.) (Jan. 4, 2021). Judge Dalton.

Judge Dalton denied Enterprise's motion to dismiss a class action by rental car employees claiming that Enterprise violated the Worker Adjustment and Retraining Notification (WARN) Act by "dismissing themwith little to no notice"due to the COVID-19 pandemic. The court rejectedEnterprise'sdefensebasedon theWARNAct'snoticeexception, which exempts employers from the notice requirement if a"mass layoff is a direct result of a natural disaster."JudgeDalton ruled that"Defendants' facilities or staff didn't disappear overnight, suddenly wiped out. Instead, COVID-19 caused changes in travel patterns and an economic downturn, which affectedDefendants—so the natural disaster defense doesn't apply." Judge Dalton deemed the "unforeseeable business circumstances exception" to be the "proper focus." Because that WARN Act exception does not fully exempt employers but only softens the notice requirement, Enterprise employees stated a claim for a WARN Act violation sufficient to survive the motion to dismiss.

Higher Ed & COVID Class Actions: Courts Split on Tuition Refund Cases

v. Pace University, No. 1:20-cv-03210; In re Columbia Tuition Refund Action, No. 1:20-cv-03208 (S.D.N.Y.) (Feb. 26, 2021). Judge Furman.

Courts across the country continue to grapple with the dozens of class actions filed against colleges and universities following their move to online instruction in the wake of the COVID-19 pandemic. Although many courts have granted motions to dismiss filed by institutions of higher education, some courts have allowed student plaintiff complaints to proceed.

As a general matter, courts dismissing these cases on the pleadings have done so when tuition refund claims were based on general allegations that tuition and fees were paid with the assumption that in-person instruction would take place. Absent specific promises on the part of a college or university that courses would be conducted in person, courts have typically granted defendants'motions.

Some courts, however, have denied dismissal—in part or fully. For example, Judge Furman denied Pace University's motion to dismiss the student-plaintiffs' contract claim related to instructional format services because the university allegedly promised on its course registration portal that on-campus courses would be taught in person. In contrast, Judge Furman dismissed the instructional format contract claim from Columbia students because they were unable to point to any specific in-person instructional promise made by the school and the vague"on-campus experience"marketing statements were insufficient to support a claim. The Pace and Columbia students also alleged they had paid mandatory fees for the semester to use campus facilities and take part in campus activities and those fees had not been refunded. Based on those allegations, Judge Furman denied both institutions' attempts to dismiss the contract claims based on the availability of campus facilities and activities.

Conditions of Carriage Carry Airline Cases

Ide, et al. v. British Airways PLC, No. 1:20-cv-03542 (S.D.N.Y.) (Mar. 26, 2021); Bombin v. Southwest Airlines Co., No. 5:20-cv-01883 (E.D. Penn.) (Mar. 29, 2021); Rudolph, et al. v. United Airlines Holding Inc., et al., No. 1:20-cv-02142 (N.D. Ill.) (Feb. 12, 2021); Fensterer v. Capital One Bank (USA), N.A., No. 1:20-cv-05558 (D.N.J.) (Mar. 5, 2021).

In recent decisions related to airline ticket refund lawsuits, courts have continued to hold that the conditions of carriage govern. Ide v. British Airways ruled that the general conditions of carriage, which allow customers to choose one of three remedies, apply to all customers, and Bombin v. Southwest held that the plaintiff asserted a valid claim for breach of contract based on the failure to operate as scheduled clause of the contract of carriage, which allows for refunds. Courts have also rejected force majeure arguments in the context of airline ticket refund cases. The judge in Rudolph v. United Airlines denied the defendants' motion to dismiss in part because under the contract of carriage, the flight cancellation at issue constituted a schedule change or irregular operation and not a force majeure event.

Steady Streak of Dismissals for PPP Agents

M&M Consulting Group LLC v. JP Morgan Bank N.A., et al., No. 8:20 cv-01318 (C.D. Cal.) (Jan. 6, 2021). Judge Selna.

The Central District of California continued the consistent trend of federal courts dismissing claims related to agent fees under the Paycheck Protection Program (PPP). The plaintiff alleged that the defendant banks failed to pay fees to agents who assisted small businesses in acquiring federal loans under the PPP. The court held that "absent an agreement between agent and lender ... lenders are not required to pay agent fees under the text of the CARES Act or its implementing regulations."

Coronavirus Vaccine Case Survives Motion to Dismiss

McDermid v. Inovio Pharmaceuticals Inc., No. 2:20-cv-01402 (E.D. Pa.) (Feb. 16, 2021). Judge Pappert. Denying motion to dismiss.

While many coronavirus securities class actions alleging falsity based on statements expressingpositive outlooks despite the pandemic have struggled to survive motions to dismiss, the plaintiffs earned a victory at the pleading stage when the court denied the defendant's motion to dismiss. The plaintiff alleged that the companymanipulated its share price by overexaggerating its ability to create a coronavirus vaccine. The company publicly stated that it had"constructed"a vaccine in three hours, when it had only "designed" a vaccine in that amount of time. The court found that the plaintiff sufficiently pleaded loss causation and an inference of scienter and that the statements were misleading. The result gives plaintiffs a blueprint for succeeding in the otherwise unsuccessful realm of pandemic-related securities claims.

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