Economy & Business

Reopening the Economy Will Require Lawsuit Protection

A deli closed due to the coronavirus outbreak in Brooklyn, N.Y., March 26, 2020. (Stephen Yang/Reuters)
There are plenty of ways to give litigation-wary businesses and institutions the reassurance they need to reopen, though none of them is perfect.

What will it take to reopen the U.S. economy and civil society? One obstacle that may stand in the way is the fear of lawsuits. State legislatures and Congress should act now to limit the threat of lawsuits so as to encourage economically and socially necessary activities that are bound to carry some risks. Doing so is a legitimate exercise of the power to make laws that allocate liability and decide what kinds of commerce, schooling, and public gatherings can proceed without government interference.

Defensive Lawyering

The chief reason to act in advance to head off civil lawsuits is to avoid the danger that businesses, schools, and other institutions will be excessively cautious and risk-averse in reopening when it is in society’s interests for them to do so. Right now, many institutions are shut down by direct order of the government; others closed voluntarily before government orders were issued, or have closed without being required to do so. Eventually, government restrictions will relax, and that will leave business leaders, school administrators, church leaders, sports-team owners, and others with decisions about when it is safe to open up again. Most of them, however, will be told by the government what they can do, not what they should do.

In making that decision, they are almost certainly going to talk to their lawyers and worry about legal risk. They will be told that they have some defenses, particularly if they can claim they were relying on the guidance of government leaders and public-health experts. Public schools may have additional defenses based on their status as government entities. Cruise ships are protected by federal laws limiting certain liabilities for deaths on the high seas. Still, uncertainty will linger. Small businesses such as barber shops and nail salons are less likely to have lawyers handy for consultation.

Consider the colleges. Cal State Fullerton has announced that it plans to go to online-only classes for the Fall 2020 semester. Harvard is still publicly mulling the same step. When Harvard sneezes, the university system catches a cold; it was Harvard’s closure that triggered the domino effect that closed most of Massachusetts’s colleges and universities within days. If you’re a lawyer for a California or Massachusetts college, do you want to be defending a lawsuit over reopening the college’s campus when there are other schools in your area saying they don’t think it is safe to reopen? Decisions should be based on the circumstances: A small, isolated, rural campus such as Williams College, in western Massachusetts, presents a very different calculus than an urban campus such as Boston-based Northeastern, which is heavily integrated into the surrounding business community. But in a lawsuit, plaintiffs’ lawyers would argue that the standard of care is set by peer institutions.

What about factories? The outbreaks at Smithfield meat-packing plants led to charges that the company had not provided adequately for employee safety from the virus, and the plants have lately been shutting down despite being classified as essential food-producing businesses under state laws. For factories, plants, or shipping hubs, it is not unreasonable for the state to require some enhanced safety procedures during a pandemic. But social distancing will be impossible for a lot of factories without huge, expensive renovations or massive reductions in the workforce on duty.

The Lawsuits Have Already Started

The plaintiffs’ bar is already circling workplaces and schools; two class-action firms have announced that they are forming a 30-lawyer “Coronavirus Litigation Task Force.” Some suits have focused narrowly on businesses and schools that closed without providing refunds to customers. Drexel and the University of Miami have been sued for providing allegedly inadequate remote instruction. Uber and Lfyt have been sued in California by workers claiming entitlement to sick pay. Producers of protective gear have faced lawsuits for alleged product defects. Target has been sued by people claiming that hand sanitizer does not kill the virus. Some of these types of suits may be justified, while others are frivolous. None of them deters the reopening of the economy.

Others, however, do. Cruise ships have faced suits for failing to adequately disclose whether previous passengers got sick, or for claims that they contributed to outbreaks by sailing. Nurses have sued hospitals for not providing adequate gear. A wrongful-death suit brought against Walmart by the family of an overnight stock and warehouse employee alleges that the company “failed to clean and sterilize the store [where the employee worked] properly, failed to promote and enforce social distancing guidelines, failed to provide personal protective equipment (PPE), and failed to address the health concerns of employees with COVID-19 symptoms and warn other workers.”

Safe Harbors

There is precedent for a legislative response to this problem. The National Childhood Vaccine Injury Act protects vaccine manufacturers from liability in order to encourage vaccine research, while providing a compensation system for people injured by vaccines. Gun manufacturers are protected from liability for shootings, on the basis of a legislative judgment that the blame for misuse of guns lies with the shooter. A variety of other laws offer safe harbors to protect businesses that comply with certain requirements or receive federal regulatory approvals. Some would object that this is government interference, but any lawsuit is government action; the only question is whether the rule of law being applied is made by a legislature or by a court. A more serious structural concern is federalism. A congressional response would be best limited to interstate operations or businesses of national scale. Most lawsuits would be filed under state laws in state courts, so the first line of defense for most of the economy should be state legislatures.

Lawsuit protection need not completely abolish lawsuits or legal safeguards. There are five ways to provide protection and guidance for decisions to reopen. The strongest protection would be an absolute bar of the sort given to vaccine makers, possibly coupled (as in that case) with a public fund for compensating those who get sick as a result. The second approach would be a rule-based safe harbor protecting any institution that follows a specific, measurable list of safety precautions from being sued. The third approach would create a permission-based safe harbor that protects any workplace that gets a green light to reopen from government authorities, perhaps after an inspection. The fourth, narrowest approach would be the creation of rules limiting the evidence that could be used against defendants (e.g. preventing the use of evidence that a neighboring school made a different choice). The fifth approach would be to eliminate certain categories of damages (e.g. barring people from suing over fear of infection or infections that did not lead to serious illness). Whatever path is taken, the key will be making the protection afforded clear enough that it can be planned around, and ensuring that it does not require extensive litigation before it kicks in.

There is no one, perfect answer; any approach to limiting lawsuits will involve a balance of interests. More lawsuit protection means more and faster reopenings, but also reduces incentives for workplaces to protect workers and customers from infection. Given the enormous economic and social importance of getting America back to work, however, the rules for filing such lawsuits should not be left to the courts to work out after the fact, with businesses stuck guessing what will happen and possibly overcompensating by staying closed. Lawmakers should lead the way.

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