Lawyers warn of pandemic class actions against business, care homes

U.S. class actions often lead to Canadian copycats

As the COVID-19 pandemic continues to heavily affect seniors' homes and businesses, lawyers are warning those sectors to be wary of class action suits flowing from pandemic issues.

“As a consequence of the COVID-19 pandemic, businesses should pay particular attention to their communications with key stakeholders and should exercise caution when making decisions,” Fasken firm lawyer Rohan Shah of Toronto.

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He said the key to minimizing risk is communicating with customers, investors and the public carefully about timely disclosure, accurate messaging, insurance coverage and how businesses respond. Consulting with legal counsel where needed is vital, Shah said.

McCarthy Tetrault firm Vancouver lawyer Patrick Williams said most U.S. cases relate to consumer contracts and consumer protection issues.

Both said a warning sign of potential Canadian class action concerns is the rise of actions in the U.S.

Shah said actions have been filed south of the border against consumer goods producers, tour providers, airlines, financial institutions, rideshare companies, cruise lines, pharmaceutical companies, online retailers, software providers, insurers and other entities.
“Given that class counsel often launch ‘copycat’ claims in Canada, it is imperative that domestic businesses stay up to date on developments across the border,” Shah said.

“Indeed, at least three class actions have already been filed in Canada as a result of the pandemic. It is likely that more will follow.”

U.S. actions have included some around deceptive advertising and unfair business practice class actions, requests for injunctive relief, securities actions, price-gouging cases, negligence and breach of contract filings, privacy class actions and insurance coverage challenges.

Shah noted there are already proposed actions underway in Canada. They include:

• an action against several Canadian airlines alleging defendants' refusals to refund costs for flights cancelled due to COVID-19, citing breach of contract;

• an action against a long-term care home related to the deaths of at least 30 residents; and

• an unissued class action statement of claim against a condominium corporation, alleging defendants negligently exposed residents to COVID-19 by permitting short-term rentals in breach of the City of Toronto's by-laws. The defendants subsequently issued a notice forbidding short-term rentals until the state of emergency was over, following which the plaintiff stated that it would not issue its claim.

Shah warned claims could be filed against:

• Canadian financial institutions to prevent foreclosures;

• debt collectors;

• manufacturers and retailers of personal protective equipment, hand sanitizer, or ventilators alleging deceptive marketing practices or negligence;

• against employers for wrongful dismissal or failure to keep workplaces safe from COVID-19;

• issuers for secondary market liability or insider trading claims;

• company officers or directors for derivative claims;

• retailers for price gouging or in relation to refund policies;

• travel agencies, ticket resellers or brokers, subscription service providers and entertainment venues for travel and event cancellations;

• software providers for privacy breaches;

• insurers for denied claims, particularly under business interruption policies; and

• healthcare providers including long-term care homes and hospitals for negligence.

Williams said proposed U.S. class actions have also been filed by businesses and others against governments and related entities based on their responses to COVID-19.

He cited various examples:

• U.S. government employees filing an action seeking hazard pay for working in close proximity to people or objects infected with COVID-19;

• A Pennsylvania business allegation that orders closing non-essential businesses are unconstitutional; and

• an action against the People’s Republic of China and related entities alleging a negligent response to the virus.

“These examples demonstrate the ongoing risks of class actions to businesses and governments as they respond to COVID-19,” Williams said. “In particular, they suggest that consumer protection claims may follow when businesses do not offer refunds for services they cannot provide due to COVID-19. Similar class actions may be filed in Canada.”


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