Business Litigation, COVID 19, and the Side Effects of Re-Opening

In the early stages of the COVID-19 pandemic, America closed its doors in hope of slowing the spread. As America re-opens amid an economy and political climate that is increasingly unstable, the legal sector is gearing up for a hike in cases surrounding all things COVID.

In fact, this increase has already begun.

While there is no telling what the ultimate trajectory of these cases will be, we are starting to see a defined pattern in case types as the aftermath of this public health crisis pushes the limits of our national law.

A Measured Spike in Litigation

Companies are unable to fulfill contract obligations and battling against material adverse effects. Meanwhile, employees are unable to earn a wage amiss a sea of unemployment claims. As the economy slows,we see a higher potential for missed loan defaults, bankruptcies, and a pronounced dip in even the most essential of retail purchases.

This indicates a pattern that, as it continues, leads us down the path of increased economic instability and, as a result, increased litigation.

According to analytics run by Lex Machina, contract, employment, and insurance disputes are all on the rise. This trend in litigation points toward the unique challenges raised by COVID-19, namely, a greater concern for exposure, lost revenue for businesses, and the improbability of fulfilling agreements.

Employment Safety Disputes

For corporations that offer essential services, act as part of the supply chain, or are otherwise unable to participate in remote work, employment safety is becoming a growing concern.

For these employees, getting sick and necessitating quarantine creates a devastating loss of income, thus resulting in disputes over whether employees sick with COVID-19 are functionally disabled.

As a related concern, projections for whistleblower litigation are eminent. This is particularly true as an increasing number of employees are coming forward about unsafe work conditions including a lack of social distancing, poor PPE, safety requirements that are either absent or not enforced, and many other problematic work conditions.

Commercial Litigation

Commonly, business interruption claims are made in the wake of natural disasters that force business closure through physical property damage. As such, not all policies have provisions set forth to manage interruptions in the event of a closure resulting from a virus or bacteria. This proves yet another legal hotspot for litigation and dispute.

Now more than ever, business interruption claims are gaining momentum on both a class action and an individual basis. This is occurring in the wake of stay-at-home orders which have caused a wide range of non-physical business interruptions while further contributing to our present economic crisis.

This inconsistency has resulted in a wide range of suits from business small and large, particularly those who have taken an economic hit from the prolonged shutdown orders. Of these businesses, we see hospitality industries, food service, and physical retailers being left desperate conditions.

The New Playbook of Legal Assertions

As COVID litigation continues, law firms around the United States are learning to abide by a new playbook for the shifting landscape of litigation tactics. As time goes on, a few recurrent principals are showing to be strong assertions in face of the virus.

Force Majeure

Force Majeure is a legal principle which protects parties who are forcibly unable to fulfill contract responsibilities. This argument rests on the fact that the contractually bound party had no way of knowing, at the time of entering the contract, that external occurrences would prevent them from fulfilling their promise.

Impossibility: Acts of God

While similar to “forced majeure,” this principle is broader when argued as it is not limited to the specific verbiage found in a contract at the time of signing.

Frustration of Purpose

Finally, in this legal principle we find a situation where both parties involved in a contract are technically able to do the work but where there would be no point or value in doing so due to external circumstances.

The main purpose of these litigation tactics is to render the original contract unenforceable— thus reducing the liability of non-performing parties based on this variety of circumstances. Due to their reliance on chance-based external factors, these arguments remain a good fit for many types of coronavirus litigation due to the unexpected arrival and severity of the virus’ impact on society.

Worry over Real Estate

Unlike other markets, the real estate sector is slow to crumble. As seen from the 2008 housing bubble, once the decline began, it took nearly two years for housing to reach its all-time low.

As Americans have an increasingly difficult time paying rent and mortgages in the midst of being fired, furloughed, or underemployed, secondary filings such as foreclosures and bankruptcies will become all the more common.

The CARES Act Wasn’t Enough

The coronavirus pandemic is far from over with experts around the world trying to play for second and third waves. These will carry with them their own challenges, building on the growing instability of the present moment. While state and federal governments have done their best to maintain order and frustrate any attempts at price gouging and excessive financial hardship, we are far from out of the woods. As such, it is undoubted that the current streak lawsuits will only continue to rise.

A Law Firm That’s Ahead of the Curve

Lawyers get into the profession of law, for the most part, to help bring justice to the public. This is no exception to the lawyers at Dave Roy Law.

As such, we are deeply concerned about the impact of the coronavirus pandemic on our local population.

With experience and expertise in many areas of litigation including business insurance litigation, bankruptcy, and divorce, we are here to serve the people of Florida as they navigate the troubling times ahead.

Located conveniently in West Palm Beach, we are dedicated to helping you and your business recover from the devastating effects of Coronavirus. Start on the right foot by contacting us at 561-729-0095 to schedule an appointment and get your business back on the right track.