Statutory Liability Protection for Essential Businesses is an Essential Need

Since the inception of the COVID-19 shutdown of the American economy instituted by governmental officials across the United States, food and beverage businesses have been designated as critical infrastructure and essential businesses. Early on, little guidance on how to operate in a pandemic beyond social distancing was provided in conjunction with the hastily prepared governmental orders, leaving many food and beverage businesses to navigate the new operating landscape on their own. As the weeks have worn on, thankfully there have been updates to the initial orders and regulatory guidance that have clarified how to operate.

The most recent guidance update was jointly issued by the Centers for Disease Control and Prevention (CDC) and the Occupational Safety and Health Administration (OSHA) on April 26, 2020. This guidance was issued in response to the outbreak of COVID-19 cases in numerous meat and poultry processing facilities across the country. Recognizing that food processing workers may have a higher risk to potential COVID-19 exposure due to the close proximity in which they work along processing lines and other plant areas, the CDC and OSHA made more definitive recommendations regarding distance between workers, engineering controls (for a quick summary, see graphic below), administrative controls (e.g., social distancing protocols, sick leave policies, handwashing, etc.), the use of personal protective equipment, and employee education about the virus and how to prevent its spread.

"Meat Processing Workstations" provided by the CDC

While such guidance is both necessary and helpful, and with some tailoring can be applied to many essential businesses outside of the meat processing industry, it does not eliminate all risk to the essential workers or to the owners/operators of essential businesses who may be claimed to be liable to those workers should they become ill. Food and beverage businesses, even if they faithfully follow these recommended practices, cannot guarantee that none of their workers will be exposed to or contract COVID-19.

More importantly, governmental leaders view food and beverage businesses to be critical to the protection and maintenance of our food supply.  President Donald Trump just signed an Executive Order to re-open shuttered food processing plants to prevent shortages of pork, chicken and other products. Given the competing demands of meeting our nation’s food supply needs and workplace safety, food and beverage businesses need more protection at this time, and liability protection is a must-have tool while we grapple with this pandemic.

Such liability protection was most notably proposed by Senator Mitch McConnell. Senator McConnell, in response to nervous businesses across the country, indicated his desire to shield companies from liability over pandemic-related lawsuits. As reported by Bloomberg, he publicly worried that asking essential businesses to operate without protection from lawsuits could see those businesses end up in years-long legal claims over their efforts to restart the economy.

Senator McConnell is not alone in sharing this concern. Senate Bill 3007, sponsored by Utah State Senator Kirk Cullimore, was recently passed during a “virtual” special session of the Utah legislature. This bill provides protection from civil liability for damages or an injury resulting from exposure of an individual to COVID-19 on a business premises or during an activity managed by the business owner (i.e., claims brought by customers and/or employees).

Proponents of the Utah legislation noted that businesses need assurance that they will not face lawsuits claiming that they exposed employees or customers to COVID-19. This is not an unreasonable fear. Senator Cullimore, who is a practicing attorney, in a subsequent interview regarding the bill noted that he believes that it would be “very difficult to prevail on a negligence claim related to the contracting of COVID-19.” This is likely true given that establishing causation with legal certainty – when, where and how an individual was actually exposed to the virus – would be very difficult, if not impossible. Even so, “as business owners know, whether something may or may not prevail in litigation is not always necessarily the main economic concern,” said Cullimore. “Bringing a claim in and of itself is detrimental to business and an impediment to operating a business.”

Opponents of the Utah legislation openly questioned, however, whether such a measure would be the equivalent of endorsing negligence. It doesn’t have to be. Exceptions to any COVID-19 limitation of liability protections can – and should be – made for gross negligence, fraud or willful misconduct. But deeming certain businesses to be so essential to our communities’ health and safety that they can choose to operate (e.g., food processors, manufacturers, distributors, and retail grocers), and then not shielding them from pandemic-related liability when they do, is a false choice. It is reasonable for a business to argue that it cannot guarantee that a worker will never be exposed to COVID-19. It is also reasonable for a business to dispute that the mere act of working by an employee would establish the requisite causation for any tort claim brought by such employee for being exposed to or contracting COVID-19.

Yet, there must be limitations. Substantial compliance with governmental orders and/or regulatory guidance should be required, of course, and a willful disregard for workplace safety cannot be allowed. If a business is not following recommended governmental and/or regulatory guidance, if it has not made any modifications to its operations to improve worker safety, or if it can be shown that a business willful acted in disregard to applicable law, then the business should not be shielded from potential liability. (In fact, Utah’s law expressly does not preclude liability for willful misconduct or reckless or intentional infliction of harm, nor does it modify workers’ compensation or Utah laws pertaining to workplace safety.)

As statutory liability protections will be heavily negotiated, publicly debated, voted upon, and subject to judicial scrutiny, businesses, employees and customers should be reasonably assured that appropriate liability protections balancing the various concerns will be put into place. But, is it realistic to believe that a federal statute will be quickly put into place, and if so, whether it adequately addresses the concerns of all relevant stakeholders? Senator McConnell has publicly tied such liability protection to any new round of federal stimulus funding, and his Democratic counterparts appear to be resisting this approach for the time being. While it would be preferable for the federal government to establish statutory liability protection regarding COVID-19 exposure claims for essential businesses to prevent a patchwork of state laws of varying levels of protection, essential businesses need protection now. For this reason, I applaud the Utah legislature in passing its liability protection measure, but its broadly worded liability protection language may prove to be too sweeping to serve as a model for legislation covering each state – especially California where it can be argued that we love to do things our own special way.

 

Published by Bill Acevedo

I am the Chair of Wendel Rosen LLP's Green Business Practice Group, and I am the Co-Chair of my firm's Food and Beverage Group. My practice focuses on manufacturing and food, dietary supplement and cosmetic companies. I provide outside general counsel services to my clients, which include: entity formation, business and legal advice on proposed business transactions, general contract negotiation and drafting, brand and licensing protection, corporate governance, capital raises, and M&A transactions. Additionally, I assist my clients with labeling, advertising, and FDA regulatory compliance matters. In addition to my corporate transactional practice, I handle all manner of business litigation, such as labeling/advertising claims, contractual disputes, trade secret matters, partnership disputes, product liability claims, director and officer liability, and unfair business practices claims.

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