COVID-19 bill limiting liability would strike the wrong balance

Recently, with the support of Senate Majority Leader Mitch McConnell (R-Ky.) and the White House, Sen. John Cornyn (R-Texas) introduced legislation designed to immunize business entities against liability when their operations transmit coronavirus to customers and employees. Although the legislation does create a federal cause of action, it simultaneously erects so many procedural hurdles that the victims of negligent and irresponsible operations will never be able to hold businesses to account for the harms their operations cause.

The public should not be misled by claims that the legislation preserves the right to sue when businesses cause harm. As the late Rep. John Dingell (D-Mich.) put it, “If I let you write the substance and you let me write the procedure, I’ll screw you every time.” To accomplish this, the legislation draws on standards used in securities and corporate law to insulate all businesses from almost all liability for operating during the pandemic.

The baseline requirements to establish a claim make it nearly impossible to recover. Clear and convincing evidence establishing that a business’s operations caused an employee to sicken and die would not be enough. A dead employee’s estate would have to show, among other things, that the business did not make “reasonable efforts” to follow health guidelines and that the defendant acted with “gross negligence or willful misconduct.” The legislation defines gross negligence as “a conscious or voluntary act or omission in reckless disregard of” legal duties, consequences to others, and government guidance. Put in plainer words, the bill would remove liability for simply operating businesses without exercising reasonable care to prevent the transmission of COVID-19. Ultimately, it allows businesses to avoid liability disastrous effects of their operations by forcing courts to focus on their intentions.

Other provisions make it increasingly difficult for any claim to survive first contact with federal courts. Borrowing from securities law, the legislation requires that a plaintiff allege “facts giving rise to a strong inference that the defendant acted with the required state of mind.” The Supreme Court interpreted this “strong inference” standard as allowing cases to be dismissed when factual allegations make both culpable and nonculpable inferences about a defendant’s mental state possible. Put simply, if a court looked at the facts alleged in a complaint and thought it plausible and even likely that the defendant acted with gross negligence, a judge would have to dismiss the case if the it seemed even slightly more likely that ordinary negligence explained the behavior.

Importing this securities litigation standard will put potential plaintiffs in an impossible bind. Consider a family seeking compensation for a loved one’s death on account of a workplace exposure. Days pass between the exposure and symptoms. From there, as symptoms worsen, a patient may be hospitalized and intubated until passing. In the aftermath, the family will need to somehow piece together facts about what the employer knew and did around the time of the exposure to attempt to establish that the employer acted with gross negligence. Information about what the employer was thinking will sit on corporate servers and in the minds of corporate executives. Absent some highly unusual circumstance, bereft families will not be able to cobble these facts together before filing a lawsuit.

The legislation also blocks access to the information necessary to plead a claim. The legislation would bar any plaintiff from obtaining any information from defendants until after surviving a motion to dismiss. Functionally, this means that defendants in possession of documents and evidence establishing their liability will never be held to account so long as they keep silent. Congress accepted this trade-off in the securities context to address perceived litigation abuses in securities class actions and because public companies must disclose enormous amounts of information. Nothing indicates that COVID-19-related litigation will generate the same problems.

To be sure many businesses may now hesitate to reopen because of fears that operating businesses as usual during a pandemic might create liability. This does not mean that the pandemic’s economic damage will be solved by encouraging greater risk-taking and accelerating the spread of disease. The pandemic will continue to harm the economy until public health efforts prevail.

If the legislation passes, it may change conversations in corporate boardrooms and shift the balance in favor of widespread reopening. In effect, the legislation shifts the cost of lost lives away from businesses and on to the families of the dead. Worse, the legislation applies retroactively. Functionally, this rewards the businesses which profited from running irresponsible operations and the spreading disease.

In the final analysis, liability limits strike the wrong balance. If passed, the legislation will increase risk-taking at a time when our national economy depends on stopping the risky behaviors which continue to spread disease.

Benjamin P. Edwards is an associate professor of law at the UNLV William S. Boyd School of Law.