Jason A. Levine, Gillian H. Clow, and Giles Judd, Alston & Bird LLP
OVERVIEW
This week’s top COVID-19 litigation developments are: a federal court ordering a Lyft driver to arbitrate claims against the company for COVID-19 sick leave; a new putative class action against Google over the security of its contact-tracing app; and a new insurance coverage lawsuit involving a cryotherapy clinic.
1. D.C. Federal Court Orders Lyft Driver to Arbitrate COVID-19 Sick Leave Claim
Overview:The D.C. federal district court ruled that Lyft’s arbitration agreement barred a driver from pursuing a lawsuit for COVID-19-related sick leave benefits. The court found that rideshare drivers are not exempt from arbitration as workers “engaged in foreign or interstate commerce.”
Background:This case arose out of a lawsuit brought by a Lyft driver who claimed that Lyft failed to provide its drivers with sick leave before and throughout the COVID-19 pandemic. Lyft moved to compel arbitration, arguing that the plaintiff had agreed to arbitration in accepting the company’s terms of service.
Decision: The court found it particularly compelling that the plaintiff had clicked the “I Accept” button at the bottom of Lyft’s Terms of Service, “objectively manifest[ing] her intent to enter into a contract with Lyft.” The court also rejected plaintiff’s argument that Lyft drivers should be exempt from arbitration under Section 1 of the Federal Arbitration Act (“FAA”), joining the growing consensus that the FAA’s exemption for transportation workers does not include rideshare drivers. Section 1 of the FAA exempts “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” Although the FAA does not define the phrase “engaged in foreign or interstate commerce,” the court found that the exemption did not apply because Lyft drivers provide rides that are “primarily local and intrastate in nature.” And the court refused to look at the class of D.C. rideshare drivers in isolation from the class of Lyft drivers nationwide.
Our Take: This case marks yet another a victory for rideshare app companies, growing the body of precedent confirming that disputes with their drivers can be subject to binding arbitration. Further, the court’s conclusion that Lyft drivers are not “engaged in foreign or interstate commerce” will likely be persuasive precedent in future disputes involving not only rideshare app companies, but potentially app-based delivery services as well. Given its importance, we would expect an appeal of the district court’s decision.
2. Class Action Complaint Claims That Google’s Contact Tracing Tool Exposed Users’ Personal Information
Overview: A proposed class of mobile device users who downloaded a COVID-19 contact tracing app incorporating the Google-Apple Exposure Notification System (“GAEN”) filed suit in the Northern District of California, alleging that Google failed to keep their personal and medical information private from third parties.
Allegations: Google and Apple jointly developed the GAEN to assist state and local authorities with their COVID-19 contact tracing efforts. According to plaintiffs, although Google assured users that its apps utilizing the GAEN would safeguard their personal and medical information, such information was stored within the system logs of the users’ mobile devices which, in turn, could be accessed by third parties such as the devices’ manufacturers. Plaintiffs further allege that Google “indirectly confirmed the existence” of this security issue by issuing patch fixes in April of 2021. The complaint asserts several causes of action, including invasion of privacy and violations of the California Constitution and the California Confidentiality of Medical Information Act (“CMIA”) for a California subclass.
Our Take: This action presents interesting questions of law under the CMIA. Plaintiffs assert that by developing the GAEN, Google qualifies as a “Provider of Health Care” under the CMIA, and that members of the California subclass who used Google’s apps incorporating the GAEN constitute “Patients” who received “health care services.” The complaint alleges that Google’s potential damage exposure could be considerable, given that California’s contract tracing app using the GAEN has been downloaded to more than 9.5 million mobile devices. Should the lawsuit survive a likely motion to dismiss, we may see more lawsuits relating to contact-tracing apps.
3. Evanston Insurance Co. Seeks Dismissal of Cryotherapy Clinic’s COVID-19 Business Interruption Lawsuit
Overview:On April 26, 2021, Evanston Insurance Co. filed a Rule 12(b)(6) motion to dismiss in federal court in Seattle, Washington, arguing that a cryotherapy facility’s claims for wrongful denial of business interruption coverage should be dismissed because the virus did not cause “direct physical loss” or “damage to property.”
Background:The cryotherapy clinic filed suit against its insurer for denial of its business interruption claims, though the insurer noted that the cryotherapy facility did not contend that COVID-19 was detected at its clinic center, or that it was required to repair or replace any property. Instead, the clinic alleges that required closures under government orders caused a loss because the clinic was unable to use its physical property, including cryotherapy machines, chambers, and sauna and treatment beds for their intended function. It asserts that loss of functionality of property constitutes direct physical loss of property. In Evanston’s motion, the insurer notes that the policy language covering “direct physical loss of or damage to” property “has been addressed by an extraordinary number of courts over the past year, and almost every court that has addressed this issue has held that the COVID-19 virus does not result in ‘direct physical loss or damage’ to insured property.”
Our Take:This motion marks the latest in a number of cases that have sought dismissal of a claim for denial of business interruption coverage based on a finding that COVID-19 did not cause direct physical loss or damage to the insured’s property. While we will continue to track different attempts to meet this physical loss or damage requirement, the tide appears to have turned in favor of the insurers on these cases.
Jason Levine is a commercial and antitrust litigation partner in the Washington, D.C. office of Alston & Bird LLP. Gillian Clow and Giles Judd are litigation associates at the firm.
