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Archive for January, 2021

A Mandatory COVID-19 Vaccination Program in the Workplace: Will It Open An Employer To Liability?

Posted on: January 29th, 2021

By: Kevin G. Kenneally and Janet R. Barringer

With the development of vaccines that have been determined to be effective against COVID-19, both employers and employees are asking when it is appropriate or safe to return to the office. One recurring question is whether a business can require its workers to be vaccinated in order to return to work. While there is much recent written guidance suggesting that the employer can require employees to be vaccinated, there remain questions about the potential legal liability of a business either for requiring or failing to require employees to undergo vaccination. For this reason, some employers—other than those in the health care or on the frontlines fighting this scourge– believe the preferred path to take might be encouraging – rather than mandating – the vaccine for its employees.

The Equal Employment Opportunity Commission (EEOC) issued guidance in December 2020, located on its website at, that employers can mandate that employees receive COVID-19 vaccinations. Employers who require the vaccine, however, must comply with the Americans with Disabilities Act (ADA), Title VII of the Civil Rights Act of 1964 (Title VII) and other federal and state workplace laws. Federal employment laws require employers to make exceptions to any mandatory vaccination policy, including under the ADA, which protects employees with disabilities who may be vulnerable to side effects, and Title VII, which protects any employee with sincerely held religious beliefs that prevent the employee from receiving the vaccination.

The ADA allows an employer to include as a workplace policy “a requirement that an individual shall not pose a direct threat to the health or safety of individuals in the workplace” which permits a mandatory vaccine policy.  If an employer’s vaccination requirement impacts a worker with a disability, however, the employer must show that unvaccinated disabled employee would pose a “direct threat” due to a “significant risk of substantial harm to the health or safety of the individual or others that cannot be eliminated or reduced by reasonable accommodation.”  The EEOC has said employers should evaluate four factors to determine whether a “direct threat” exists: 1) the duration of the risk; 2) the nature and severity of the potential harm; 3) the likelihood that the potential harm will occur; and 4) the imminence of the potential harm. If an employee who cannot be vaccinated poses a “direct threat” to the workplace, the employer must consider whether a reasonable accommodation can be made, such as allowing the employee to work remotely or take a leave of absence.

There are two exceptions where disability-related screening questions can be asked without satisfying the “job-related and consistent with business necessity” requirement.  First, if an employer has offered a vaccination to employees on a voluntary basis, the ADA requires the employee’s decision to answer pre-screening disability-related questions to also be voluntary.  If an employee chooses not to answer these questions, the employer may decline to administer the vaccine and may not retaliate against the employee for refusing to answer any questions. Second, if an employee receives an employer-required vaccination from a third party that does not have a contract with the employer, such as a pharmacy or other health care provider, the ADA “job-related and consistent with business necessity” restrictions on disability-related inquiries would not apply to the pre-vaccination medical screening questions. 

FMGlaw BlogLine previously discussed the vaccine manufacturers’ immunity from products liability suits conferred by federal law for illness, injury or complications caused by the vaccine. An employer, however, may find itself liable for an employee’s injury resulting from a mandatory vaccine, which could be considered a workplace injury under state workers compensation laws. Such injuries and illnesses resulting from required vaccines may be covered by the employer’s workers’ compensation insurance. Employers considering a mandatory vaccination program should check with their broker or business insurance provider to determine whether there is coverage.

Employers that choose not to require employee vaccinations separately may find themselves liable to customers or vendors exposed to COVID-19 at a business that could have been prevented by a vaccination program. Depending on the business and the nature of interaction with the public, a vaccination program may be advisable.

If vaccination is mandatory for employees, the business could encounter wrongful termination or other legal issues when the requirement is enforced in the workplace. Adverse action, such as termination, change of shifts or hours, demotions or transfers involving workers who refuse the COVID-19 vaccine could expose the company to litigation. Thus, many businesses and employers may opt to encourage employees to be immunized rather than implement company-wide mandatory vaccination programs.  The EEOC, for example, previously suggested such a voluntary approach for the seasonal flu vaccine in certain instances: “Generally, ADA-covered employers should consider simply encouraging employees to get the influenza vaccine rather than requiring them to take it.”  Such encouragement – as opposed to a workplace-wide requirement – might be prudent for some employers for the COVID-19 vaccine. Many employers may opt to encourage their workers to obtain the COVID-19 vaccine, including by offering the following: make the vaccine readily available to the employees, cover the cost of the vaccine, provide workplace incentives to those who receive the vaccine, and pay for time off to obtain the vaccine.

Employers need to strike the proper balance during the pandemic and when assessing the competing objectives of protecting employees’ rights under the ADA and freedom of religion, limiting their own exposure to legal liability, and protecting employees and customers from the COVID-19 virus.

If you have questions or would like more information, please contact Kevin G. Kenneally at [email protected], Janet R. Barringer at [email protected].

Yes, Robinhood can, and should, halt the purchase of GameStop

Posted on: January 29th, 2021

By: Kirsten Patzer

In the wake of GameStop Corp. (GME) stock spiking as high as 800% over the last several weeks, broker dealers are stepping in to stop the madness. The lead up to Robinhood, Interactive Brokers, and other trading platforms halting the purchase of high-flying stocks GameStop, AMC Entertainment Holdings Inc. (AMC), and other low-value shorted securities, was a dizzying roller coaster ride fueled by users of the popular online message board, Reddit.

The strategy implemented by the Reddit members was simple: target low priced stocks held in large positions by hedge funds who were “shorting” the position; purchase those stocks in quantities large enough to move the market; watch as the hedge funds are forced to purchase the stock to offset losses held by their shorted positions; sell the stock at an outsized profit. The situation only became problematic for Robinhood and other broker dealers when new investors, not part of the initial purchases leading to the surge in prices, began buying the stocks at the inflated price hoping the rise in value would continue. The initial investors will likely see a positive return on their investments. The new investors, however, stand to lose nearly all the money they invested once the stocks lose their inflated value.

Robinhood had to step in to protect those new investors. If they had not done so, the potential for customer harm could be catastrophic, leading to litigation and regulatory scrutiny. The ill-advised class action suits filed in the Southern District of New York and the Northern District of Illinois fail to understand the regulatory landscape surrounding the financial services industry. Broker dealers have no obligation to unconditionally accept orders to buy or sell stocks or any other security. In fact, given the newly implemented Regulation Best Interest, and here in Massachusetts where a fiduciary standard applies to broker dealers, Robinhood arguably was required to shut down any further purchase of the stocks. Robinhood is already the subject of the Commonwealth’s first Enforcement Action under the new fiduciary standard (See In the Matter of: Robinhood Financial LLC Docket No. E-2020-0047).

Broker dealers have historically restricted the purchase and sale of securities they deem too risky for retail customers. In the aftermath of the 2008 financial crisis many financial advisors advised their clients to invest in triple and quadruple inverse leveraged securities, betting the rise of the markets that started in March 2009 could not possibly be maintained. Once the markets “corrected” they would receive the spoils for shorting the market. That prediction did not come to pass, and many broker dealers removed these investments from their trading platforms to stop the bleeding. These decisions are made to protect investors, not harm them.

Sometimes Wallstreet does the right thing.

For more information, please contact Kirsten Patzer at [email protected].

Mutual Mistake In Naming The Insured?

Posted on: January 29th, 2021

By: William Gildea

In a case pending in the United States District Court for the Southern District of Florida, a company not named in an insurance policy is nevertheless demanding coverage based on a claim of mutual mistake over the “named insured” in the policy.  Hallmark Spec. Ins. Co. v. Lion Heart Surgical Supply, LLC, No. 20-CIV-61483-RAR, 2020 U.S. Dist. LEXIS 232612 (S.D. Fla. Dec. 10, 2020). 

Hallmark Specialty Insurance Company (“Hallmark”) contends in its declaratory judgment action that there is no coverage for Lion Heart Surgical Supply, LLC, in a counterfeiting suit against it by Johnson & Johnson, because the Named Insured in the policy is “Lion Heart Surgical Equipment, Corp.” 

But Lion Heart Surgical Supply says that it was supposed to be identified as the Named Insured and filed a counterclaim for reformation of the policy to name Lion Heart Surgical Supply as the Named Insured.  Lion Heart Surgical Supply contends there was a mutual mistake based on evidence that it instructed its broker to correct the Named Insured and received a Certificate of Insurance naming Lion Heart Surgical Supply as the Insured, that the entity “Lion Heart Surgical Equipment, Corp.” never existed, and that Lion Heart Surgical Supply paid the premium from an account named “Lion Heart Surgical Supply.”

Hallmark brought a motion for judgment on the pleadings based on the facts that “Lion Heart Surgical Supply” was not named on the policy and that the broker gave written instructions to Hallmark to name “Lion Heart Surgical Equipment Corp.” as the Named Insured.

The court denied Hallmark’s motion for judgment and concluded that more discovery and extrinsic evidence were “necessary to establish whether there was a mutual mistake.”  Id. at 7.  The court said that Hallmark “has not established that reformation of the Policy would be precluded in this case.”  Id. at 5.  “Courts have recognized that the concept of reformation applies where the named insured in an insurance contract does not ‘accurately reflect the mutual intent of the contracting parties as to who was to be designated a named insured.’”  Id. at 6.  “Whether any mistake occurred is a question of fact that requires evidence of the parties’ intent at the time of the agreement — and the facts on the face of the pleadings are inconclusive on this issue.”  Id. at 7. 

We will be watching this case as the evidence unfolds to see whether the fact that the insurer followed the explicit instructions of the broker carries the day.

For more information, please contact Bill Gildea at [email protected].

A Bridge Too Far – 3d. Circuit Holds PA Safety Regulations Inapplicable to Delaware River Joint Commission Construction

Posted on: January 28th, 2021

By: Sean Riley

In Del. River Joint Toll Bridge Comm’n v. Sec’y Pa. Dep’t of Labor & Indus., No. 20-1898, 2021 U.S. App. LEXIS 895, at *2 (3d Cir. Jan. 12, 2021) the Third Circuit Court of Appeals recently held that Pennsylvania had ceded its authority to enforce building safety regulations for the construction of an administrative office in Bucks County, Pennsylvania.

Nearly 100 years ago, Pennsylvania and New Jersey enacted laws creating the Delaware River Joint Toll Bridge Commission, authorizing the Commission to not only administer, operate and maintain toll bridges crossing the Delaware River but to also acquire real property and to make improvements thereon to the extent necessary to discharge its duties. In 2017, the Commission undertook a project to replace the Scudder Falls Bridge that connects Bucks County, Pennsylvania with Mercer County, New Jersey. As part of that project, the Commission purchased ten acres of land near the bridge on the Pennsylvania side of the river and broke ground on the Scudder Falls Administration Building, which would house the Commission’s staff in a single location. A year later, inspectors with the Pennsylvania Department of Labor took issue with the fact that the Commission had proceeded with construction without having applied for a building permit, as required under the Department’s regulations. The Department threatened to issue a stop-work order for want of a permit; however, the Commission maintained that it was exempt from Pennsylvania’s regulatory authority and continued with construction. Undeterred, the Department turned its attention to the Commission’s elevator subcontractor, threatening it with regulatory sanctions for its involvement in the project. The Commission filed a complaint seeking a declaratory judgment that the Department lacked authority to enforce Pennsylvania’s building regulations pursuant to the inter-state compact.

The District Court for the Eastern District of Pennsylvania granted the Commission’s request, holding that the Commission’s new administrative office was not subject to Pennsylvania’s building regulations as the authority to enforce such regulations had been ceded in the compact between the states. On appeal, the Third Circuit affirmed, establishing precedent that such buildings and other construction projects engaged in by the Commission and its contractors are wholly exempt from state safety regulations.

For more information, please contact Sean Riley at [email protected].

Collect Now, Pay Later: PA Federal Court Ruling Imposes Duty On Retailers Upon Collecting Payment Data

Posted on: January 27th, 2021

By: Justin Boron and Courtney Mazzio

The eye that retail businesses must thread to avoid data breach class actions just got a little narrower in Pennsylvania.

In a decision issued this month in In re Rutter’s Data Sec. Breach Litig., No. 1:20-cv-382 (M.D. Pa. Jan. 5, 2021), a Pennsylvania federal court judge denied a motion to dismiss and held—for the first time under Pennsylvania law—that retailers and other businesses who collect credit and debit card information owe a duty of care to protect their customers’ information from unauthorized access by hackers.

The district court’s decision expanded on the duty to protect employee privacy data that the Pennsylvania Supreme Court recognized in the employment context in Dittman v. UPMC, 196 A.3d 1036, 1038 (Pa. 2018).  Like in Dittman, the district court drew on traditional tort principles and reasoned that the retailer owed a duty because it took the affirmative step toward protecting consumer data—much like a rescuer has a duty of care by taking affirmative steps toward rescuing someone.

The decision also exemplifies the way in which courts have become more comfortable with the burgeoning area of law involving technology, electronically stored personal data, and the unique, and ever-expanding, threats from hackers.  In the recent past, courts struggled to fit data breaches into a cognizable claim, primarily because they involved some unknown, third party actor and lacked the clear physical or monetary injuries that exist in other legal contexts.

As a result, defense litigators could rely on a steady stream of decisions to cut off data breach class actions at the outset—well before the case reached costly discovery and class certification phases.  But the Rutter’s opinion sends the message that courts are tackling a difficult subject matter area by analogizing to traditional tort and contract principles and shaping the legal doctrines around the unique technology context.

How the duty will take shape—and what specific protective measures will be required to fulfill it—is not clear from the decision and will likely evolve as cases arise.  That puts businesses at a disadvantage because—absent legislative intervention—there is no clear standard for what a retailer can do to avoid liability as a result of third-party data breaches.

One silver lining to the Rutter’s decision, however, is that it re-affirmed Third Circuit precedent holding that the risk of future harm from a data breach is insufficient to make out Article III standing.  This requirement will continue to screen out many potential plaintiffs who have not suffered any injury or damages as a result of having their personal identifying information, protected health information, or account information compromised.

If you have questions or would like more information, please contact Justin Boron at [email protected] and Courtney Mazzio at [email protected].