A December decision by the California Court of Appeal held that California businesses face potential liability outside the workers compensation system for so-called “take-home” COVID-19 claims. These claims arise in cases where a worker allegedly contracted COVID-19 in the workplace and then infected another person outside of work. In this recent case against candy manufacturer and retailer See’s Candies, the question was whether an infected nonemployee or their heirs could bring a negligence suit against an organization instead of being limited to remedies available under California’s Workers Compensation Act (WCA).
The WCA is a comprehensive statutory scheme providing remedies to California employees injured at work and for certain third-party claims deemed collateral or derivative of the employee’s injury. Typically, remedies under the WCA are limited to medical care and disability benefits. In a civil case, however, a broad array of remedies are available, such as loss of earnings or damages for pain, suffering and loss of enjoyment. These can be substantial.
The Court of Appeal opened the door for take-home COVID-19 suits to be brought in court. As the pandemic continues and more people return to work, this case could have broad implications for U.S. businesses and, in turn, their liability insurers.
Reviewing the Case
Plaintiff Matilda Ek allegedly contracted COVID-19 while working at a See’s Candies packing facility in Los Angeles during the height of the pandemic. While convalescing at home, she transmitted the virus to her husband, who ultimately died from the disease a month later. Ek and her daughters filed a wrongful death suit against See’s Candies, alleging the company failed to implement adequate safety measures at its packing facility. In particular, the plaintiffs claimed that See’s was “aware of the highly dangerous, contagious and transmissible nature” of the virus, particularly when people were working and interacting near each other. Further, they alleged that employees had complained to the company through their union and requested safety mitigation efforts, but the company failed to put adequate measures in place to protect its workers.
Because Mr. Ek’s illness and death were caused by his wife’s workplace injury (COVID-19 infection at work), See’s Candies tried to have the case dismissed on the grounds that the wrongful death claims were preempted by California’s workers compensation law. See’s argued to apply the so-called “derivative injury” doctrine, which provides that the WCA not only preempts claims by workers for their own workplace injuries, but also claims based on injuries “collateral to or derivative of” such injuries. For example, under the “derivative injury” doctrine, claims for loss of consortium or emotional distress based on the physical injuries or disability of the worker are preempted.
The trial court ruled against See’s Candies and found that the case could proceed. When See’s appealed, the appeals court agreed with the trial court that, when a spouse or other individual contracts COVID-19 from someone who claims to have contracted the disease at work, those individuals or their heirs can bring their claims in court and are not limited to workers compensation remedies.
The Court of Appeal rejected the argument made by See’s Candies that the “derivative injury” doctrine applied, stating that “the fact an employee’s injury is the biological cause of a nonemployee’s injury does not thereby make the nonemployee’s claim derivative of the employee’s injury.” In essence, the court found that the plaintiffs were not suing for injuries derived from Mrs. Ek’s workplace disease. Rather, they were seeking recovery for damages related to her husband’s independent illness and subsequent death. The court found that it is not the injury to the employee that causes the family member’s illness—it is the virus. To that end, the court noted that an employee infected with COVID-19 “need not themselves suffer adverse health impacts in order to transmit a virus,” as asymptomatic individuals can infect other people.
Moreover, the court made clear that derivative injuries are “economic” or “intangible” losses that are suffered by an employee’s loved ones due to the employee’s disability or death, not “separate physical injuries suffered by nonemployees.”
If See’s prevailed, the ruling would have barred claims from both family members and other individuals injured due to the employee’s injury. The court used the following hypothetical to explain how far this could go: “Imagine a researcher in a laboratory studying dangerous pathogens inadvertently becomes infected due to the employer’s lax safety protocols. That researcher then boards a bus home and infects all the passengers with a lethal virus.” Under the rule advocated by See’s Candies, the passengers would be barred from asserting their claims in court against the laboratory. This was a bridge too far for the court.
Potential Implications of the Decision
The court’s decision has several potential implications. First, it may encourage plaintiffs’ lawyers to bring more cases against companies on behalf of people infected with COVID-19 who may have contracted the virus from exposure to company employees who were infected at work. As the See’s Candies court suggested, such claims may not be limited to family members but could be brought by anyone who encountered the infected person and then became ill.
That said, the court alluded to certain difficulties a plaintiff might have in making their case. First, a plaintiff will have to show that a company even has a duty of care to nonemployees who contract COVID-19 from one of its employees. Next, plaintiffs would have to prove that they contracted COVID-19 due to the company’s negligence in the workplace as opposed to some other source of the virus. These issues may be difficult for plaintiffs to overcome as some states have passed laws or issued administrative orders providing immunity from tort liability for COVID-19 exposures.
The court’s decision may also cause companies to think more about their workplace safety practices. The plaintiff alleged that See’s Candies knew about the dangers from exposure to COVID-19 but did not take “appropriate and necessary” safety measures. If these cases move forward, courts will have to address what constitutes “negligence” in this area. Depending on how courts determine the proper standard of care, businesses may need to consider more stringent masking policies, social distancing measures and vaccination requirements. Of course, the standard of care might be different for companies in different locations or in different lines of business. The standard of care in a See’s Candies packing facility, for instance, might be different than the standard of care in a retail store or office setting.
Finally, the decision has implications for insurers. Most businesses maintain commercial general liability (CGL) insurance to protect against liability claims, including claims brought by people who allege injuries caused by negligence. A court in Illinois found that an insurance company was obligated to defend a lawsuit brought against a fast-food franchise by employees who wanted the company to provide more stringent COVID-19 safety protocols. The court found that the claim constituted a claim for damages because of bodily injury under the franchise’s CGL policy.
Some CGL policies may now contain exclusions for communicable diseases or insurers may argue that standard pollution exclusions in their policies preclude coverage for take-home COVID claims. Businesses should review their insurance policies to see if they have protection in the event they face such claims in the future.