Liability In the Time of Covid: When Should Businesses Be Sued for the Spread of Infectious Disease?

When businesses reopen, what liability should they face related to the spread of Covid? Can businesses who remained open during the pandemic, or those who were open before the lockdowns began, be held liable if their customers caught the virus within the businesses’ walls? If so, what would a customer-plaintiff need to prove? 

Defending even a meritless lawsuit can be prohibitively expensive. For this reason, it is important to define ahead of time what harms can lead to successful lawsuits. Limitations on causes of action can reduce unwarranted suits by kicking them out of the legal system earlier in the process. So what should businesses be liable for?

There are two distinct categories of business liability that might arise from Covid. The first is products liability. The second is liability for infection spread within a business. 

Products Liability

First, any willful fraud perpetrated in relation to Covid should be severely punished. This would include selling false cures, mislabeling products, and any other situation where the purveyor knows what he is selling isn’t the same as what he’s advertising. Putting an N95 label on a less protective dust mask, or guaranteeing that your miracle drug will prevent or cure Covid when you know it’s just a sugar pill are concrete examples. This type of bald-faced lie should result in an award to the plaintiff in both compensable (compensating for the actual harm cause) and punitive (punishment for bad behavior) damages. This type of fraud should also result in criminal prosecution of the seller. 

One step below outright fraud is a seller acting recklessly.  A reckless seller doesn’t know that his claims are false, but he also has no reasonable basis for believing they are true. So someone who guarantees their homemade mask with coffee filter insert is just as effective as an N95 mask, without some good reason for believing it, would be reckless. These merchants should also face liability if someone gets sick while using their product. 

Sellers have a duty not to make reckless claims in selling their products, and any injury resulting from such a claim should be compensated. However, criminal prosecution is unlikely and would not be a good use of state prosecutors’ resources, since crimes usually require a willful state of mind. 

Finally, we turn to the trickiest part of products liability in the time of Covid: negligence and strict liability. Negligence is a breach of duty that one person owes to another, that causes a harm. If someone is in the business of making N95 masks and they don’t use ordinary care, leading to the mask being too thin and allowing micro-particles to pass through it, they might have been negligent. Strict liability means that the presence of a defect is all a plaintiff has to prove in order to receive compensation. These differences matter a great deal in the context of litigation, but for our purposes they can be treated the same. 

These standards may make sense under normal circumstances. But in times of crisis, we want entrepreneurs to seek profits by producing undersupplied goods (this profit incentive is why anti-price gouging laws should be abolished). It may be in our best interest to encourage this transition by relaxing standards to some degree. This is especially true for those who are donating items, or selling them at-cost, so long as their consumers are on notice that they are homemade goods, or were produced as a “better than nothing” alternative, and may not be as effective as comparable products. 

There may be a case for allowing new and even existing professional manufacturers to market their products as “better than nothing,” which would encourage more makers to transition from their primary operations to these needed products, provided they come with adequate notice. 

Spread of Covid within a Business 

Liability for the spread of Covid is where the legislature can do the most good in terms of stopping meritless suits before they are filed. Covid is a highly infectious disease. Going about your business in public could lead to an infection. The risks are, at this point, well documented. 

While there are reports of some grocery stores throwing away thousands of dollars worth of food after customers coughed on it, we should consider carefully whether we want that to become the norm (obviously intentional spread of disease can and should be punished, but it should the customer, not the store, who bears the cost). We as consumers would pay the price for such precautions, through higher prices. Stores can’t monitor every item on their shelves every second of the day. It is a virtual certainty that uncontaminated goods will be thrown away, and contaminated goods will make their way home to consumers. Should we stop what little commerce is left, and starve to death instead? 

There should, of course, be liability for anyone who acted willfully or recklessly. If a cruise line knew that passengers on a previous voyage had or likely had Covid, failed to warn future passengers, and did not sufficiently clean the ship, they might well be liable. On the other hand, if they had no such knowledge, they should bear no more blame for continuing to operate normally than their passengers bear for continuing to vacation normally. In a pandemic, one assumes the risk of infection simply by going out in public. Businesses should only be liable if they had reason to know of a heightened risk and failed to warn their patrons or remediate the problem. 

The legislature has the power to limit or eliminate causes of action. They can and should strike a balance that allows legitimate lawsuits to go forward as normal, while stopping frivolous suits before they start, especially for those who stepped up, or stayed open to provide vital services, in a time of emergency.  

Our Covid response has already wreaked havoc on the economy. Those businesses that survive the lockdown should not then be fed to a pack of ravenous lawyers, unless they knowingly or recklessly increased the risk of contagion. One economic crisis is enough for this year. 

Mike Davis is a Research Fellow at 1889 Institute. He can be reached at mdavis@1889institute.org. 

The opinions expressed in this blog are those of the author, and do not necessarily reflect the official position of 1889 Institute.