Legal Implications for Cancelling Conferences and Events Due to COVID-19

By Dominica C. Anderson

Based on growing concerns over the spread of COVID-19, large public gatherings, such as conferences and other events, are being cancelled at an increasing rate throughout the United States, and internationally. More than 50,000 people signed an online petition requesting the cancellation of the multi-day South by Southwest event in Austin, Texas. That and other conferences and large events are being cancelled daily. With at least 3,300 world-wide deaths, and approximately 200 confirmed cases in the U.S., large public events will continue to be cancelled for the near future.

Impacting the decision to cancel conferences and other large public events, large corporations are issuing policies (changing almost daily) such as: no nonessential travel; employees can attend conferences only if the conference has a travel ban from certain countries (i.e., you, employee, can attend the conference, but only if the conference bans attendance of people from certain COVID-19 troubled countries); and no attending public events larger than 10 people (last week the policy was 1,000 people or more). Most recently, companies have issued bans on guests being allowed onto their premises, and/or issued a mandatory work from home policy.

What are the legal ramifications of each of these edicts? Or of cancellations of conferences and other large public events? What happens to the contracts for each of these events, such as contracts with the attendees, the site, the vendors, the airlines, consultants, speakers, performers etc. What are the legal ramifications and what will be the financial impact from these cancellations? Will you be able to make an insurance claim to protect you?

Insurance companies are starting to see numerous notifications under Event Cancellation insurance. But will the cancellation be covered by your policy? Are you trying to submit a claim for cancelling an event due to the attendees’ fear, or event organizer’s fear of spreading or catching COVID-19 even though there is no ban on the event going forward? That may not be a covered claim.  While you may decide to cancel the event, just know that the cancellation may not be covered because the cancellation was not beyond the control of the event organizer.  Additionally, the typical cancellation insurance policy likely contains exclusions that come into play (e.g., the Communicable Disease exclusion – excluding coverage where fear causes a cancellation due to the World Health Organization’s world epidemic determination). Don’t assume your Event Cancellation Insurance will cover your expenses related to canceling.

Other insurance companies are seeing notifications of claims for Business Interruption coverage.   Presenting a covered claim under a Business Interruption Insurance policy may be difficult. The first question will be: Does the cause of loss qualify under the policy for coverage?  Recently, the UK made COVID-19 a registered notifiable disease to allow insurance claims to be filed. What will happen in the U.S.? And, what is the “loss”? Are there applicable exclusions precluding coverage? Unless you have a specific and unusual insurance policy,  recovering under an insurance policy for expenses due to COVID-19 may be very difficult.

These are just some of the legal issued to be sorted out in the coming months. But without recourse to insurance coverage, the contract disputes become even more key.

For more on Force Majeure Contract Clauses and COVID-19, see the March 4, 2020 Duane Morris Alert.

What Law Governs Force Majeure in Your International Supply Chain Agreement?

By Thomas R. Schmuhl

If a U.S. company has a sales or supply agreement with a buyer or supplier outside of the United States which has been disrupted or otherwise impacted by circumstances relating to the COVID-19 situation now garnering world-wide attention, determining whether or not force majeure applies may not be governed by traditional domestic U.S. law.

Since January 1, 1988, such international commercial agreements have been governed by the United Nations Convention on the International Sale of Goods, commonly known as the CISG. The CISG is an international convention with the full force of federal law that preempts state contract law that would otherwise govern such commercial agreements, including both the Uniform Commercial Code and common law.  Under the CISG, a sale taking place between a seller in one country which has acceded to the CISG and a buyer in another country which has acceded to the CISG, will be governed by the CISG just as a sale between a buyer in New York and a seller in Illinois will be governed by the Uniform Commercial Code. Simply put, the governing law of the international contract between the buyer and the seller is the CISG when the parties are in different countries which have each acceded to the CISG.  Many of the countries most impacted by the COVID-19 situation (e.g. the United States, China, Japan, South Korea, Italy, Canada) have acceded to the CISG.

In the present context of COVID-19, this means that whether the impact of the virus constitutes force majeure will be determined by the CISG unless, pursuant to Article 6 of the CISG, the parties to the contract have explicitly and clearly excluded the application of the CISG from the contract in whole or in part.  Article 79 of the CISG sets forth the standards for determining if a force majeure condition has arisen.  Those standards bear a resemblance (but are not identical) to the standards found in many commercial laws around the world such as Section 615 of Article 2 of the Uniform Commercial Code.

One quick and obvious lesson to be drawn from this brief discussion is that is that the best protection available to buyers and sellers in an international context is a carefully drafted force majeure clause that will minimize the uncertainty that can arise from having to analyze real events like an epidemic in the context of the principles propounded in a state or nation’s commercial code or the international CISG.

Coronavirus and the Workplace: A Quick Reference Guide for Employers

With no signs of slowing down, the coronavirus, or COVID-19, presents a potentially serious risk to the safety and welfare of employees and the financial health of companies. Employers must be prepared to address COVID-19 related issues in the workplace without violating employees’ rights and without causing unnecessary confusion.

What Should Employers Do to Protect Their Workforce?

There is no known vaccine or treatment for COVID-19, and thus the best way to protect the workplace is to avoid exposure to the virus. Based on the Centers for Disease Control and Prevention’s (CDC) recommendations, employers should:

  • Encourage employees to cleanse their hands regularly and thoroughly with soap and water or with an alcohol-based rub, avoid touching their eyes, nose and mouth, and cover their coughs or sneezes with a tissue.
  • Review cleaning operations to ensure frequently touched surfaces are disinfected regularly.
  • Encourage employees to avoid contact with sick people and to stay home if they are sick.

Personal protective equipment is a must for healthcare workers, however, it is not likely necessary for employees who are well, according to the CDC. If an employer receives a request from an employee to wear masks or gloves, employers should consider the requests with three issues in mind: whether the employee (1) has traveled to or from an area where COVID-19 is prevalent; (2) is exhibiting symptoms of the virus or has an underlying health condition; or (3) has been in close contact with someone who has COVID-19. The employer may also consider directing such employee not to report to work for a period of at least 14 days or longer, based on current CDC advice.

View the full Alert on the Duane Morris LLP website.

Can ‘force majeure’ save your company from the coronavirus?

The provision is a legal term known as force majeure. Taken from French civil law, force majeure is “a contract provision that excuses a party’s performance of its obligations under a contract when certain circumstances beyond their control arise, making performance inadvisable, commercially impracticable, illegal, or impossible,” according to a recent coronavirus and force majeure story in The National Law Review.

Force majeure has been invoked in the past by companies seeking to explain contractual failures stemming from the Sept. 11 terrorist attacks, Hurricane Sandy, SARS, and Ebola. But the international response to the coronavirus—quarantines, shutdowns, and travel bans—has upended business as usual around the world in an unprecedented way, said attorney Gregory Bombard, a partner at the law firm Duane Morris.

Companies seeking to escape liability for failing to deliver the terms of a contract are scrambling for the legal cover to do so, he said. “They want to know: Who bears the risk if we can’t deliver?”

To read the full text of this article, please visit the Compliance Week website.

When May Employers Require Workers to Self-Quarantine?

Spring break is near, and globe-trotting employees soon may return to the workplace from countries that the Centers for Disease Control and Prevention (CDC) and State Department have classified as areas where travelers could be at high risk for contracting COVID-19.

Employers can require workers to stay away from the workplace during the maximum incubation period of the virus—thought to be approximately 14 days—but may decide to not be so strict with employees returning from countries with low-risk assessment levels or low travel-alert levels.

[…]

Employers shouldn’t promise employees that they will be paid while in quarantine, said Jonathan Segal, an attorney with Duane Morris in Philadelphia and New York City. Whether the waiting period is paid will depend on whether work can be performed at home and the nature of the job classification, such as exempt or nonexempt. Some employers are saying that if employees must wait at home before returning to work, they will still be paid, but not every business can afford that, Segal said.

To read the full article, visit the SHRM.org website.

Does COVID-19 Outbreak Constitute a Force Majeure Event?

Unforeseeable circumstances – such as the outbreak of coronavirus – that prevent a party from fulfilling its contractual duties may fall under the force majeure clause of that contract.

Force majeure clauses are specific to each contract and operate as a risk allocation mechanism to govern situations that are beyond the parties’ control, such as the outbreak of war or natural disasters. Whether the COVID-19 outbreak constitutes a force majeure event depends on the exact wording and scope of the provision in the contract. For example, if the force majeure clause:

  • expressly specifies epidemics, diseases or public health emergencies, then COVID-19 likely qualifies as a force majeure event;
  • covers “acts of government,” then travel bans may be covered.

The party seeking to invoke force majeure usually must show a causal connection between the event – the outbreak of COVID-19 – that made it effectively impossible to perform its contractual duties. The clause may operate to excuse or suspend performance of a particular contractual duty.

Some companies are providing force majeure notices to their contract partners. The China Council for the Promotion of International Trade announced that it will offer force majeure certificates to help companies deal with overseas contractual requirements. The effectiveness of these certificates and notices will depend on the exact language of the contract’s force majeure clause.

If your contracts do not contain a force majeure clause, then the narrower doctrine of frustration of the contract purpose may apply. To qualify under this doctrine, the event must (1) be not reasonably foreseeable and (2) radically change the contract terms from what the parties agreed to.

Of course, there is no court guidance yet on how the COVID-19 outbreak may affect commercial contracts. The facts are still evolving. But as businesses prepare for the impact of the virus in the United States, they can look to the cases that arose out of past unexpected events like the September 11 terrorist attacks, previous changes in Chinese government policy or unprecedented weather events as a guide to how to deal with key contracts.

View the full Alert on the Duane Morris LLP website.

During Coronavirus Outbreak, Should Employers Check Workers’ Temperatures?

Infrared forehead thermometers—so-called thermometer guns—are “notoriously unreliable,” according to medical experts quoted in an article in The New York Times, but that hasn’t kept the devices from flying off store shelves as coronavirus cases pop up around the world. Some employers are using them to take workers’ temperatures, then sending the workers home if they have a fever.

[…]

Is it legal for employers to take workers’ temperatures? If the Centers for Disease Control and Prevention (CDC) or a state or local health authority proclaims a pandemic has spread in an area, then yes, it is; otherwise, it is not, according to Equal Employment Opportunity Commission (EEOC) guidance.

[…]

“Employers are doing the right thing by considering all options potentially available to them in the event of a pandemic, including temperature testing,” said Jonathan Segal, an attorney with Duane Morris in Philadelphia and New York City.

[…]

To read the full article, visit the SHRM website.

The Impact of Coronavirus on Travel and Entry to the United States

The ongoing worldwide outbreak of the Coronavirus has led to serious public safety concerns, restrictions, and even bans on international travel.  The Coronavirus disease 2019 (COVID-19) is caused by a virus (more specifically, a coronavirus) identified as the source of an outbreak of respiratory illness first detected in Wuhan, China.  The disease outbreak has also led to several measures by the U.S. Government to control the entry to the United States of individuals potentially exposed to the virus.

On January 31, 2020, President Trump issued a proclamation suspending and limiting entry into the U.S. as immigrants or nonimmigrants of all individuals who were physically present within the People’s Republic of China, excluding Hong Kong and Macau, during the 14-day period preceding their entry or attempted entry. The proclamation became effective at 5:00 pm (ET) on February 2, 2020.

View the full post by Duane Morris attorney Teodora Purcell on the Duane Morris Immigration Law Blog.

My Boss Wants Me to Travel During the Coronavirus. Do I Have to Go?

As the deadly coronavirus becomes a global pandemic, companies like Apple and Starbucks have stopped operating in China, and others, like Sony and Amazon, have pulled out of global trade shows like this month’s World Mobile Congress in Barcelona.

[…]

The only opportunity for an employee who contracts coronavirus to seek damages outside of workers’ compensation is if their company has behaved recklessly—such as by ordering them to Wuhan, the epi-center of the virus. According to Jonathan Segal, a partner at the law firm Duane Morris, the fact the U.S. State Department has issued a Level 4 advisory for China—a flat-out “do not travel” warning—means firms could face special liability in the event their employees contracted the virus.

[…]

“There’s the legal answer but, from a practical management point of view, you don’t want to force people who are scared into doing something,” says Neuberger.

Segal echoed this sentiment, saying “it’s a horrible message to the workforce” to order employees to travel when they are fearful of a pandemic.

[…]

To read the full text of this article, please visit the Fortune website.