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<\/a>\n <\/div>\n<\/p><\/div>\n<\/p><\/div>\nIn the first instalment of our three-part series covering
\nlitigation and COVID-19, we discuss some of the potential COVID-19
\nrelated litigation risks that businesses may face in the upcoming
\nweeks and months, and need to be aware of and plan for as part of a
\ncomprehensive back-to-work strategy.<\/p>\n
Introduction<\/h3>\n
Canadians have heard it over and over: we must flatten the
\ncurve. To do so, non-essential businesses were shut down and
\nemployees were asked to work from home. Most Canadian provinces,
\nincluding Qu\u00e9bec, Ontario, Alberta, and British Columbia
\nhave now announced frameworks for the reopening of businesses and
\nthe return of employees to physical workplaces. This is welcome
\nnews for many businesses who are experiencing significant financial
\nhardship as a result of the COVID-19 pandemic.<\/p>\n
Now that it is time for business directors to develop a
\nback-to-work strategy, we are publishing a trilogy for the
\nre-opening of businesses, which will discuss: (i) potential
\nexposure to COVID-19 related litigation; (ii) how to mitigate the
\nrisks of potential litigation exposure; and (iii) what to do should
\nyou face a litigation-precipitating event such as a COVID-19
\noutbreak in your workplace.<\/p>\n
This post highlights some of the potential COVID-19 related
\nlitigation risk that businesses may face in the upcoming weeks and
\nmonths, and need to be aware of and plan for as part of
\ncomprehensive back-to-work strategy. This publication does not
\npurport to address all relevant considerations and we encourage our
\nreaders to discuss their own particularities as well as their
\nback-to-work and\/or current strategies with their legal
\nadvisors.<\/p>\n
Types of Potential Exposure to COVID-19 Related Litigation<\/h3>\n
Businesses may face COVID-19 related litigation. It is most
\nimportant that directors and officers be aware of the different
\nareas from which risks might arise, which we have identified as
\nfollow:<\/p>\n
- \n
-
\n
Health and safety:<\/strong> Some workplaces may find it
\nchallenging to address the risk of potential exposure to COVID-19
\nthrough measures such as social distancing. Under provincial and
\nfederal occupational health and safety legislation, businesses have
\nvarious obligations including obligations to assess risk and to
\ntake all reasonable precautions in the circumstances to protect the
\nhealth and safety of workers. Determining the sufficiency of
\nprecautions will depend on a number factors specific to the
\ncircumstances of each case. Government orders and emergency
\nlegislation may also set out certain health and safety requirements
\nbusinesses are to follow in order to open and operate their
\nworkplace. Businesses may also have a duty of care towards
\nnon-workers such as visitors and clients, especially where products
\nare sold.<\/p>\n\n<\/li>\n
\n<\/ul>\n
Failure to have appropriate health and safety policies and
\nprocedures in place may leave a business exposed to onerous
\nregulatory orders, work refusals, workers compensation claims, or
\nliability in the event of prosecutions, health and safety tort
\nclaims or class actions by persons who have attended the workplace,
\nbought or consumed a product. Legal proceedings related to COVID-19
\nalso come with a risk of reputational damage and the challenge of
\nappropriately managing communications with various stakeholders and
\ncustomers.<\/p>\n- \n
-
\n
Employment issue:<\/strong> Employee layoffs and
\nterminations create various litigation risks, including potential
\nclaims for statutory, contractual, and common-law entitlements.
\nFurther, employers should consider any statutory and\/or contractual
\nrequirements when recalling employees from a layoff. Consult our recent blog post<\/a> which details further
\nconsiderations for employers.<\/p>\n\n<\/li>\n
\n <\/p>\n- \n
Contract:<\/strong> In this climate, it may be difficult
\nfor parties to business contracts to perform them. We expect that
\nmany businesses will face contract-related litigation should they
\nfail to perform their contractual obligations. To learn more about
\nthe principles of force majeure<\/em> and frustration as they
\nmay apply to contracts, consult our blog post<\/a>.<\/p>\n\n<\/li>\n
\n <\/p>\n- \n
Consumer protection claims, including deceptive
\nadvertising and business practices, and securities class
\nactions:<\/strong> As we explained in this recent blog post<\/a>, the pandemic poses high
\nrisks of consumer protection class actions, including alleged
\nunfair, deceptive or unconscionable business practices, and
\nsecurities-related class actions. These types of class actions have
\nalready emerged in the United States. Any statement made to the
\npublic pertaining to outlooks for the corporation in the context of
\nCOVID-19 should be carefully reviewed. Branding, packaging,
\nlabelling, and marketing should be given the same precautions.<\/p>\n\n<\/li>\n
\n <\/p>\n- \n
Claims against Directors and Officers:<\/strong> In light
\nof the foregoing high-risk litigation areas, and in the context
\nwhere directors and officers will have to re-think the way the
\ncompany does business, often under tight time constraints, we
\nanticipate that claims, including class actions, will be made not
\nonly against businesses, but also against their directors and
\nofficers. D&O insurance policies offer liability coverage for
\ndirectors and officers to protect them from claims that may arise
\nfrom the decisions and actions taken within the scope of their
\nregular duties. As a result, we also expect an increase in
\nlitigation regarding insurance coverage for directors and officers
\nfaced with COVID-19 related claims. We encourage readers to consult
\nour recent blog post<\/a> discussing directors’
\nduties and key considerations in the context of the COVID-19
\npandemic.<\/p>\n\n<\/li>\n
\n<\/ul>\n
Conclusion<\/h3>\n
Now that we have outlined the potential risks, stay tuned for
\nour second publication which will discuss best practices for risk
\nmitigation.<\/p>\n - \n
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