Many readers may have seen the news this past week that the estate of a deceased Walmart employee who had died of complications from COVID-19 has filed a Wrongful Death lawsuit against the company. According to the lawyer who filed the complaint, the lawsuit is the “first known COVID-19 wrongful death lawsuit.” Even though a Wrongful Death lawsuit is far outside this blog’s usual remit, I tracked the complaint down and read it carefully, in order to think more about possible future coronavirus blame casting that could arise in the D&O claims arena. While the wrongful death lawsuit may be the first of its type, it surely will not be the last, and its filing may foreshadow other possible claims.
The Wrongful Death Lawsuit
On April 6, 2020, Toney Evans, the administrator of the Estate of Wando Evans, filed a lawsuit in Cook County Illinois Circuit Court against Walmart, Inc. and against the owner of the property at which Walmart’s Evergreen Park, Illinois store is located. A copy of the complaint can be found here.
Prior to his March 25, 2020 death, Wando Evans had been an employee at the Evergreen Park, Illinois Walmart store. The complaint alleges that Evans died of complications from COVID-19. The complaint alleges that Evans contracted the disease while working at the store. The complaint alleges that another store employee also died from COVID-19 shortly after Evans died, and that other employees of the store were exhibiting signs and symptoms of COVID-19.
The complaint asserts four claims of wrongful death liability against Walmart based on allegations of negligence; wanton and willful misconduct; as well as several related claims under Illinois law. The complaint asserts three claims of wrongful death liability against the property owner, based on allegations of negligence, as well as related Illinois law claims.
In the claims against Walmart, the complaint alleges that the company had a duty to exercise reasonable care in keeping the store in a safe and healthy environment, and in particular to protect employees and customers from contracting COVID-19 “when it knew or should have known that individuals at the store were at a very high risk of infection and exposure due to the high volume of individuals present at and circulating at the store on a daily basis.”
The complaint alleges that Walmart breached this duty in a number of ways, for example by failing to cleanse and sterilize the store to prevent infection; failing to implement and enforce social distancing guidelines; and failing to warn the defendant and other store employees that various individuals were experiencing symptoms at the store. The complaint also alleges that the store failed to meet or implement various measures recommended by the Center for Disease Control and other governmental authorities, such as failing to implement basic infection prevention measures (by providing hand sanitizer, masks, gloves, etc., to employees); failing to develop procedures to identify and isolate sick people; failing to train personnel on measures to minimize infection risk; and failing to stop employees exhibiting symptoms from working in the store.
In its claims against the property owner, the complaint alleges that the property owner breached its duty of care when it failed to close operations at its retail facility during the escalation of the pandemic; failed to implement and enforce social distancing guidelines; and failed to follow CDC guidelines pertaining to the prevention of infection at commercial buildings.
The complaint alleges that “as a direct and proximate cause of the above acts and/or omissions of negligence, the decedent was infected by COVID-19 and ultimately died due to complications of COVID-19.” The complaint seeks damages on behalf of the Estate.
Before analyzing the newly filed lawsuit, I cannot overlook the fact that in this situation two ordinary people who were just doing their jobs were sickened and died from this terrible disease. This is a reminder that though many are safely at home just trying to avoid getting sick, many others in a number of industries are continuing to work, in ways that potentially expose them to infection and illness. The disease’s large and growing aggregate infection and death numbers can obscure the fact that behind these numbers are individual cases, such as, for example, the unfortunate Wando Evans.
In the lawsuit, Evans’s Estate seeks to assign blame for his death. The defendants of course will seek to defend themselves. The lawsuit has only just been filed and it is far too early to tell the lawsuit’s merits or likelihood of success.
In defending against the lawsuit, the defendants undoubtedly will turn to their insurers. In Walmart’s case, it will likely turn to its Worker’s Compensation insurer, under the Employer Liability portion of the Worker Comp coverage. The property owner will turn to its General Liability insurer.
Insurers providing these types of insurance could see many more of these kinds of claims. Because the focus of this blog is on directors’ and officers’ liability and related issues, one question that occurred to me as I thought about this lawsuit and its possible broader liability and insurance implications is the question of whether COVID-19 blame-casting could lead to D&O claims that could trigger the D&O coverage.
The decedent’s Estate in the recently filed lawsuit named only the corporate entities. The plaintiff did not name any individuals as defendants. However, one can easily imagine other future complaints based on COVID-19-related circumstances could include individual defendants, including, for example, individual directors and officers of defendant companies.
My first thought in contemplating the possibility of future claims that name directors and officers as defendants is that, if there were to be claims like that, the D&O insurer likely would take the position that coverage under the D&O policy would be precluded by the standard bodily injury/property damage exclusion typically found in most D&O insurance policies. The BI/PD exclusion in the D&O policy (and the equivalent exclusion found in most Employment Practices Liability policies) are there to keep claims in their proper lanes; claims for bodily injury or property damage should go under the General Liability policy (or other liability coverages), not under the management liability policies.
However, these kinds of circumstances could give rise to a variety of claims. Here, I am thinking about the shareholder derivative lawsuit that was filed against the directors of Blue Bell Creameries, an ice cream manufacturer that was forced to close down its manufacturing operations after an outbreak of listeria resulted in the deaths of three people. The lawsuit against the board was not filed by the victims of the listeria outbreak, but rather by a shareholder who alleged that the directors had breached their duty of oversight.
As discussed here, in the landmark June 2019 decision of Marchand v. Barnhill, the Delaware Supreme Court held that the claimant had sufficiently alleged that the Blue Bell board had breached its duty of oversight and that the plaintiff’s claims could go forward. In a guest post on this site last week from lawyers at the Simpson Thacher law firm (here), the authors noted that, while duty of oversight claims (also known as Caremark claims) present a significant pleading hurdle for prospective claimants, the Marchand decision “underscores the need for directors to be mindful about how their roles may be scrutinized in both the context and aftermath of COVID-19.”
As readers of this blog undoubtedly are aware, there have already been a few coronavirus-related D&O lawsuits (as noted most recently here). The coronavirus-related D&O lawsuits so far have been essentially standard misrepresentation lawsuits, in which the claimants allege that the companies misled investors in public statements. To my knowledge, there have not yet been any coronavirus-related mismanagement claims.
But as a result of the thought process summarized above, it now seems likely to me as the coronavirus blame-casting process unfolds, we are likely to see mismanagement claims filed, and that among the mismanagement claims we are likely to see are breach of the duty of oversight type claims, like those asserted against the board of Blue Bell Creameries.
In the Blue Bell Creameries case, the plaintiff alleged that the company’s operations had been significantly impaired following the listeria outbreak. The plaintiff alleged that the board had failed to implement “any system to monitor” the ice cream company’s “food safety performance or compliance.” The Delaware Supreme Court said that these allegations were sufficient to state a claim for alleged breach of the duty of oversight and allowed the claim to go forward.
Breach of the duty of oversight claims are, as if often noted, notoriously difficult for plaintiffs to establish. But as I think about the new Wrongful Death lawsuit and contemplate its implications, it seems to me that we could well see claims of this type in the months ahead.
Readers interested in what the implications for board of directors might be given the possibility of these kinds of lawsuits in the wake of the coronavirus outbreak will want to read the recommendations of the Simpson Thacher attorneys in their recent guest post, to which I linked above.