The CDC released an interesting analysis of a case study of a COVID-19 outbreak among 10 people from three families whose only common denominator was that they all ate at the same air-conditioned restaurant on January 23, 2020, in Guangzhou, China. Spoiler alert: It wasn’t the food.

Family A, who had just been in Wuhan, and Families B and C all sat at neighboring tables for their meal for an overlapping period of more that 50 minutes. Later that day, a member of Family A began experiencing symptoms of fever and cough.

The air outlet and return air inlet for the central air conditioning were located above Family C’s table. Given that COVID-19 is commonly transmitted through droplets, the CDC concluded the most likely scenario was that three of Family B’s members were infected and two of Family C’s were infected by the Family A member by strong airflow from the air conditioner that could have propagated droplets from table C to table A, then to table B, and then back to table C.

In light of this scenario, CDC recommends  strengthening temperature-monitoring surveillance, increasing the distance between tables, and improving ventilation. You can read the full report here: https://wwwnc.cdc.gov/eid/article/26/7/20-0764_article

With many of us trying to stay at home as much as possible, ordering meal kits and other mail-order food is a popular alternative to going out. The CDC has published some tips to make sure these types of food are handled in a way to prevent bacteria growth. Although the CDC reiterates there is no evidence to support transmission of COVID-19 through food, it is important to be aware of foodborne pathogens that can make you sick.

Before ordering

  • Research companies and call customer service to ask about food safety standards. Ask how the company responds if food is delivered at an unsafe temperature or is otherwise not safe to eat. Find out if the company provides information with each shipment on safe handling and preparation of food, including cooking temperatures.
  • Arrange for delivery when someone is at home so food can be refrigerated quickly instead of being left outside until someone is at home.
  • Find a safe space for delivery if no one will be at home when food arrivesFood should be delivered to a cool, shaded, and secure location where pests and rodents won’t be able to get it.

Safe food delivery and receipt

  • Examine the box and packaging. When you get your delivery, look for stickers on the box that say “Keep Refrigerated” or “Keep Frozen” if you ordered perishable food such as meat, seafood, poultry, eggs, or dairy.
  • Make sure the company uses insulated packaging and materials such as dry ice or frozen gel packs to keep perishable food cold in transit.
  • Refrigerate or freeze your delivery as soon as possible. Bacteria can multiply rapidly if food is kept in the “danger zone” between 40°F and 140°F for more than two hours.
  • Notify the company if food arrives above 40°F. Don’t eat any of the food, or even taste it to see if it is safe. Food can be unsafe and still taste, look, and smell OK. When in doubt, throw it out.

Safe food handling

  • Wash your hands and kitchen utensils. Wash your hands with soap and water for at least 20 seconds before, during, and after handling any food and before eating. Wash your utensils, cutting boards, and countertops with hot, soapy water after using them.
  • Rinse fresh fruits and vegetables under running water.
  • Separate foods to avoid cross-contamination. Keep raw meat, poultry, seafood, and eggs away from other foods, and use separate cutting boards, plates, and utensils for these ingredients.
  • Refrigerate leftovers within 2 hours.  Make sure you know how long your leftovers will keep in the fridge or freezer.

You can read the full CDC recommendations here:https://www.cdc.gov/foodsafety/communication/food-safety-meal-kits.html?deliveryName=USCDC_485-DM25470

America’s small businesses are facing an unprecedented economic disruption due to the ongoing coronavirus pandemic. In these difficult and uncertain times, it is important for business owners to be aware of the resources available to them to help mitigate the effects of the pandemic.

The $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law on March 27, 2020, is intended to speed relief across the American economy. The Act provides financial relief to small businesses through its Paycheck Protection Program (PPP) and bankruptcy protections.

Paycheck Protection Program’s Forgivable Loans

According to the U.S. Chamber of Commerce, the PPP “sets aside $350 billion in government-backed loans from private banks” and is designed to incentivize small businesses to retain workers or to “rehire laid-off workers that lost jobs due to COVID-19 disruptions.”[1] These federal loans may be converted to grants (i.e. they may be forgiven) if eligible business owners meet certain requirements.

Businesses, sole proprietors, independent contractors, self-employed persons, and nonprofit organizations with fewer than 500 workers are all eligible for aid under the PPP.[2] These businesses may borrow 2.5 times their average monthly payroll costs (up to $10 million) to cover certain expenses such as payroll costs, mortgage interest, rent, and utilities for up to eight weeks.[3]

To have their loans fully forgiven, business owners must maintain their full-time headcount and keep all of their employees on the payroll for eight weeks.[4] At least 75 percent of the loan must go toward payroll costs including salaries, wages, commissions, tips, and employee benefits.[5] If owners trim their headcount or cut workers’ wages, their loan will only be partly forgiven. In that case, they will have two years to pay off the balance (at an interest rate of 1%).[6]

Eligible businesses “may apply [for a loan] through any existing SB 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating.”[7] Although the application deadline is June 30, 2020, the funds are allocated on a “first come first serve” basis and are likely to run out soon.

As of April 11, 2020, lenders had already approved more than 725,000 loans, totaling over $182 billion.[8] Due to overwhelming demand, Treasury Secretary Steven Mnuchin called for another $250 billion to be allocated to the Program on April 8, 2020.[9]

Expanded Bankruptcy Protections

Congress passed the Small Business Reorganization Act of 2019 (SBRA), effective February 19, 2020, to “streamline and reduce the cost of bankruptcy for small businesses.”[10] As originally enacted, the SBRA allowed small business debtors with no more than $2,725,625 in combined secured and unsecured debt to file for bankruptcy.[11] It also allowed small businesses with debts “to more quickly, and less expensively, reorganize” and made the process of bankruptcy “more manageable and more likely to succeed.”[12]

The CARES Act has temporarily expanded the SBRA to include debtors with up to $7.5 million in debt.[13] At least 50% of that debt must be from commercial or business activities.[14] However, this modification applies only to cases filed after the CARES Act was enacted and will only be applicable for one year.[15]

This expansion will allow many more businesses to take advantage of the SBRA, notably because it is estimated that “over 50% of businesses that filed [for Chapter 11 bankruptcy] between 2013 and 2017 had debt below $7.5 million.”[16]

*       *       *

[1] Sean Ludwig, How to Get a Coronavirus Emergency Paycheck Protection Loan (Mar. 30, 2020), https://www.uschamber.com/co/run/business-financing/coronavirus-emergency-loans.

[2] U.S. Small Business Administration, Paycheck Protection Program, https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program-ppp.

[3] Id.

[4] U.S. Department of the Treasury, Paycheck Protection Program (PPP) Information Sheet: Borrowers (Apr. 3, 2020), https://home.treasury.gov/system/files/136/PPP%20Borrower%20Information%20Fact%20Sheet.pdf.

[5] Id.

[6] Id.

[7] See supra note 2.

[8] Cameron Albert-Deitch, Payment Protection Program: Uncertainty Reigns (Apr. 10, 2020), https://www.inc.com/cameron-albert-deitch/coronavirus-paycheck-protection-program-funding-uncertainty.html?icid=hmhero.

[9] Grace Segers, Mnuchin requests boost in funding for Paycheck Protection Program (Apr. 8, 2020), https://www.cbsnews.com/news/coronavirus-paycheck-protection-program-mcconnell-schumer-mnuchin/.

[10] Jessica Ljustina, Coronavirus Aid, Relief, and Economic Security Act Expands Scope of Small Business Reorganization Act (Apr. 7, 2020), http://blogs.harvard.edu/bankruptcyroundtable/files/2020/04/CARES-Act-Expands-Scope-of-Small-Business-Reorganization-Act.pdf.

[11] David L. Gay and Yolanda P. Strader, Big Changes for Small Business Bankruptcies (Feb. 12, 2020), https://www.natlawreview.com/article/big-changes-small-business-bankruptcies.

[12] Kathleen McLeroy, Luigi Orengo Jr., Bankruptcy Provisions in the CARES Act (Apr. 5, 2020), https://www.jdsupra.com/legalnews/bankruptcy-provisions-in-the-cares-act-96392/; Andrew Zaron, New Bankruptcy Law May Help Small Cos. Weather COVID-19 (Mar. 24, 2020), https://www.law360.com/articles/1256508/new-bankruptcy-law-may-help-small-cos-weather-covid-19.

[13] McLeroy, supra note 12.

[14] Javier Roldan Cora, Jeffrey Kucera, David Mawhinney, and Margaret Westbrook, Small Business Debtor Reorganization: An Overview of Chapter 11’s New Subchapter V (Sept. 24, 2019), https://www.jdsupra.com/legalnews/small-business-debtor-reorganization-an-59887/.

[15] McLeroy, supra note 12.

[16] See supra note 10.

The COVID-19 pandemic continues to reveal numerous unique and unaddressed issues each day.  While we as individuals are becoming more intimately acquainted with nuances we previously took for granted, many others—especially businesses—are confronting a myriad of problems and obstacles that would have seemed improbable just a few short months ago. Specifically, many restaurants have been faced with the choice to either restructure into a strict take-out/delivery establishment or close shop and hope they can reopen their doors in the future. Neither option is ideal, and the decision to press on conducting business carries its own set of risks that are beginning to find their way into court dockets.

In the first half of their two-part article, “Managing Employer Risk in the Age of the Coronoravirus” [1], Ian Stewart and Jana Farmer advise of the pitfalls facing those establishments that choose to press on. They wisely caution that “all organizations should be aware of the risks of civil liability for exposing members of the general public, as well as their family members, to COVID-19 and should establish reasonable protocols and procedures to minimize such risks.” Case in point, Stewart and Farmer refer to a lawsuit filed on April 6, 2020, in Illinois against Walmart, that alleges that an employee died after contracting COVID-19 at work due to Walmart’s failure to follow relevant guidelines for maintaining safe workplaces and hiring workers without appropriate COVID-19 symptom screening.

Many restaurants are undoubtedly operating under precautions to ensure their employees can continue to help the business thrive with as little risk as possible (“no contact delivery” is now available on virtually every food delivery platform). But how can a restaurant take appropriate precautions to ensure the virus is not transmitted to its customers? Are restaurants exposed to liability if an infected employee exposes its customers to COVID-19?

The short—but incomplete—answer to the latter question is “yes.” However, for the reasons detailed below, the chances of this kind of liability occurring are very slim. A good way to illustrate why is to compare COVID-19 with a virus with which Marler Clark has extensive litigation experience: the hepatitis A virus (“HAV”).

HAV is a communicable disease that most often spreads from person to person via the “fecal-oral route,” while all other exposure is generally attributable to contaminated food or water. [2]. Food-related outbreaks of HAV are usually associated with contamination of food during preparation by an HAV-infected food handler. [3]. The food handler is generally not ill because the peak time of infectivity—that is, when the most virus is present in the stool of an infected individual—occurs two weeks before illness and symptoms begin. [4]. Although ingestion of contaminated food is a common means of spreading HAV, it can also be spread through household contact among families or roommates, sexual contact, or by direct inoculation from persons sharing illicit drugs. [5]. HAV is also relatively stable, and can survive for several hours on fingertips and hands and up to two months on dry surfaces. [6] Notably, HAV is the only common vaccine-preventable foodborne disease in the United States. [7]

When Marler Clark represents individuals who contract HAV after eating at a restaurant, the most common situation we encounter is that an unvaccinated employee worked while shedding the virus, but was asymptomatic. As the asymptomatic “patient zero” handled and prepared food, he or she unknowingly spread the virus to food products subsequently consumed by customers. Usually, the employee will display HAV symptoms about two weeks after the infectious period, but the damage has already been done; anyone who consumed food prepared by the infected employee became at risk of contracting the virus. Frequently, local health departments are able to respond to a food worker’s HAV diagnosis by publicly alerting persons who consumed food from a restaurant to obtain post-exposure prophylactic (“PEP”) treatment within two weeks after their exposure (when such treatment is most effective). However, there are always those who, even upon learning of a health department’s exposure advisory, are outside of the two-week window and, thus, PEP is no longer effective.

A restaurant becomes liable in these instances because a majority of states deem a restaurant strictly liable for any injuries caused by food it cooks (i.e. manufactures) and sells to customers. Concepts of fault and taking reasonable precautions are not taken into account. Rather, an injured patron generally need only prove that the food had some problem or defect when it was given to him or her, and that problem or defect caused their injuries. Thus, in its simplest form, a restaurant would be strictly liable to a customer who contracts HAV in a matter of weeks after consuming food from its establishment and after one of its employees became symptomatic with the virus. A highly convincing case would also include a finding that the customer and the employee (or others who also dined at the restaurant and became ill) had the same strain of HAV.

While a restaurant could theoretically also be held strictly liable if its customers contracted COVID-19, there are quite a few complicating factors that make this highly unlikely. First and foremost is the problem of proving causation, or, put simply, how to prove that Food Item X did in fact transmit the virus to Individual Z. With HAV, a person’s infection can usually be traced back to a local restaurant if an employee of the restaurant became symptomatic within the relevant time frame. Additional proof will certainly benefit a claim, but those two factors generally lay the groundwork for proving causation.

COVID-19’s nature, however, substantially undercuts the simplicity of the HAV example. For instance, imagine if three local restaurants all had employees become symptomatic with HAV at the same time and a person ate food from all three in the same week. Absent specific identification of the HAV strain, there is no way to prove which restaurant actually exposed the person to HAV. Now consider the fact that, just like HAV, a person can be asymptomatically spreading COVID-19 [8] but they never develop symptoms. Given the current prevalence of COVID-19 and, in many cases, the inability to determine who is actually carrying the virus, there is simply no way to eliminate all possible exposures to COVID-19 and thus, no way to convincingly claim that Individual Z got infected due to exposure to Establishment Y.

Another factor that renders strict liability unlikely is the fact that COVID-19 is spread predominantly through respiratory droplets produced when an infected person coughs, sneezes or talks. [9]. While the virus can survive on some surfaces (72 hours on plastic, 24 hours on cardboard) [10], it is unlikely to be able to survive on food itself according to an expert in infectious diseases and public health at Cornell University. That being the case, the most probable exposure to COVID-19 is not through consumption of a product. A critical piece for strict liability is that the manufacturer’s product caused the injury alleged. Therefore, a strict liability claim is unlikely to succeed if a person is infected with COVID-19 through exposure to an ill restaurant employee or through contaminated food packaging.

Finally, while it is possible a restaurant could be held liable under principles of negligence, proving as much would be a steep uphill battle, especially without any egregious conduct by a restaurant. Unlike strict liability, negligence requires that a plaintiff also prove that there was some shortcoming in the restaurant’s conduct and that, but for that shortcoming, the injury would not have occurred (or, in legal terms: the restaurant had a duty to the customer and it breached that duty in some way). Due to the nature of HAV, negligence is particularly difficult to demonstrate because of the ability of an infected person to shed the virus without even knowing it. If no one knows the employee is sick (including the employee herself), how are they to take appropriate precautions to prevent transmission? The same rationale applies to COVID-19: if an employee is asymptomatic, how is a restaurant to prevent transmission without shutting down entirely? Further, while a reasonable argument exists that restaurants can prevent employees unknowingly infected with HAV from working by requiring all staff to provide proof of HAV-vaccination before hiring (or offering to cover the costs thereof), there are no vaccines currently available for COVID-19.

Thus, a restaurant would only likely be found to have negligently transmitted COVID-19 under extreme circumstances. Common ways to show negligent transmission of HAV in a restaurant setting include things demonstrating that there were no safeguards in place to prevent transmission from an employee to food: food workers were handling ready-to-eat food items without gloves, no significant employee handwashing policy, or that employee handwash stations were not appropriately stocked. While all these factors may be equally applicable to negligent transmission of COVID-19, their persuasiveness also requires (and assumes) that an infected employee was identified and worked while infectious. Given the foregoing discussion about COVID-19’s unique nature, it certainly seems that a restaurant may only be held liable for negligent transmission of COVID-19 if it knowingly allowed an infected individual to work while infectious; a significantly demanding burden of proof for any claimant.

__________________

[1] Stewart, Ian and Farmer, Jana, “Managing Employer Risk in the Age of the Coronavirus – Part 1,” Property Casualty 360 (Apr. 9, 2020). https://www.propertycasualty360.com/2020/04/09/managing-employer-risk-in-the-age-of-the-coronavirus/?slreturn=20200309100124

[2] Jaykus Lee Ann, “Epidemiology and Detection as Options for Control of Viral and Parasitic Foodborne Disease,” Emerging Infectious Diseases, Vol. 3, No. 4, pp. 529-39 (October-December 1997). Full text of the article is available online at http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2640072/pdf/9366607.pdf

[3] CDC, “Hepatitis A,” supra note 5; See also CDC, “Surveillance for Acute Viral Hepatitis – United States, 2007, Morbidity and Mortality Weekly Report, Surveillance Summaries, Vol. 58, No. SS03 (May 22, 2009) at http://www.cdc.gov/mmwr/preview/mmwrhtml/ss5803a1.htm

[4] Fiore, Anthony, Division of Viral Hepatitis, CDC, “Hepatitis A Transmitted by Food,” Clinical Infectious Diseases, Vol. 38, 705-715 (March 1, 2004). Full text online at http://www.cdc.gov/hepatitis/PDFs/fiore_ha_transmitted_by_food.pdf.

[5] Id.

[6] Feinstone, Stephen and Gust, Ian, “Hepatitis A Virus,” in Mandell, Douglas, & Bennett’s PRINCIPLES AND PRACTICE OF INFECTIOUS DISEASES, Fifth Edition, Chap. 161, pp. 1920-40 (2000); Mayo Clinic Staff, “Hepatitis A,” (last updated Sept 1, 2011). Articles available online at http://www.mayoclinic.com/health/hepatitis-a/DS00397.

[7] CDC, “Hepatitis A,” in EPIDEMIOLOGY AND PREVENTION OF VACCINE-PREVENTABLE DISEASES (also known as “The Pink Book”), Atkinson W, Wolfe S, Hambrosky J, McIntyre L, editors, 12th edition. Chapter available online at http://www.cdc.gov/vaccines/pubs/pinkbook/hepa.html.

[8] “Clinical Questions about COVID-19,” Centers for Disease Control and Prevention (updated Mar. 30, 2020). https://www.cdc.gov/coronavirus/2019-ncov/hcp/faq.html; “No Signs of Coronavirus? Here’s Why You Could Still Be Carrying (and Spreading) It,” Health Essentials, Cleveland Clinic, (Apr. 4, 2020). https://health.clevelandclinic.org/studies-show-carriers-with-mild-or-no-symptoms-are-key-part-of-covid-19-spread/; Rettner, Rachael, “Up to 25% of People with COVID-19 May Not Show Symptoms,” Live Science (Apr. 1, 2020). https://www.livescience.com/coronavirus-asymptomatic-spread.html

[9] “How COVID-19 Spreads,” Centers for Disease Control and Prevention (last reviewed Apr. 2, 2020). https://www.cdc.gov/coronavirus/2019-ncov/prevent-getting-sick/how-covid-spreads.html

[10] “Aerosol and Surface Stability of SARS-CoV-2 as Compared with SARS-Cov-1,” NEJM, (Mar. 17, 2020). https://www.nejm.org/doi/10.1056/NEJMc2004973

MEDSCAPE VIDEO BY DAVID A. JOHNSON MD (5 minutes , 27 seconds)

Some excerpts from the video transcript:

“As we know, GI diseases can be transmitted via the fecal-oral route. Now researchers looking at hospitals in Wuhan, China, that treated COVID-19-positive patients have provided valuable new data on its transmission. They found that although the intensive care units were good at containing the spread of the virus outside of the patients’ rooms, there was a high concentration of the virus in the air samples taken from the patients’ toilets.

What are the implications of that finding? Droplets of SARS-CoV-2, which causes the disease COVID-19, can be spread and live in the air for up to 3 hours, and be disseminated to hard surface areas where they can live up to 3 to 4 days. That is quite concerning when you consider that flushing a toilet can create an aerosolized plume of these viral particles, which can then spread elsewhere within proximity. We know that toothbrushes left in proximity to the toilet gain viral spread quite rapidly, mirroring levels observed in the toilet itself. That same thing can occur for cell phones, which many people take with them into the bathroom. However, this mode of transmission has not been well studied as it relates to COVID-19.

We do have available evidence with another coronavirus, the severe acute respiratory syndrome (SARS). Researchers looked at the Amoy Gardens apartment complex in Hong Kong, which experienced a large community outbreak of SARS during the 2003 epidemic. Using airflow dynamics studies, they were able to retrospectively track the spread of the virus from one individual patient—the index case—to other residents of the complex. They reported that the patient’s toilet exhaust fan, which created a negative pressure effect, vented into the apartments above and also to the outside. They linked this to 187 cases in the complex with available data. This analysis suggests that the SARS virus was able to be transmitted by microdroplets through inhalation, touch, and potentially fecal-oral routes.

The aerosolization effect that can occur in toilets, leading to microdroplets that can be inhaled or persist on surface areas, raises some real concerns regarding epidemiologic spread. It may also be helpful in understanding why this rapid spread can occur when not linked to known contact with those positive for COVID-19.”

 

Meat industry giants such as Tyson Foods and JBS U.S. Holdings have closed some of their facilities as employees have fallen ill with COVID-19, but JBS has kept its Greeley, Colorado facility open despite the fact that at least 28 employees have tested positive for the virus, including a long-time employee who passed away this week.

Employees at the Greeley facility have raised the alarm that JBS may be ignoring calls for social distancing and improperly disinfecting equipment and communal spaces. See https://www.thedenverchannel.com/news/investigations/weld-county-health-official-would-consider-closing-greeleys-jbs-meat-plant-over-covid-19-concerns. The employees’ complaints sparked a Weld County Health Department investigation into the company’s facilities. Further action, including closure, could be required by the facility pending the health department’s findings.

Agricultural businesses must balance competing interests in the face of COVID-19:

The close quarters required for meatpacking makes keeping the virus spread at bay a difficult task for companies. While obvious measures such as decreasing interpersonal contact or providing personal protective equipment to individual employees can help curtail the spread, companies need to balance employee safety with production.

As essential businesses feeding a country whose grocery shopping habits are verging on hoarding, production in meat processing plants across the country is adjusting to deliver. But if fewer workers are present at each shift and production lines are slowed, there could be issues in providing an adequate quantity of products to consumers. Still, if the virus continues to spread and more workers fall ill, companies will either have to dig into their coffers to quickly hire and train new employees or they will be forced to slow production and retain experienced workers, albeit at a safer distance from one another.

You can read the whole article here: fooddive.com/news/tyson-and-jbs-close-plants-as-coronavirus-hits-meat-manufacturing/575600/

While many Washington-based restaurants still provide “carry-out and quick-serve food operations” under Governor Jay Inslee’s business-closure order, their ability to generate revenue has been severely impacted. Technomic, a restaurant industry research group, reported that consumer spending on food service is down 45 percent from a typical week in February, with further planned reductions expected to come.[1] Survey results also show that people are concerned about ordering take-out. A Dataessential survey has revealed that 34 percent of customers believe that limited-service restaurants are “high-risk.”[2] Moreover, although there is no evidence of COVID-19 transmitting through food or packaging, the general public’s avoidance of physical contact has wreaked havoc on local businesses. According to a New York Times article, Seattle chef Tom Douglas has shuttered his dozen restaurants and laid off nearly all of his 800 employees.[3] He says business is down 90 percent from usual. Local eateries are desperately trying to adapt to save their businesses. Canlis, one of Seattle’s highest-end restaurants, is now running a drive-through serving bagel sandwiches for breakfast, and burgers and veggie melts for lunch. Pandemic-related travel restrictions and supply chain disruptions have also had disastrous effects on small businesses. These unprecedented challenges, including government-mandated business shutdowns, record unemployment, and consumer uncertainty, warrant an equally unprecedented response. This blog post discusses three legal excuses for nonperformance of a contract under which small businesses may be discharged of their contractual obligations: force majeure, impracticability, and frustration of purpose.

Force Majeure

Force majeure clauses are included in contracts to spell out extraordinary circumstances under which a party’s nonperformance under a contract will be excused. Events of force majeure typically include acts of God (including natural disasters such as tsunamis, earthquakes, and floods) and acts of people such as riots, strikes, civil unrest, and wars.

The applicability of a force majeure provision is contract-specific, and there is a high bar for invocation of such a clause. In considering the applicability of force majeure, courts look to whether: (1) the event qualifies as force majeure under the contract; (2) the risk of nonperformance was foreseeable and able to be mitigated; and (3) performance is truly impossible.[4]

The court’s inquiry largely focuses on whether the event giving rise to nonperformance was specifically listed as a force majeure in the clause at issue.[5] Most force majeure clauses contain a specific list of triggering events as well as a general catch-all provision. Courts often take a “noticeably strict approach” when interpreting force majeure clauses, “requiring that the event asserted as an act of force majeure actually be listed as a qualifying event in the contract.”[6] In rare circumstances, nonperforming parties “may also rely upon a catch-all provision to argue that the occurrence of an event not explicitly listed in the force majeure clause qualifies to excuse performance.”[7] This narrow exception involves the canon of construction ejusdem generis which “limits the application of general terms which follow specific ones to matters similar in kind or classification to those specified.”[8] Thus, when a contract contains a catch-all that makes clear that it is not limited to the same type of events (e.g., “…or any other events or circumstances not within the reasonable control of the party affected, whether similar or dissimilar to any of the foregoing”), the nonperforming party’s may be excused.[9] Even if the nonperforming party can surmount this harsh requirement, it cannot invoke force majeure if performance is merely impracticable or economically difficult rather than truly impossible.[10]

The facts of a case may fall squarely within the scope of a contract’s force majeure clause; for example, if a provision specifically lists a “pandemic,” “epidemic,” “public health emergency,” or “disease” as a triggering event, COVID-19, a global pandemic, would likely qualify. However, because many contracts contain boilerplate force majeure clauses, a run-of-the-mill contract is unlikely to contain the highly specific catch-all provision required to bypass the court’s narrow interpretation. Moreover, even if a nonperforming party’s contract contains a qualifying clause, the party cannot invoke force majeure if performance is merely impracticable or economically difficult rather than truly impossible. In the present situation, although Washington-based small businesses are struggling, in most cases, their performance is not truly impossible; thus, even if a contract at issue contains a qualifying provision, the force majeure defense may not apply.

Impracticability Defense

If a contract includes a force majeure clause that allocates the risks associated with a global pandemic, that contract term controls. However, if the contract is silent on force majeure, courts may decide to excuse a nonperforming party based on the legal excuse of impracticability or frustration of purpose. These excuses may have different interpretations under applicable law, but in general, they are narrowly interpreted and applied.

There are five discernable elements in the judicial application of the impracticability doctrine: (1) there must be a supervening event (2) whose nonoccurrence was a basic assumption on which the contract was made (3) which renders contract performance impracticable (4) without fault of the party seeking relief (5) and where the party seeking relief did not bear the risk of occurrence of the event based on the contract language.[11]

In order for a supervening event to discharge a duty, the nonoccurrence of that event must have been a “basic assumption” on which both parties made the contract, meaning the supervening event must vitally affect the basis upon which the parties contracted.[12] Ordinary shifts in market conditions or financial ability are not basic assumptions and, thus, cannot be used to justify nonperformance.[13] In Washington, an intervening “prohibition or prevention by law” qualifies as an event, the nonoccurrence of which may be a basic assumption on which a contract was made.[14]

Additionally, in Washington, the phrases “impracticability of performance” and “impossibility of performance” are interchangeable.[15] The courts have held that the defense of impossibility encompasses not only objective impossibility (i.e. the thing cannot be done) but also “impracticability arising from extreme and unreasonable difficulty, expense, injury, or loss.”[16] A “subjective inability to perform” (i.e. a party’s individual inability to perform) under a contract or the fact that performance would likely be “more difficult or more expensive” does not excuse nonperformance.[17] In assessing whether cases meet the impracticability requirement, several courts have relied on the commentary in the Second Restatement, which states that “[a] severe shortage of raw materials or of supplies due to war, embargo, local crop failure, unforeseen shutdown of major sources of supply, or the like, which either causes a marked increase in cost or prevents performance altogether may bring the case within the rule.”[18] The First Restatement suggested that the loss must be “extreme and unreasonable” and, through its illustrations, indicated that tenfold increases or costs multiplied fifty times would constitute such burdens.[19]

Impracticability (or impossibility) is difficult to prove, even in light of the extreme disruptions caused by the COVID‑19 pandemic. It requires the performance to be objectively impossible, or impracticable due to extreme difficulty, expense, injury, or loss – not just financially unfavorable. Thus, if a party can render performance with additional time, energy, money, or resources, impracticability is not a valid excuse. In the current circumstances, impracticability will likely discharge a party where: (1) in a contract requiring that party’s personal performance, the party dies or is incapacitated due to a COVID-19-related illness; (2) in a contract requiring specific raw materials, the party cannot secure these materials without extreme difficulty and unreasonable expense due to severe pandemic-related shortages or shutdowns of commercial facilities in the supplying country; (3) in a contract where performance requires the continued existence of an irreplaceable good or component, that good or component is destroyed due to the pandemic; or (4) performance is rendered impossible by prohibition or prevention of law, such as in a region where there is a state-imposed lockdown.

Frustration of Purpose Defense

The doctrine of frustration of purpose discharges a party from the requirement to complete its contractual obligations when the party’s purpose for entering the contract is subsequently frustrated by a change in circumstances. Frustration of purpose requires many of the same elements as the principles of impracticability/impossibility: (1) there must be a supervening event (2) whose nonoccurrence was a basic assumption on which the contract was made (3) which substantially frustrates a party’s principal purpose (4) without fault of the party seeking relief (5) and where the party seeking relief did not bear the risk of occurrence of the event based on the contract language.[20]

Like the defense of impracticability/impossibility, the defense of frustration of purpose requires that the supervening event vitally affect a “basic assumption” upon which the parties contracted. The doctrine further requires that “the purpose that is frustrated [be] a principal purpose” of the contract such that, “as both parties understand, without it the transaction would make little sense.”[21] Moreover, “the frustration must be substantial”; it must be “severe enough that it cannot fairly be considered a risk the party assumed under the contract.”[22] Examples of “supervening frustration” illustrated by the Restatement’s authors are a cancelled event, destruction of premises, and a change in traffic regulations that reduces a tenant’s business to the point that the tenant is unable to operate except at a substantial loss.[23]

Frustration of purpose may excuse nonperformance if a contract’s purpose is frustrated by pandemic-related events. For example, if a company contracts to book a venue for an event with 150 attendees, but Gov. Inslee issues an order banning public gatherings of more than 10 people, the doctrine of frustration of purpose may apply. Thus, like impracticability, frustration of purpose may be applicable in situations where performance is rendered impossible by prohibition or prevention of law. The doctrine may also apply if a tenant’s business is affected to the point that the tenant is unable to operate except at a substantial loss.

It is important to note that the doctrines of impracticability and frustration of purpose only discharge the party’s duty to perform for so long as the impracticability or frustration exists.

Conclusion

In conclusion, as the COVID-19 pandemic continues to develop, small businesses should take proactive steps to ensure continuity of operations sufficient to meet existing contractual obligations. However, if the pandemic results in a business’s inability to satisfy its contractual obligations, it should assess the viability of the legal defenses of force majeure, impracticability, and frustration of purpose. Furthermore, while a struggling business may not be eligible to be fully discharged from its contractual obligations, it may be able to renegotiate its existing obligations using one or more these doctrines.

*       *       *

[1] Joseph Pawlak, Technomic’s Take: COVID-19, The Foodservice View (Mar. 23, 2020), https://www.technomic.com/technomics-take/coronavirus-foodservice-view.

[2] Danny Klein, What Customers Think About Restaurants and Coronavirus (March 2020), https://www.qsrmagazine.com/consumer-trends/what-customers-think-about-restaurants-and-coronavirus.

[3] Ben Casselman et al., Coronavirus Cost to Businesses and Workers: ‘It Has All Gone to Hell’ (Mar. 15, 2020), https://www.nytimes.com/2020/03/15/business/economy/coronavirus-economy-impact.html.

[4] P.J.M. Declercq, Modern Analysis of the Legal Effect of Force Majeure Clauses in Situations of Commercial Impracticability, 15 J.L. & Com. 213, 230 (1995).

[5] Allison R. Ebanks, Force Majeure: How Lessees Can Save Their Leases While the War on Fracking Rages on, 48 St. Mary’s L. J. 857, 881-82 (2017).

[6] Id. at 878.

[7] Id. at 882.

[8] Id.

[9] Id. at 881-82.

[10] Id. at 874.

[11] Restatement (Second) of Contracts § 261 (Am. Law. Inst. 1981).

[12] Id. at cmt. b.

[13] Id.

[14] 25 Wash. Prac., Contract Law and Practice §10:19 (3d. ed.).

[15] 25 Wash. Prac., Contract Law and Practice §10:16 (3d. ed.).

[16] 25 Wash. Prac., Contract Law and Practice §10:16; 1-8 Murray on Contracts § 113 (2011).

[17] Id.

[18] Restatement (Second) of Contracts § 261 cmt. d.

[19] Restatement (First) of Contracts §§ 454, 460, ills. 2 and 3 (Am. Law. Inst. 1932).

[20] Restatement (Second) of Contracts § 265 (Am. Law. Inst. 1981).

[21] Id. at cmt. a.

[22] Ebanks, supra, at 876.

[23] Restatement (Second) of Contracts § 265 cmt. a, ills. 1-4.

The coronavirus and COVID-19 have instigated a new normal for us all, affecting almost every aspect of life. We are all aware of the everyday preventive actions the Centers for Disease Control and Prevention (CDC) recommends.

  • Avoid close contact with others.
  • Avoid touching your eyes, nose and mouth with unwashed hands.
  • Clean your hands often, including before eating or preparing food.
  • Clean and disinfect frequently touched surfaces daily.
  • Cover coughs and sneezes.
  • Stay at home if you’re sick.

Coronaviruses are generally thought to be spread from person-to-person through respiratory droplets. A sick person coughs or sneezes and moisture droplets containing virus land in the mouth or nose, or are inhaled, by healthy people nearby.

But what are the facts related to coronavirus and the safety of our food? Let’s look at CDC guidance for answers to four common food-related questions.

Can I get sick from eating food contaminated with COVID-19 virus particles?

CDC statement: “Currently there is no evidence showing transmission of the virus through food.” This does include fresh produce.

Can I get sick from handling a food package contaminated with virus particles?

Coronaviruses have poor survival on surfaces. There is very low risk of disease spread through food products or packaging that are shipped over a period of days or weeks at ambient, refrigerated or frozen temperatures.

The CDC states, “It may be possible that a person can get COVID-19 by touching a surface or object that has the virus on it and then touching their own mouth, nose, or possibly their eyes, but this is not thought to be the main way the virus spreads.” Follow good hygiene and hand washing practices before preparing food or eating to alleviate concerns due to handling food packaging.

What about imported products?

CDC statement: “Currently there is no evidence to support transmission of COVID-19 associated with imported goods and there have not been any cases of COVID-19 in the United States associated with imported goods.“

How should fresh produce be washed to reduce the risk of any food borne pathogen?

Remember, there is no evidence COVID-19 can be transmitted through food, but these guidelines are good basic practices for cooks at any time when cleaning produce.

  1. Wash your hands for 20 seconds with warm water and soap before and after preparing fresh produce.
  2. Remove the outermost leaves of a head of lettuce or cabbage.
  3. Clean fruits and vegetables before peeling, by gently rubbing while holding them under running water. Do this even with produce you plan to peel. Germs on the peel or skin can get inside fruits and vegetables when you cut them. There’s no need to use soap or a produce wash – use plain water only.
  4. Use a clean vegetable brush to scrub firm produce, such as potatoes, melons and cucumbers.
  5. Dry the produce with a clean paper towel.
  6. Refrigerate fruits and vegetable within 2 hours after you cut, peel or cook them. Or 1 hour if air temperature is 90°F or warmer. Chill them at 40°F or colder in a clean container.