Business Beware: Premise Liability in the Age of the COVID-19 Economic Restart

May 11, 2020

As the initial round of state and local “stay-at-home” and “shelter-in-place” orders expires, and businesses start to reopen, business owners should be aware of the potential liability they face as a result of the COVID-19 pandemic. This potential liability is a major concern for business owners, as evidenced by a proposal by certain members of Congress that, as a part of a new stimulus plan, businesses that reopen should be granted immunity for COVID-19-related claims. As the COVID-19 situation evolves, so too will the law governing COVID-19-related lawsuits. It is likely that a determination of liability will turn largely on the individual facts and circumstances of each case.

Legal Principles

While each state has different laws, in general, a business will be liable for physical harm caused to its patrons if the business: (i) knows of, or by the exercise of reasonable care would discover, a dangerous condition present in the business premises, and should realize that it involves an unreasonable risk of harm to those patrons; (ii) should expect that the patrons will not discover or realize the danger, or fail to protect themselves against it; and (iii) fails to exercise reasonable care to protect its patrons against the danger. (See Restatement (Second) of Torts, § 343.)

Where a hazard is a “known or obvious danger,” the business is liable for physical harm caused by that “known or obvious danger” only if the business should anticipate the harm despite the obviousness of the danger or the patron’s knowledge. Courts will likely view COVID-19 as a “known or obvious danger” that businesses should anticipate and plan for in order to keep patrons safe.

The potential harm the coronavirus can cause will not dissipate when businesses reopen, and businesses are not relieved of the duty of reasonable care they owe to patrons.

Moreover, where businesses are open to the public, businesses may potentially be liable for the transfer of COVID-19 from one patron to another if the business fails to exercise reasonable care in giving an adequate warning that would enable patrons to avoid the harm, or to otherwise protect them from it.

Even in normal times, complying with industry standards or best practices does not guarantee a court would find that a business fulfilled its duty of reasonable care, although it is often powerful evidence. (See 65A C.J.S. Negligence § 911; “Even though evidence of compliance with industry standards is admissible … such evidence is not conclusive on the issue of due care.”)

Practical Considerations

Ultimately, to avoid liability to the best of their ability, businesses should, at minimum, follow federal, state and local guidelines. (See, e.g., Winger v. CM Holdings, L.L.C ., 881 N.W. 2d 433, 447-49 (Iowa 2016), noting that a violation of an ordinance and/or state law can constitute negligence per se, but it can also be viewed on a fact-specific, case-by-case approach for determining whether the violation constitutes negligence per se or merely prima facie evidence of negligence; and Restatement (Second) of Torts § 286, expressly including local ordinances as a basis for a standard of care the violation of which is negligence per se.) It might also be prudent to implement stricter safety measures that are not necessarily required, but which other businesses in the same industry have adopted. (See, e.g., 65A C.J.S. Negligence § 911.)

Comply with federal, state and local guidelines

As an initial matter, businesses should comply with all federal, state and local guidelines. Generally, state and local guidelines will be particularized for the needs of the relevant community and should create the minimum safety precautions businesses take in reopening. For example, Georgia, one of the first states to partially reopen, has now allowed, among other businesses, movie theaters to reopen. The Georgia guidelines require that theaters seat parties no larger than six people, with all parties seated six feet apart; that they put tape on floors near ticket counters and concessions to guide patrons to remain six feet apart; and that they close any playgrounds or arcades within the theater. The Georgia order also mandates that, while salons may open, they may have only one person per stylist in the salon at a time, and salon employees must wear gloves and may not reuse capes.

Additionally, while there has been some preliminary discussion of the federal government providing immunity for COVID-19-related lawsuits for businesses that choose to open, the legality of such an order or statute is unclear. (See Jeff Stein and Josh Dawsey’s April 24 Washington Post article, “White House faces internal debate over ‘liability shield’ for firms seeking protection from coronavirus lawsuits.”) Businesses should not rely on this potential immunity and should be prepared to adapt if and when such a law is enacted.

Consider actions of competitors and/or related industries

Any retail store or other establishment open to the public, to the extent governmental guidelines do not direct certain safety procedures, should consider adopting some of the measures taken or prescribed to other industries. The guidelines that various stay-at-home orders required grocery stores to follow likely would be the most applicable. These measures may include limiting the number of people who can enter at a time; making aisles “one-way”; placing Plexiglas between employees and customers; increasing cleaning frequency, especially of common-touch areas, such as doors, self-checkout centers and shelves; and requiring employees to wear gloves.

Recently, Kroger published “Sharing What We’ve Learned: A Blueprint for Businesses,” in which it provided certain steps it has taken to lessen the danger of transmitting the coronavirus in its stores. Kroger, among several other precautions, posted signs at entrances instructing customers not to enter if they were sick, increased the availability of hand sanitizer and wipes for customer and employee use, and encouraged social distancing through a variety of measures.

Going even further, Wal-Mart began taking employees’ temperatures when they reported for work and provided them with protective equipment. Also, COSTCO has now stated that all customers will be required to wear a face mask that covers their mouth and nose when shopping.

Consider adopting policies that comport with the most restrictive guidelines (even if not explicitly applicable to the business at issue)

If it is economically feasible, businesses should also consider using the most restrictive guidelines from state and local governments, even outside their jurisdictions. For example, Los Angeles requires everyone who works in or enters a grocery store, pharmacy or other essential shopping place to wear a mask or face covering.

Consider posting warnings about the possibility of transmission so customers can assess for themselves the risk of entering the premises

Businesses should also consider posting a warning on their entrances that might include some of the following information: (1) the measures the business has taken to prevent the spread of the virus, (2) that customers are responsible for abiding by any rules or guidelines the business has put in place for everyone’s protection, (3) that these measures do not guarantee a person will not contract the virus while on business premises, and (4) that customers enter at their own risk.

While any disclaimer in this type of posted warning is unlikely to remove liability for COVID-19-related lawsuits, providing a warning acknowledges the business is taking meaningful steps to act reasonably by permitting customers to conduct their own risk assessment before patronizing that business. Allegations of businesses failing to act reasonably regarding the potential spread of COVID-19 have been, and likely will continue to be, the grounds on which plaintiffs will bring their claims. In one of the more well-known COVID-19-related actions, Archer et al. v. Carnival Corporation et al., 3:20-cv-02381 (N.D. Cal.), the plaintiffs, passengers on a cruise ship, asserted that the defendant corporation “knew of the unreasonably high risk of viral contagion of COVID-19 on cruise ships,” but “failed to do what a reasonably careful cruise ship owner and operator would do under the circumstances.” Accordingly, any measures that businesses can put in place to demonstrate that they are acting reasonably as they start to reopen, should help avoid liability for COVID-19-related lawsuits.

Conclusion: Stay Apprised of Changing Circumstances

The businesses that most successfully navigate reopening to the public will be those that are adaptable and those that maintain best practices to ensure the safety of employees and customers.

In sum, businesses should strive to follow government guidelines as they reopen and diligently monitor those guidelines, as they change frequently in these uncertain times. Merely following government guidelines, however, may not be sufficient to avoid potential liability for the spread of the coronavirus on business property. To best limit liability and protect their customers, employees and communities, businesses should consider implementing more stringent safety requirements, some of which are mentioned above. Finally, monitoring other businesses in the same industry and beyond may also reveal additional safety precautions that businesses can easily put in place to better protect themselves.

To help businesses navigate these uncertain times, McGuireWoods continues to monitor best practices among a variety of industries. Please contact the authors for more information regarding appropriate considerations when reopening during the COVID-19 pandemic. McGuireWoods has published additional thought leadership related to how companies across various industries can address crucial coronavirus-related business and legal issues, and the firm’s COVID-19 Response Team stands ready to help clients navigate urgent and evolving legal and business issues arising from the novel coronavirus pandemic.