5 New Legal Risks for Product Manufacturers During COVID-19

The manufacturing industry faces unique challenges resulting from the COVID-19 pandemic as companies work to keep line and other onsite workers safe, resolve supply chain shortages threatening to close down plants, and respond to tremendous upheavals in consumer spending habits and product demand.

COVID-19 has also affected the legal landscape for manufacturing companies, with new potential areas of exposure, as well as new risk-management and litigation strategies related to the following claims and actions.

What Manufacturers Need to Know

1. Product Liability Litigation

Although manufacturers generally have yet to see product liability claims alleging a person contracted or was exposed to COVID-19 as the result of a defective product, companies should expect to see the full gamut of product liability claims filed against them as statutes of limitation begin to expire, including claims alleging that products were defectively designed, manufactured, and/or accompanied by faulty warnings and instructions, that manufacturers acted with negligence in preparing and marketing products, and that manufacturers breached their warranties surrounding or intentionally misrepresented products’ characteristics and abilities.
 
Manufacturers facing product liability claims may be able to avail themselves of the various statutory defenses aimed at limiting liability for COVID-related products—including the federal Public Readiness and Emergency Preparedness Act—which preempts COVID-19-related claims involving FDA-approved products designed to combat COVID-19, among others. Additionally, many state and local governments are enacting their own COVID-19 safe-harbor laws shielding businesses from COVID-related claims where CDC, state, and local health guidance was followed. Although the specifics of the defenses vary by statute, some explicitly apply to product manufacturers and shield them from product liability claims under certain circumstances.
 
2. Consumer Protection Claims

Manufacturing companies have already faced lawsuits alleging their marketing statements violated state consumer protection statutes, including a slew of lawsuits against manufacturers and sellers of hand sanitizers nationwide. Several such proposed class actions were consolidated in the United States District Court for the Northern District of Ohio in Aleisa v. GOJO Indus., Inc., where they were ultimately dismissed with prejudice in May 2021 for lack of standing to bring suit. The impact of the Aleisa court’s ruling will soon be seen as putative consumer protection class actions continue to be filed against manufacturers of other COVID-related products in different jurisdictions.
 
3. Government Enforcement Actions

Manufacturing companies should also anticipate potential governmental actions aimed at representations regarding products’ ability to prevent, diagnose, or treat COVID-19. Collectively, the FTC and the FDA have issued hundreds of warning letters to companies regarding products related to COVID-19.
 
Additionally, in December 2020, the United States Congress passed the COVID-19 Consumer Protection Act, which “makes it unlawful...to engage in a deceptive act or practice in or affecting commerce associated with the treatment, cure, prevention, mitigation, or diagnosis of COVID–19 or a government benefit related to COVID–19.” Manufacturing companies should be mindful of the Act as a potential source of liability, take extra care when making any representations related to their products and the COVID-19 virus, and be sure all representations are based on reliable scientific data, like controlled studies.
 
4. Unsafe Work Environment Claims

Because most manufacturing facilities necessarily require workers to be physically present on site, the companies that operate those facilities also face potential unsafe work environment claims. Workers across the country have filed claims in similar contexts—to date mostly against food companies—alleging they and/or their loved ones at home contracted COVID-19 as a result of unsafe working conditions. In one notable case, Ek v. See’s Candies, Inc., Case No. 20STCV49673 (Cal. Super. Ct. Dec. 30, 3030), a worker’s claims that she contracted the virus at work and brought it home to her husband, who died, were allowed to go forward.

Additionally, OSHA's general duty clause requires employers to provide a safe and healthy workplace free from recognizable hazards, and OSHA’s guidance on higher-risk workplaces expressly applies to manufacturing facilities where social distancing may not always be practical. OSHA’s best practices for such environments include staggered break times, mask requirements, and increased ventilation. Employees dissatisfied with their manufacturing employer’s efforts to provide a safe and healthy workplace have filed thousands of OSHA complaints to date, resulting in more than $4M in fines following hundreds of inspections. Although most of these citations have been issued to employers in the healthcare and congregate living facilities industries, manufacturers have not been immune.

OSHA’s guidance to provide a safe workplace takes on new significance as the agency is poised to issue a new emergency temporary standard that will require employers with 100 or more employees to ensure that their workforce is fully vaccinated or require unvaccinated employees to undergo weekly COVID-19 testing, impacting more than 80 million private sector workers. This new mandate comes at the same time that manufacturers are experiencing a bleak labor shortage. The tension between the obligation to comply with applicable law and provide a safe workplace on the one hand, and the practical need to maintain a steady employee base on the other, will continue to pose challenges for the manufacturing sector for the foreseeable future.

5. Supply Chain Disputes

As COVID-19 continues to cause shutdowns and travel embargoes affecting manufacturing facilities worldwide, many companies face shortages and other supply chain disruptions that dramatically impact their bottom line. Determining responsibility for bearing those losses depends heavily on the facts of each case and the nature and language of the relevant agreement, but manufacturing companies seeking to enforce supply-chain obligations through civil litigation will need to overcome sympathy towards the widespread effects of the pandemic on global operations. At least one court has recognized that the pandemic may excuse failure to supply goods due to supply chain shortages. See JVIS-USA LLC v. NXP Semiconductors USA Inc., Case No. 4:21-cv-10801-DSS-APP (E.D. Mich. April 16, 2021).

We Can Help
Maslon’s Litigation and Employment Groups can help manufacturing clients navigate this new era of risk management amid COVID-19. We welcome your questions.