Democrats in Congress are at odds with each other over whether the next congressional relief package should provide businesses with coronavirus-related liability protection, an issue Senate Majority Leader Mitch McConnell has said is essential to include in the next coronavirus relief package.
Some Democrats are willing to consider liability protections as long as the bill includes federal aid to cash-strapped states.
“There is a trade to be made — liability protection in exchange for cash for states,” said one former administration official, citing Democrats’ and some Republicans’ calls for federal aid to states. This official described the post-coronavirus world as bringing a “cornucopia” of opportunities to bring litigation.
State government employee unions are urging speedy federal relief amid plummeting state revenues, budget cuts, and furloughs.
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“McConnell will not settle for anything without liability shields,” former Senate Majority Leader and co-Chairman of Squire Patton Boggs’s Public Policy Practice Trent Lott told the Washington Examiner. Without them, “he will blow the place up.”
With McConnell’s so-called “red line” in place, Democrats are left to hash out their differences. “McConnell has set it up so that the Democrats in Congress have to negotiate between their own factions. Hopefully, the administration will have the good sense to stay still and not get in the way,” a former official said.
On Friday, the American Federation of State, County, and Municipal Employees called for “urgent” legislation in the Senate for aid to “America’s states, cities, and towns.”
President Trump is said to be solidly in favor of federal business liability protection and, in a nod to this, said last month he was “certainly OK with helping the states and helping the hospitals.”
Democratic lawmakers are under pressure from lobbying groups such as the American Association for Justice, which represents trial lawyers, to ignore calls for coronavirus-linked tort reform, which they say will shield companies from unsafe practices. Labor unions have called for bolstering emergency guidance from the Occupational Safety and Health Administration to help protect essential workers in lieu of providing liability protection to businesses.
Trade groups and business executives say litigation could stymie an economic recovery, a key priority for the administration. Trump, too, has warned of “litigation heaven,” but he maintains that he is in “no rush” to approve further spending.
Senate Judiciary Committee Chairman Lindsey Graham said during a hearing last week that liability reforms were necessary but that the government should also bring and enforce regulatory guidance. “Tell the employers what they need to do to protect the workers and hold them accountable if they don’t,” said Graham, a Republican senator from South Carolina and a Trump ally.
Law professor David Vladeck said during his testimony at the hearing that without federal guidance, the courts would “inevitably” decide the standards for litigation.
Business lobbyists want fast action. “Our litmus test for [liability protection] is whether this prevents an avalanche of lawsuits from being triggered against employers and retailers for situations during the pandemic,” said an association lobbyist. “The negotiation process is maybe not going as quickly as I would like.”
One association executive said his group had provided input to the White House “going back several weeks” and stressed the need for federal guidance as states begin to loosen stay-at-home orders “so as not to undo the hope for a restart of the economy.”
The delay was partly for practical reasons, this person said, including the need to define a regulatory standard that everybody could agree to.
Others fear being targeted in spite of the administration’s March 10 Public Readiness and Emergency Preparedness Act, which lends immunity to companies manufacturing coronavirus “countermeasures.” Ventilators are also covered under the PREP Act.
In Massachusetts, a company manufacturing personal protective equipment for healthcare workers stopped production over concerns of a potential lawsuit.
“Plaintiffs lawyers love to sue people who make protective equipment,” said torts expert Victor Schwartz. “Those who are thinking about remedial measures have to think about what would be effective and what would be politically viable.”
In a meeting of restaurant executives at the White House on Monday, chief economic adviser Larry Kudlow said liability protections for businesses were “going to be a key part of our next package.” Kudlow has often voiced support for such protections.
