The swift action of the New York state governor and the courts to help prevent the spread of the coronavirus (COVID-19) has dramatically decreased litigators’ workloads and led us to ask what’s next. In particular, what’s next for us?
Just one week ago, on March 16, at 5 p.m., New York state courts closed their doors for everything except essential functions, pursuant to a directive issued by Chief Administrative Judge Lawrence K. Marks. Next came a March 19 administrative order urging state court litigants affected by the coronavirus to stipulate to postponing procedural deadlines, including for discovery and dispositive motions.
The following day, Governor Cuomo suspended all specific time limits “for the commencement, filing or service of any legal action [or] motion,” tolling them until April 19. On Sunday, March 22, county clerks were directed not to accept paper or electronic filings in anything except a narrow list of “essential” matters. So, what’s a litigator to do when courthouses are closed?
Even outside the courthouse, litigators serve an important function. Representing clients in pending lawsuits is only half the picture. We also counsel clients on how to avoid litigation or governmental action – and that’s what our clients need now. Since declaring a state of emergency for the entire state, Governor Cuomo has issued nine executive orders, several of them superseding or modifying the ones that came before.
We can help our clients not to run afoul of the dizzying array of new legal restrictions or their current contractual obligations. Here is a checklist of issues to discuss.
- Whether a business is essential. Executive Order 202.8 requires that, starting March 22 at 8 p.m., all workers stay home, unless they work for essential businesses. In a companion document, the governor identified 12 categories of essential businesses. Some are obvious, such as health care operations, including hospitals, labs, and nursing homes; essential retail, including grocery stores and pharmacies; and financial institutions, including banks. Others leave more room for interpretation, such as “essential services necessary to maintain the safety, sanitation and essential operations of residences or other essential businesses” and “vendors that provide essential services or products, including logistics.”
- How much of a business’s functions are essential. Some businesses might serve both essential and non-essential functions. Only essential functions are exempt from the in-person restrictions. A tip of the hat to the New York State Association of Criminal Defense Lawyers, which reports receiving an official advisory from the state that “law firms and other providers of legal services are essential businesses only to the extent that their services are currently needed to support the essential functions of health care providers, utilities, state and local governments, the federal government, financial institutions, businesses that have been designated as essential; or to support criminal defendants in court proceedings or individuals in emergency family court proceedings.”
- Whether a business needs to apply for designation as essential. Businesses that fall under the 12 categories identified by the governor do not need apply to be designated essential. Other businesses may submit a request to Empire State Development, the state’s economic development agency . Businesses with only one on-site employee are automatically exempt and do not need to submit a request.
- What the penalties are for non-essential businesses that stay open. Any business that violates the in-person restrictions is subject to the same penalties imposed by Section 12 of the Public Health Law, which provides for a fine of between $2,000 and $10,000 per violation.
- Whether employees affected by COVID-19 get paid sick leave. On March 18, Gov. Cuomo signed legislation guaranteeing sick leave for employees under orders of quarantine or isolation due to COVID-19. Employers above a certain number of employees or amount of net taxable income must provide paid sick leave. The governor’s web site has guidance for employers and employees.
- Contractual force majeure clauses. In addition to complying with the new legal framework, clients will want to know what liability they will face from failing to perform contractual obligations because their businesses have temporarily closed. Under New York law, force majeure clauses, which commonly excuse performance in the case of “Acts of God” or “action by government”, are narrowly construed. Reviewing the specific language of the client’s contracts is key.
- Whether contractual performance is legally impossible. Not every contract has a force majeure clause. Under that circumstance, the common law doctrine of impossibility of performance or frustration of purpose can provide a defense. If government action has rendered performance impossible because to do so would violate the law, neither party may be required to fulfill the contract.
New developments occur daily as Gov. Cuomo puts New York “on pause,” as he has spelled out elsewhere, in an effort to stop the spread of contagion. The only thing certain is change. Let’s commit to giving our clients the legal assistance they require in these trying times.
Katharine Smith Santos is a commercial litigation and real estate attorney with Lynn Gartner Dunne, LLP in Mineola, New York. She is also a published author, who formerly worked as a journalist, blogger, and public speaker.