Like most of the country, Pennsylvania courts were slowed in some respects by the novel coronavirus (COVID-19) pandemic over the last year. Commercial litigation cases that were set for jury trials in both the state and federal courts have been postponed for over a year and are now starting to resume. On the other hand, after only brief delays the courts continued handling bench trials and all other hearings during the pandemic via remote technology platforms, such as Zoom and Microsoft Teams. Pennsylvania courts have taken a massive leap forward with technology and efficiency, and we expect to see many aspects of remote technology continue in discovery and motion hearings as well as remote witness testimony and depositions even after the pandemic is far behind us.
A Growing COVID-19 Commercial Litigation Wave
The expected emergence of COVID-19-related commercial litigation in Pennsylvania courts has arrived and grows larger every day, with a significant number of breach-of-contract claims being filed related to defaults caused by the pandemic, most notably concerning landlord/tenant and premises-related issues. Although Pennsylvania courts did not postpone commercial foreclosures, there was little action in 2020 as landlords attempted workouts and deferred rent following tenant rent defaults during the pandemic. In 2021, hundreds of lawsuits have already been filed by commercial landlords against tenants who did not pay rent during the pandemic. The tenants are utilizing defenses to these claims under the doctrines of force majeure, commercial impracticability and frustration of purpose. There are many similar but related suits where parties are attempting to rescind contracts for services, canceled events and sponsorships, and real estate agreements due to changed circumstances or frustration of purpose caused by the pandemic.
In addition, Pennsylvania courts are seeing an increase in shareholder claims alleging false representations, misuse of federal Paycheck Protection Program funds, data breaches, and mishandling of COVID-19 precautions. Importantly, dozens of lawsuits have been filed in Pennsylvania by a variety of businesses against their insurance carriers seeking business interruption coverage and recovery of losses caused by COVID-19 and government-mandated shutdowns. Although most judicial opinions so far have favored the carriers, recent decisions in Pennsylvania have sided with policyholders against insurers—a development that warrants continued monitoring by businesses across the state.
Potential Ramifications of Data Breach Legislation
With data breaches drawing national headlines, the Pennsylvania legislature is turning its attention to potentially adopting a consumer privacy law that will impact businesses and commercial litigation. In April 2021, the Pennsylvania General Assembly reintroduced the Consumer Data Privacy Act, H.B. 1126, (PCDPA)—a broad consumer privacy bill that encompasses the use of biometric data, much like the California Consumer Privacy Act of 2018 (CCPA). The PCDPA affords consumers similar privacy rights, including the rights to access, know, delete and opt-out of the sale of their data. The PCDPA requires implementation of technical safeguards to protect consumers’ data, including 'reasonable' data security measures that must be implemented and maintained. Under the current version of the PCDPA, consumers can pursue individual or class litigation if their personal data is affected by a data breach and the entity is found to have violated its duty to maintain reasonable security measures. Consumers’ ability to pursue a private right of action under the PCDPA means businesses may face significant class action exposure if the law is enacted.
With Pennsylvania and the rest of the country emerging from the COVID-19 pandemic, the way business is conducted and law is practiced has not only been transformed, but this transformation is showing staying power. Businesses will require counsel who can help them navigate disputes and new regulations that are increasingly complex, technologically dependent and without precedent over the next year and beyond.