Governor Kay Ivey Issues Executive Order to Protect Alabama Small Business Owners  from Lawsuit Abuse Arising from the COVID 19 Pandemic

Governor Kay Ivey Issues Executive Order to Protect Alabama Small Business Owners from Lawsuit Abuse Arising from the COVID 19 Pandemic

On Friday, May 8, 2020, Governor Kay Ivey issued an Eight Supplemental Executive Order that provides a safe harbor for businesses and individuals from frivolous lawsuits arising in whole or in part from the COVID-19 pandemic, as long as they comply with or reasonably attempt to comply with public health guidance during the pandemic. Governor Ivey’s action to protect Alabama businesses is bold, visionary, and makes Alabama one of the first states in the country to take action to bolster the economic recovery effort against unnecessary threats of lawsuit abuse arising from this national and state emergency.  Thank you, Governor Ivey, for your leadership!

“I want to do everything within my authority to protect businesses as Alabama’s economy gets up and running again," Governor Ivey said. “As we resume operations, the very last thing a business owner needs to worry about is a frivolous lawsuit from responding to COVID-19. Let me be clear, this in no way shields them from serious misconduct. If someone knowingly abuses the public during a time of crisis, they should be held accountable and prosecuted as such.”

During these times of uncertainty, when the business and healthcare community is doing all it can to safely and responsibly reopen their doors; this Proclamation will help assure them that, as long they conduct their operations reasonably, they will be protected from the threat of meritless lawsuits.

A broad coalition of business groups, including the Alabama Civil Justice Reform Committee, Business Council of Alabama, Alabama Farmers Federation, the Alabama REALTORS®, Alabama Homebuilders Association, Alabama Bankers Association and others advocated for the protection of businesses, health care providers, universities, public institutions of higher education, and their employees, officers and agents, from unwarranted legal liability stemming from COVID-19.

Summary of Principal Provisions of the Proclamation

• The Proclamation provides civil immunity for “covered activities” by “covered entities” operating in Alabama from certain claims and damages relating to COVID-19, including claims that someone contracted or was exposed to COVID-19 on the premises of a business, or due to the operations or services provided by the business, or due to the provision of health care services or treatment provided by doctors, hospitals or nursing homes. Exceptions to this immunity exist only if the covered entity acted with wanton, reckless, willful or intentional misconduct and such misconduct must be proven under a “clear and convincing” evidentiary standard. Cases that do not involve death or “serious physical injury” are limited to recovering actual out-of-pocket economic damages. Punitive damages cannot generally be recovered.

• In the event of a claim accruing prior to issuance of the Proclamation, and a determination by a court that the above provisions are inapplicable to the claim, the Proclamation directs that a covered entity shall not be liable for negligence, premises liability or non-wanton conduct. Damages in these cases that do involve serious physical injury will also be limited to economic damages.

Why Was This Proclamation Needed?

•  The reasonable measures provided in this Proclamation will protect healthcare providers on the front lines of the crisis, as well as businesses struggling to keep their doors open, from the risk and expense of lawsuits associated with COVID-19.

• Businesses in all industries and areas of the state are facing major financial damages from the sudden, all-consuming effect of Coronavirus from which it could take years to recover. These businesses, especially those in the small business community, cannot afford to be exposed to additional financial injury incurred through costly lawsuits resulting from an unprecedented pandemic and circumstances outside of their control.

What type entities are covered under the Proclamation? 

Entities covered under this Proclamation include businesses, nonprofits, LLCs, health care providers, educational entities, churches, governmental entities, and cultural institutions operating in this state, as well as individuals associated with these entities.

Who is included as individuals associated with an entity and covered under this Proclamation?

Any director, officer, trustee, manager, member, employee, or agent with respect to any act or omission performed while acting on behalf of the covered entity.

How can a business ensure it is covered under the civil immunity provisions in this Proclamation?

The best way to avoid COVID-19 liability is for covered entities to operate in a manner that is reasonably consistent with applicable public health guidance in order to show that they are not acting recklessly. The Proclamation will assist businesses and healthcare providers because perfection in this time is impractical but using reasonable best efforts should shield covered entities from liability.

Is Legislation Necessary? 

Yes, the Proclamation will expire when the state of emergency is ended. Currently that date is July 12, 2020 unless the Governor determines to extend it again. In a special legislative session, the legislature will need to act quickly once the emergency order expires so that there is not a “gap” in the law leaving businesses and healthcare providers exposed to unchecked liability concerns.

Legislation to address this issue was filed during the last week of 2020 Regular Legislative Session in the Alabama Senate. The legislature adjourned prior to considering the bill. Senate bill 330 was sponsored by twenty-four Senators including:

Senator Arthur Orr; Senator Cam Ward; Senator Greg Albritton; Senator Jabo Waggoner; Senator Jack Williams; Senator Randy Price; Senator Clay Scofield; Senator Will Barfoot; Senator Larry Stutts; Senator Garlan Gudger; Senator Clyde Chambliss; Senator Dan Roberts; Senator David Sessions; Senator Gerald Allen; Senator Steve Livingston; Senator Greg Reed; Senator Del Marsh; Senator Tom Butler; Senator Jimmy Holley; Senator Andrew Jones; Senator Chris Elliott; Senator Donnie Chesteen; Senator Sam Givhan; Senator Tom Whatley. Several other Senators were supportive of the legislation but were unable to attend the final days of session.

Thank you to all of these Senators for standing up for Alabama’s small businesses.