May 14, 2020

Do State Executive and Emergency Orders Offer Any Product Liability Protection Amidst the COVID-19 Outbreak?

As companies continue to produce, modify, and/or distribute essential medical equipment and supplies to support efforts to fight the COVID-19 outbreak, questions about whether these companies may be subject to liability linger.

We previously analyzed the protections state Good Samaritan laws may provide to companies contributing to the fight against the virus. This time, we conducted a survey of the Executive and Emergency Orders executed by governors and legislatures in all 50 states and Washington, D.C. to assess whether companies may look to these executive actions to immunize activities such as making, modifying, and/or distributing equipment and products needed to combat COVID-19.

While some states have extended protections for health care workers or health care facilities, either through the declaration of express immunities1 or through relaxation of licensure requirements for these individuals and facilities (enabling more health care workers to provide aid at this time),2 many of the orders adopted by state governors in response to the COVID-19 emergency do not provide or extend immunities to companies undertaking activities to fight the virus.

Five states, however, have implemented orders extending protections to companies that provide equipment and materials to the frontline efforts against COVID-19. Below is a discussion of each of these states’ relevant orders and an analysis of how they may insulate companies from future liability.

Connecticut

Connecticut Gov. Ned Lamont took significant steps in Executive Order No. 7O, signed March 27, 2020, to provide unregistered manufacturers the opportunity to create hand sanitizer and produce medical devices — including personal protective equipment — to meet the state’s significant demands. In an effort to ensure the state has quick access to essential goods, Executive Order No. 7Z, signed April 14, 2020, further provides state contracting agencies the option to waive certain identified statutory requirements if necessary to expedite procurement of essential products.

Specifically, the Orders modify or suspend the following statutory provisions:

  • Conn. Gen. Stat. § 21a-70(b) (“Registration of Manufacturers and Wholesalers of Drugs”) — Modified, with several restrictions, to allow unregistered manufacturers the opportunity to create alcohol-based hand sanitizer and produce medical devices, including personal protective equipment used to assist in the prevention and treatment of COVID-19
  • Conn. Gen. Stat. § 28-9(b)(1) (“Governor’s Powers”) — Allows the head of a state contracting agency to waive certain identified statutory provisions if he or she deems the waiver necessary to expedite procurement of “essential goods”

At a time when many companies’ operations are limited or entirely closed, these Orders provide unregistered manufacturers an opportunity to produce products in high demand due to the COVID-19 pandemic.

Kentucky

Kentucky Gov. Andy Beshear signed Senate Bill No. 150 on March 30, 2020, which provides qualified immunity for certain manufacturers that begin to make or supply hygiene supplies and personal protective equipment in response to COVID-19. The bill states that any Kentucky business “that makes or provides personal protective equipment or personal hygiene supplies relative to COVID-19, such as masks, gowns, or sanitizer, during and in response to the state of emergency,” and which “does not make or provide such products in the normal course of its business[,] shall have a defense to ordinary negligence and product liability” claims, provided “the business has acted in good faith and in an ordinary, reasonable, and prudent manner in the same or similar circumstances.”

This law applies to hygiene supplies and personal protective equipment related to COVID-19. It provides qualified liability protection against negligence and product liability claims, so long as the manufacturer or distributor acted “reasonably” and “in a prudent manner” under the circumstances. It is also important to note that these protections are tailored for manufacturers who begin to provide supplies and equipment in response to COVID-19, and not for manufacturers who make or distribute these materials in their normal course of business.

North Carolina

The North Carolina legislature passed Session Law 2020-3 on May 4, 2020 to provide immunity from certain civil claims for essential businesses and emergency response entities providing goods or services in North Carolina. “Essential businesses” are defined to include manufacturers, distributors and supply chain companies for critical products and services. Examples of “critical products and services” include “pharmaceutical, technology, biotechnology, healthcare, chemicals and sanitation, waste pickup and disposal, agriculture, food and beverage, transportation, energy, steel and steel products, petroleum and fuel, mining, construction, communications, as well as products used or commonly sold by other COVID-19 Essential Businesses and Operations.” This immunity extends to “claims from any customer or employee” alleging “injuries or death alleged to have been caused as a result of the customer or employee contracting COVID-19 while doing business with or while employed by the essential business.”

This law also provides immunity from civil liability for “emergency response entities,” which include “businesses . . . that manufacture, produce, or distribute personal protective equipment, testing equipment, or ventilators, or process COVID-19 testing results.” The immunity includes claims by “any customer, user, or consumer” alleging “injuries or death to have been caused as a result of the COVID-19 pandemic or while doing business with the emergency response entity.” The immunity from civil liability for both essential businesses and emergency response entities “shall not apply if the injuries or death were caused by an act or omission . . . constituting gross negligence, reckless misconduct, or intentional infliction of harm.”

Session Law 2020-3 addresses an issue on the minds of many manufacturers and distributors in providing liability protection for the transmission of COVID-19. We have already seen lawsuits based on COVID-19 transmission in other jurisdictions, and the number of these claims is likely to significantly increase. This law also provides potential defenses to broader claims against emergency response entities by customers, users and consumers alleging injuries “as a result of the COVID-19 pandemic” or incurred “while doing business with the emergency response entity.” Although these phrases may provide immunity beyond COVID-19 transmission, their limits are undefined and have not been interpreted by the judiciary.

Washington

Washington State Gov. Jay Inslee has instituted new protections for companies that manufacture and distribute hand sanitizer. In Proclamation 20-36, issued March 30, 2020, Governor Inslee found that “strict compliance” with certain “statutory and regulatory obligations or limitations on the manufacture and distribution of hand sanitizer will prevent essential workers in Washington State from meeting the demand for essential services required during the COVID-19 State of Emergency.” As a result, Proclamation 20-36 “waived and suspended” certain statutory provisions through “midnight on April 29, 2020.” Governor Inslee has since extended these waivers and suspensions until the termination of the Washington State “COVID-19 State of Emergency or May 9, 2020, whichever occurs first.”

The following statutory provisions have been waived and suspended:

  • RCW § 18.64.020 (“Licensing Required.”) — Relating to pharmacy licensing requirements
  • RCW § 18.64.044 (“Shopkeeper’s Registration—Penalty. . .”) — Relating to shopkeeper registration and licensing requirements, including penalties for failure to register for various activities
  • RCW § 18.64.045 (“Manufacturer’s license—Fees—Display—Declaration of Ownership and Location—Penalties”) — Relating to licensing requirements for manufacturers of drugs and penalties for failure to do so
  • RCW § 18.64.250(1),(2) (“Unlawful Practices—Penalty for Violations—Exceptions”) — Relating to penalties for unlicensed pharmacists and the dispensing of prescriptions, drugs, medicines or poisons by an unlicensed pharmacist

Proclamation 20-36 expressly limits the waiver and suspension of these statutory provisions to “the manufacturing, distributing, selling, and donating of hand sanitizer.”

If your company manufactured, distributed or sold hand sanitizer in Washington State in March, April and early May 2020, Proclamation 20-36’s suspension of certain statutory requirements may provide additional liability protection for your company’s activities. These protections may be particularly useful to a company that did not usually manufacture or distribute hand sanitizer, but began doing so in response to COVID-19.

Wisconsin

Wisconsin Gov. Tony Evers issued Emergency Order #32 on April 23, 2020, which affords various protections to manufacturers, distributors and suppliers providing PPE and other medical supplies to Wisconsin’s alternative care facility (ACF) during the COVID-19 crisis. Emergency Order #32 provides, in relevant part:

  • All persons who provide equipment, materials, facilities, labor, or services in the planning, construction, staffing, maintenance, support or operation of the ACF do so at the direction of the governor and Department for purposes of Section 323.45(1) of the Wisconsin Statutes.
  • All persons who provide equipment, materials, facilities, labor, or services in the planning, construction, staffing, maintenance, support or operation of the ACF do so in response to the public health emergency declared by Gov. Tony Evers on March 12, 2020, via Executive Order 72, any extension or subsequent emergency declaration related to COVID-19, the federal emergency declared by President Donald Trump on March 13, 2020, or any subsequent federal emergency declarations related to COVID-19, for purposes of Section 323.45(1)(b) of the Wisconsin statutes.

Section 323.45(1) of the Wisconsin Statute provides immunity for persons who provide equipment, materials, facilities, labor or services when certain qualifiers are satisfied. The person must do so under the direction of the governor, and in response to a state of emergency declared by the federal government or state governor. Under these circumstances, persons who provide equipment, materials, facilities, labor or services are afforded immunity from liability for “death of or injury to any person or damage to any property caused by his or her actions.” The immunity does not apply if the person’s act or omission involved reckless, wanton or intentional misconduct.

Accordingly, manufacturers, distributors or suppliers who provide equipment, materials or services in the planning, construction, staffing, maintenance, support or operation of Wisconsin’s ACF will be immune from civil liability for any deaths or injuries that are caused by such actions.

Conclusion

If your company is looking for added protections to manufacture, modify or distribute products, including PPE and other medical supplies, in response to the pandemic, it is unlikely you will find immunity from civil liability in individual state executive and emergency orders. Only five states have implemented such protections by way of executive or emergency order or legislation, while the majority have remained silent. When states have extended liability immunity by executive order, the immunity usually only extends to health care providers and facilities, and fails to encompass supply chain entities. Thus, unless a manufacturer, distributor or supplier is located in Connecticut, Kentucky, North Carolina, Washington or Wisconsin, the likelihood that they can avail themselves of some liability protection through executive or emergency order is low, and they should proceed accordingly.

  1. Alaska, Arizona, Arkansas, Delaware, Georgia, Hawaii, Illinois, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Mississippi, New York, Pennsylvania, Rhode Island and Virginia.
  2. California, New Hampshire, New Mexico, South Dakota, Tennessee, Texas and West Virginia.

As the number of cases around the world grows, Faegre Drinker’s Coronavirus Resource Center is available to help you understand and assess the legal, regulatory and commercial implications of COVID-19.

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