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Expect Delays: Pandemic Slows Fund Litigation, Puts Trials on Pause

FInancial Times/Ignites—Beagan Wilcox Volz

The wheels of justice usually turn slowly, but the Covid-19 pandemic has put the brakes on litigation of all types, including fund-related lawsuits and 401(k)-fee cases, lawyers say.

Though proceedings in many existing cases have been delayed, plaintiffs are still filing new securities lawsuits and 401(k)-fee cases, court documents show.

Individual state and federal courts have taken different measures to slow the spread of coronavirus, but many have suspended trials and are conducting hearings remotely via video conferences and phone calls.

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“Populations identified by the [Centers for Disease Control and Prevention] who are particularly vulnerable include many members of the public who form our jury pools, members of our Bar, court staff, and judges,” the order states.

The federal courthouse in Rome, Ga., which is within the Northern District of Georgia, was closed last week after a court security officer was hospitalized with Covid-19 symptoms, Courthouse News Service reported. The courthouse has since reopened but access has been restricted.

Two other federal courthouses have also closed after authorities confirmed that someone working at each had the virus, ABC News reports. Those courthouses are in the Middle District of Pennsylvania and the District of Delaware.

But the pandemic-related measures courts are taking are unlikely to slow the filing of new lawsuits, lawyers say.

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There may also be an uptick in employment cases against companies of all kinds, including asset managers, says Sally Abrahamson, a partner at Outten & Golden and head of the class action practice for the D.C. office.

Some of those claims will be related to layoffs, Abrahamson says.

Unemployment claims are expected to soar as a result of the pandemic. About 1.5 million people filed for unemployment during the week ended March 21, according to Bloomberg projections. This marks the highest number since October 1982.

“Employers need to be really careful that they’re making fair and lawful decisions” and ensure that layoffs are done “without bias or based on discrimination,” she says.

Employees could also bring lawsuits or file arbitration claims if their employers have required them to go to work despite work conditions that could have exposed them to coronavirus, Abrahamson says.

Sick leave is likely to be another area of dispute, she says.

“I think you’re going to see workers a lot braver than they may have been in the past because the stakes are just so high right now,” she adds.

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