Restaurant’s Challenge to COVID-19 Declarations Could Go to Bankruptcy Court
A lawsuit filed by Allegheny County and the Allegheny County Health Department (“ACHD”) against The Cracked Egg, LLC may be transferred to the United States Bankruptcy Court for the Western District of Pennsylvania. The Cracked Egg is a restaurant located in Allegheny County, Pennsylvania. Following an investigation by the ACHD in August, the restaurant was ordered to close because it did not comply with mask or facial coverings guidelines.
The ACHD filed a state court civil complaint and emergency motion for preliminary injunction against the restaurant. The Cracked Egg then filed a federal lawsuit against the County and the ACHD alleging that emergency orders and disaster emergency declarations issued by Governor Tom Wolf are unconstitutional and caused harm to the restaurant. The lawsuit asks the court to enter a declaratory judgment that the emergency orders are unconstitutional, stop the imposition of further violations, attorney’s fees and other damages.
Thereafter, The Cracked Egg filed for Chapter 11 bankruptcy in federal court. The restaurant also filed a notice of removal of the state court matter to the Bankruptcy Court for the Western District. The restaurant’s motion seeking referral to the bankruptcy court claims, among other things, that any rulings in the state court action will directly affect the bankruptcy case and, therefore, that court should hear both matters.
With COVID-19 cases on the rise, additional safety restrictions being implemented in states across the country, and a focus on compliance with regulations, more businesses might be filing similar actions seeking relief from violations of the Commonwealth’s and other states’ emergency orders.