The Pandemic Special with a Side of Shut-Downs: A Note on NYC's Restaurants in the Age of COVID-19

Abstract

There is an old phrase that resonates from time immemorial throughout the streets of
New York City: carpe diem. Latin for “seize the day,” the Roman poet Horace used the phrase to
express the attitude of enjoying life for as long as one still can.1 The streets of New York City
invite all of its walkers to partake in the celebration, by offering endless bars and restaurants to
explore. This feeling is irresistible when walking around Downtown, in search of hidden gems.
Even a busy lunch hour in Midtown is filled with a wonderous array of diverse cultural foods
that some locals have mastered. Yet there is a good reason why Horace emphasized enjoying life
while one still can: like waking up from a dream, it can all be gone in an instant. In 2020, when
the “invisible enemy” turned New York City into a ghostown almost instantaneously, the
restaurant industry descended into chaos, and the timeless lesson emerged once again.
SARS-CoV-2 is the virus causing the coronavirus disease (COVID-19).2 The World
Health Organization (WHO) stated the virus originated in Wuhan, China.3 On March 11, 2020,
the WHO declared COVID-19 a global pandemic.4 On the day of this declaration, New York

City reported its first COVID-19 associated death.5 Three weeks after the discovery of the
coronavirus, NYC accounted for 5% of the world’s confirmed cases, rendering the region a
global epicenter.6 By May 2, 2020, New York City recorded 13,831 COVID-19 deaths, and
estimated an additional 5,048 probable deaths.7
COVID-19 is infamous for its lethal effects: the Center for Disease Control listed Covid-
19 symptoms that include “fever or chills, cough, shortness of breath or difficulty breathing,
fatigue, muscle or body aches . . . . ”8 For individuals who are at higher risk of severe illness
(young children, the elderly, and those with compromised immune systems), COVID-19 is
deadly.9 Globally, and as current as January 2021, the WHO reported 98,794,942 confirmed
cases, and over two million deaths.10
When the pandemic struck the State of New York in March 2020, Governor Cuomo
signed Executive Order No. 202, declaring a state of emergency.11 Shortly afterwards, the
Governor signed the “New York on PAUSE” Executive Order, requiring all nonessential
businesses to shut down.12 Subsequent guidance clarified the meaning of “essential businesses,”
which did not include restaurants.13

The COVID-19 crisis in New York City eviscerated most restaurants’ capacities to
conduct their ordinary business activities.14 Even when New York City (“NYC”) began entering
its reopening phases, the economic ramifications of COVID-19 and the Executive Orders
continued to pose unprecedented hardships for restaurants.15 Given the substantial health risks of
resuming restaurant work amidst a global pandemic, many restaurant owners concluded that
reopening their businesses would be an unprofitable and dangerous affair. Accordingly, many
restaurant owners diligently, although with great sadness, elected to close shop permanently.16
Commercial rent in Midtown Manhattan and throughout New York City is expensive.17
Rent may be as high as thousands of dollars per square foot.18 As such, the pandemic caused
landlords great angst about lost income, and many began pestering small business owners for
rent.19 Beyond pestering, landlords launched a brigade of lawsuits to recover rent owed.20
This crisis raises complicated questions of contract and property law regarding
commercial leases in the event of unforeseeable emergencies: should defendants in breach of
contract lawsuits be required to pay rent when performance of the paramount contractual terms,
e.g., operating a business safely, are no longer possible? Does a global pandemic constitute an
“act of God” capable of triggering force majeure clauses? And in the absence of such clauses,
can the common law doctrines of impossibility of performance or frustration of purpose rise up
to the defense of the small business owner? Can the State and City of New York solve this matter
through legislation and ordinances? This Note explores these questions, while prescribing the
need for force majeure clauses in every restaurant’s lease that clearly define pandemics, and
perhaps other imminent natural disasters as triggering events, as the most powerful prospective
solution.

This Note proceeds as follows: Part I discusses relevant background information
concerning COVID-19’s impact on New York City from public health, economic, and
administrative perspectives. Part I also unpacks the federal CARES Act, examining some of its
economic relief programs, as well New York City’s local ordinances and their efficacies. Part II
analyzes the common law doctrine of force majeure and its applicability to the COVID-19 crisis.
Part III examines the usefulness of the impossibility of performance doctrine, as an alternative to
force majeure. Part IV proposes mandatory force majeure legislation and tests its constitutional
dimensions. Lastly, this Note will summarize the major arguments and themes, and will
reemphasize the policy considerations of protecting small restaurant owners from unjust
enrichments in the COVID-19 context.