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Prop. 65 Point-of-Sale Warnings Expiring for BPA in Food and Beverage Products

The California Proposition 65 regulation allowing a point-of-sale warning for bisphenol-A (BPA) in food and beverage products expires on December 30, 2017.  After that date, retailers and manufacturers likely cannot rely on the point-of-sale warning, and may have to rely instead on product label or shelf warnings, or reformulation of food containers without BPA.

California’s Office of Environmental Health Hazard Assessment (OEHHA) has refused to extend the regulation, on grounds that manufacturers have had sufficient time to phase out use of BPA.  OEHHA’s refusal has been appealed to the California Environmental Protection Agency and the Governor’s Office, but is likely to stand.

Therefore, after December 30th, retailers could be held liable for the sale of products containing BPA unless a Proposition 65 compliant warning is provided. While the safe harbor level for dermal exposure to BPA is less than 3 micrograms per day, there is no safe harbor threshold for

Restaurants vs. Apparel: A Different Recipe for Restructuring a Retail Footprint

With the holiday season now upon us, analysts are closely watching the restaurant industry, particularly the casual dining segment. Reminiscent of the conditions in 2008-2009, many are speculating whether the increase in online consumer shopping that served as a catalyst for the current “Retail Apocalypse” will reduce crucial holiday shopper foot traffic and push some teetering dining chains over the edge.

In the first half of Q4 2017 alone, there were at least three Chapter 11 filings by national and regional casual dining chains, including Romano’s Macaroni Grill and Vasari LLC, the second largest franchisee of Dairy Queen franchises. In Q2 2017, Ignite Restaurant Group commenced its Chapter 11 cases to conduct a 363 sale process for Joe’s Crab Shack and Brick House. Meanwhile, industry commentators are keeping a close watch on some household name chains and other mid-market brands such as Bravo Brio and Bertucci’s.

Following in the footsteps

Don’t Get TARRed: FTC Continues to Scrutinize Misleading Marketing and Sales Methods

November 22, 2017

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The Federal Trade Commission has taken Tarr, Inc. and 18 other entities to task for fake news, unsubstantiated advertising claims, and fake celebrity endorsements.

A stipulated order for permanent injunction and monetary judgment announced on November 15, 2017 imposes a $179 million penalty against the online marketer on charges it sold weight-loss, muscle-building, and wrinkle-reduction products to consumers using unsubstantiated health claims, fake magazine and news sites, bogus celebrity endorsements, and phony consumer testimonials.

The injunction includes, among other things:

  • A permanent ban on the use of negative option features to sell dietary supplements, cosmetics, foods or drugs, products sold on a trial or sample basis, or products that are sold as add-ons when consumers purchase other products. Negative options occur when a customer accepts a supposedly free trial offer, but is enrolled in a continuity program, through which they are charged for the initial supply of products if

Online Retailers Beware: Court Holds Website Violates ADA Despite Lack of Physical Store

Courts across the country continue to weigh in on the issue of website accessibility. Last week, the U.S. District Court for the District of New Hampshire denied a motion to dismiss filed by online food delivery servicer Blue Apron.  In denying the motion, the court found that Blue Apron’s website is a place of public accommodation – despite the fact that Blue Apron operates only online and has no traditional brick and mortar locations. Access Now, Inc. v. Blue Apron, LLC, Case No. 17-cv-00116, Dkt. No. 46 (D. N.H. Nov. 8, 2017).

In so finding, the court relied on binding precedent in the First Circuit, and noted that other Courts of Appeals, namely the Third, Fifth, Sixth and Ninth Circuits, have held that in order to be considered a “public accommodation,” an online business must have a nexus to an actual, physical space. Id. at pp. 9-10.  This decision highlights

Time is Running Out for Retailers to Register DMCA Agent, Preserve Safe Harbor Protections

Retailers who host third-party content and comments on their websites have until the end of 2017 to register as internet service providers through the new online system in order to preserve their protections under the Digital Millennium Copyright Act’s (“DMCA”) safe harbor provisions. The online system launched about a year ago, and if service providers do not register before the end of 2017, any designations submitted before December 2016 will expire and become invalid, which could result in a service provider losing the safe harbor protections.

Previously, agent designations were submitted to the Copyright Office in paper form.  The Copyright Office would then make those forms available through an online index of internet service providers.  The paper-generated directory contains significant inaccuracies and outdated information.  Under the new system, DMCA agents are required to register through the online system, and update their contact information to renew their designations at least every three

States Urge Reversal of Physical Presence Rule That Bars Collecting Sales Tax From Online Retailers

November 16, 2017

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Thirty-six state attorneys general, most recently joined by California and Hawaii, have filed an amici curiae brief urging the U.S. Supreme Court to reconsider the “physical presence test”.  The test requires that a retailer have a physical presence within a state before being subject to the collection of sales and use tax by such a state.

The test was established by the 25-year-old case of Quill v. North Dakota, long before the existence of online retailers and e-commerce, as we know, today.  The crux of the argument against the physical presence test is that out-of-state online retailers that sell goods to in-state residents receive an unfair pricing advantage over in-state retailers because the out-of-state online retailers are not required to collect sales or use tax from the customer.

The attorneys general filed the brief in support of a petition submitted by the state of South Dakota asking

Dollar Tree Wins California Pay Stub Class Action

November 10, 2017

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Dollar Tree Wins California Pay Stub Class Action

November 10, 2017

Authored by: Bryan Cave and Traci Choi

A California federal jury has returned a verdict in favor of Dollar Tree in Francisca Guillen v. Dollar Tree Stores, Case No. 2:15-cv-03813, finding that providing pay stubs on cash register receipts did not violate state law requiring accessible wage statements.

Plaintiff Francisca Guillen filed the lawsuit in the Central District of California representing a class of 5,400 retail employees, alleging that workers had to print their direct deposit wage statements from the cash registers, rather than receiving a paper statement or having an online portal. Guillen further complained that corporate workers of Dollar Tree had access to wage statement information on the company’s website.

Dollar Tree successfully defended its practices, contending that its register stub system was designed to be convenient and free for store associates, who may not have access to the internet or a printer at home. Further, the register statements included all of the information required

California Proposition 65 Actions Expected to Target Furfuryl Alcohol in Food and Beverages

The next wave of lawsuits involving California Proposition 65 and food products may allege exposure to furfuryl alcohol, a chemical commonly found in a wide variety of thermally processed foods and listed as a carcinogen under Proposition 65. The warning requirement for furfuryl alcohol took effect on September 30, 2017.  As of the date of this post, there have been no 60-day notices alleging exposure without a warning. Given the prevalence of this chemical, however, future enforcement actions seem likely.

Furfuryl alcohol forms when amino acids react with sugar in a process known as the “Maillard reaction” that gives many foods a golden brown color.  Much like acrylamide, which has been the subject of numerous 60-day notices and lawsuits, furfuryl alcohol can be found in a wide variety of foods, including:

  • baked goods
  • coffee
  • pasteurized milk
  • alcoholic beverages such as wine and beer
  • ice cream
  • juice beverages
  • toasted nuts

Master Servicer Agreements Can Streamline Contracting, but Steer Clear of Pitfalls

Retailers often use master service agreements (“MSAs”) to repeatedly contract for the same services.  MSAs spell out most but not all of the terms between the parties. Their purpose is to speed up and simplify future contracts because the initial negotiation process is done once, at the beginning of the relationship.

Retailers should keep the following mind when preparing and using MSAs:

  • A MSA may not be appropriate for all projects. MSAs are usually generic. The terms may or may not be appropriate for each project.
  • Have as few MSA forms as possible.
  • Standardize MSA terms among parties working on the same project to minimize conflicts in common terms (especially indemnity provisions).
  • Specifically state that field personnel are not permitted to agree to any fundamental changes in the risk allocation scheme for a particular operation or job.
  • Additional terms may need to be added for highly specialized projects or scopes of work.

NYC Retailers Beware: Asking About Applicants’ Salary History Prohibited by Law

Beginning October 31, retailers and other employers in New York City will be prohibited from asking job applicants about their previous salary. The legislation is aimed at breaking the cycle of wage inequality affecting women and people of color by requiring employers to base compensation on the applicant’s qualifications, not previous salary.

Which businesses are covered by the law?

Any employer which employs at least one employee in New York City is covered.

What type of job applicants are protected by the law?

All new hires, regardless of whether they are applying for full-time, part-time, or internship positions are covered.  The law does not apply to an employer’s current employees applying for an internal transfer or promotion in the same company.

What is the employer banned from doing?

No Inquiry: Employers may not ask candidates about their salary history (previous salary, benefits, and other types of compensation) at any

California Enacts New Law Expanding Parental Leave to Small Employers

California Governor Jerry Brown has signed a new law that extends twelve weeks of unpaid parental leave to California employees who work for small businesses, including retailers.  The New Parent Leave Act applies generally to California employers with at least 20 and no more than 49 employees.  The practical effect of the Act is to expand the parental leave required under the federal Family and Medical Leave Act (FMLA) and the California Family Rights Act (CFRA) to smaller employers.  The new law takes effect on January 1, 2018.

Under the New Parent Leave Act, an employee may take up to twelve weeks of unpaid parental leave within one year of a child’s birth, adoption, or foster care placement, so long as the employee (1) works at a location where the employer has at least 20 employees within a 75 mile radius, (2) has at least twelve months of service with

Supreme Court to Review Antitrust Suit Over AmEx Merchant Rules

The retail industry should have great interest in a case set to be decided the Supreme Court this term, the outcome of which will affect the terms and conditions of credit card acceptance for all merchants.

The Supreme Court has granted certiorari to review the Second Circuit’s decision in Ohio v. American Express, an antitrust case in which a group of states have challenged American Express Co.’s rules preventing merchants from steering customers to other credit cards as being anti-competitive.

The case is based on the American Express (“AmEx”) “anti-steering” rules, also known as “non-discriminatory provisions” or “NDPs.” AmEx’s NDPs are provisions in the contracts between AmEx and merchants that prohibit merchants from showing a preference for credit cards other than Amex (like Visa or MasterCard) or otherwise offering customers discounts for using non-Amex credit cards.

In 2010, the federal government and several states filed suit against AmEx, arguing that its anti-steering

Cook County Retailers Cheer Repeal of Soda Tax That Spurred Class-Action Lawsuits

October 16, 2017

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Cook County, Illinois has repealed its sweetened beverage tax, just two months after the unpopular ordinance was implemented. As we previously reported, Cook County was among a number of localities across the country to pass sugary drink tax laws, including the following:

  • Berkeley in December 2015;
  • Albany, California in December 2016;
  • Philadelphia in January 2017;
  • and Oakland, California; Boulder, Colorado; and Cook County, Illinois in July 2017.

Cook County consumers objected, however, to paying an additional 68 cents for a two-liter soft drink or an extra 72 cents for a six-pack. Retailers complained the tax was driving consumers to neighboring jurisdictions to avoid the tax.

The sweetened beverage tax also triggered numerous lawsuits, some of which are still playing out in court.  The Illinois Retail Merchants Association sued the county to get the tax thrown out days before it was to take effect.  The court granted a

Recent Cases Provide Recipe for Resolving Consumer Class Actions Through Arbitration

October 12, 2017

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Recent court decisions confirm the possibility of mandatory arbitration as a viable option for retailers frustrated with the rising costs of litigation, and the inability to recover their attorneys’ fees, for frivolous class action lawsuits.

As I reported in a recent Law360 article, the clear benefits of arbitration to retailers include:

  • its barrier to class action claims;
  • its rational approach to damages;
  • the mainstreamed, and therefore less costly, discovery process;
  • the extremely narrow right of appeal;
  • the neutralization of jury nullification; and
  • of course, the availability of fee awards where an arbitrator deems a claim frivolous.

All of that, plus the reduced risk of media coverage, should serve as major disincentive for a frivolator seeking to score big bucks.

However, whether a consumer plaintiff can be required to waive the right to trial and submit to arbitration depends on whether he or she has agreed to do

Ninth Circuit Blocks San Francisco’s Warnings Ordinance for Sweetened Beverages

In a decision likely to have important implications for regulation of commercial speech, the Ninth Circuit Court of Appeals has blocked a San Francisco ordinance requiring warnings about the health effects of certain sugar-sweetened beverages on fixed advertising.

In American Beverage Association v. the City and County of San Francisco, a three-judge panel held that the California Retailers Association, American Beverage Association, and the California State Outdoor Advertising Association are likely to prevail in their lawsuit challenging the ordinance as violating the First Amendment, and reversed the district court’s denial of a preliminary injunction against enforcement of the ordinance.

The ordinance, S.F. Health Code § 4200 through 4206, was enacted in June 2015 and would require the following warning on any advertisement that “identifies, promotes, or markets a Sugar-Sweetened Beverage for sale or use”:

“WARNING: Drinking beverages with added sugar(s) contributes to obesity, diabetes, and tooth decay. This

Tiffany’s Trademark Infringement Victory a Costly Lesson for Costco

Tiffany’s Trademark Infringement Victory a Costly Lesson for Costco

September 19, 2017

Authored by: Bryan Cave, Merrit Jones, Alex Whitworth and Nancy Franco

A federal district court has ordered Costco to pay Tiffany at least $19.4 million in a trademark infringement battle based on generic diamond engagement rings bearing the “Tiffany” name.

Judge Laura Taylor Swain in the Southern District of New York ruled that Tiffany is entitled to $11.1 million as profits for trademark infringement, plus interest, representing triple its lost profits, plus $8.25 million in punitive damages awarded by a jury last October. Judge Swain also permanently barred Costco from using “Tiffany” as a stand-alone term, without modifiers such as “setting,” “set” or “style.”  Tiffany did not assert any infringement claims based on Costco’s use of the terms “Tiffany style” and “Tiffany setting,” leaving open the question of whether these modifiers could provide a fair use defense.  Costco has appealed the ruling.

In an unsuccessful bid to dismiss the case before trial, Costco had argued that “Tiffany” has become a generic

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