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Think Your Market Is Global? Then Global Consumer Regulators Likely Are Watching Your Business

April 14, 2017

Authors

Bryan Cave and Doug Thompson

Think Your Market Is Global? Then Global Consumer Regulators Likely Are Watching Your Business

April 14, 2017

by: Bryan Cave and Doug Thompson

 

Advances in internet technologies, global social media platforms, and inventory order management and shipping delivery systems have revolutionized our businesses. Shopping-at-home and catalog sales, markets most retailers never would have considered as recently as 20 years ago, are now vibrant. Your business now may have customers in many different countries. You should be aware of the growing collaboration among the consumer watchdogs across the world, because those regulators may well be aware of your business through consumer complaints.

econsumer.gov is a site sponsored by the International Consumer Protection and Enforcement Network (ICPEN) and supported by the U.S. Federal Trade Commission (FTC) as well as approximately 35 other countries’ consumer regulators. The site provides consumer education and publishes trends regarding consumer fraud complaints. As the tag line of the site reveals, it also is a portal for the collection of global consumer fraud complaints: “Report international scams

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Beware of Making Unsubstantiated Anti-Aging Claims

April 7, 2017

Authors

Bryan Cave, David Zetoony and Mary Longenbaker

Beware of Making Unsubstantiated Anti-Aging Claims

April 7, 2017

by: Bryan Cave, David Zetoony and Mary Longenbaker

Manufacturers, distributors, and retailers often tout the anti-aging effects of certain cosmetics and nutritional supplements. Of course, the term “anti-aging” is not intended to literally mean that a product prevents aging. To the contrary, it is understood by both the industry and consumers as describing a product that is designed to mitigate, mask, or soften certain cosmetic indicators that come with age. These typically include wrinkles, discoloration, greying of the hair, or a loss of skin firmness.

Anti-aging litigation has proven popular with the plaintiffs’ bar. In the past five years, there have been at least 31 class action complaints filed alleging deceptive advertising of anti-aging products, and at least 10 enforcement actions brought by the Federal Trade Commission (FTC).

Often such putative class actions allege that advertising which touts a product’s anti-aging properties is deceptive and misleading to consumers. Typically, complaints over anti-aging claims lack affirmative evidence that a

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Taking the Stress Out of Distress for Retailers

March 31, 2017

Authors

Bryan Cave and Andrew Schoulder

Taking the Stress Out of Distress for Retailers

March 31, 2017

by: Bryan Cave and Andrew Schoulder

Despite the downturn in many retail sectors, retailers should not automatically adopt a “glass half empty approach” but instead view the impending cycle as creating opportunities for companies in both the U.S. and globally.

In recent months, a steady stream of analyst coverage has painted a bleak outlook for the retail industry. Between February and March 2017, BCBG Max Azria, Eastern Outfitters, hhgregg, Gander Mountain, and Gordmans were among the companies added to the long list of retailers to seek bankruptcy protection. In February 2017, Moody’s Investors Service reported that the number of distressed U.S. retailers has tripled since the 2008-2009 recession. With 19 companies currently in Moody’s Caa/Ca retail portfolio, industry analysts are forecasting this current distressed cycle will surpass the conditions that existed for the industry in 2008-2009. The continued growth of online retailers is expected to hasten that result.

For companies with healthier balance sheets, the current

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Court Dismisses Website Accessibility Case as Violating Due Process, Since DOJ Still Has Not Issued Regulations

March 30, 2017

Authors

Bryan Cave and Merrit Jones

Court Dismisses Website Accessibility Case as Violating Due Process, Since DOJ Still Has Not Issued Regulations

March 30, 2017

by: Bryan Cave and Merrit Jones

Recent court decisions from California and Florida may provide ammunition to retailers battling claims that their websites and mobile applications are inaccessible in violation of Title III of the Americans With Disabilities Act (the “ADA”). As we reported in a previous blog post, retailers and other businesses have faced a wave of such demand letters and lawsuits.  Most of these claims settled quickly and confidentially.

However, a California district court recently granted Dominos Pizza’s motion to dismiss under the primary jurisdiction doctrine, which allows courts to stay or dismiss lawsuits pending the resolution of an issue by a government agency. In Robles v. Dominos Pizza LLC, U.S. Dist. Ct. North Dist. Cal. Case No. CV 16-06599 SJO, the court held it would violate Domino’s due process rights to hold that its website violates the ADA, because the Department of Justice still has not promulgated regulations defining website accessibility –

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Give Me … “Separability!” Supreme Court Holds Cheerleading Uniform Designs Copyrightable

March 24, 2017

Authors

Bryan Cave, Matt Minder and Ben Sidbury

Give Me … “Separability!” Supreme Court Holds Cheerleading Uniform Designs Copyrightable

March 24, 2017

by: Bryan Cave, Matt Minder and Ben Sidbury

In an important copyright case for retailers, the Supreme Court, in Star Athletica, L.L.C. v. Varsity Brands, Inc., 580 U.S. (2017), resolved “widespread disagreement” among the circuits, and adopted a single test to determine the copyrightability of designs incorporated in “useful articles.” The Court held that “an artistic feature of the design of a useful article is eligible for copyright protection if the feature (1) can be perceived as a two- or three-dimensional work of art separate from the useful article and (2) would qualify as a protectable pictorial, graphic, or sculptural work either on its own or in some other medium if imagined separately from the useful article.” Applying that test to Varsity Brands’ cheerleading uniforms, the Court concluded that the “arrangement of colors, shapes, stripes, and chevrons on the surface of the cheerleading uniforms” are separable from the uniforms and eligible for copyright protection.

In Star Athletica,

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“Made in USA” Claims Can Be Considered Deceptive Unless Substantiated

March 16, 2017

Authors

Bryan Cave, Mary Longenbaker, David Zetoony and Merrit Jones

“Made in USA” Claims Can Be Considered Deceptive Unless Substantiated

March 16, 2017

by: Bryan Cave, Mary Longenbaker, David Zetoony and Merrit Jones

Although every product imported into the United States must be marked with its country of origin pursuant to Section 304 of the Tariff Act of 1930, most products manufactured domestically are not required to list the United States as the country of origin. However, if manufacturers or retailers do choose to market their products as “Made in the USA,” these claims must be substantiated, or risk being considered deceptive under federal or state law.

On the federal level, the Federal Trade Commission has issued guidelines and considers representations that a product is “Made in the USA” to be deceptive, unless (1) “all or virtually all” of a product’s components are of U.S. origin, and (2) “all or virtually all” processing takes place in the United States.  Furthermore, the FTC considers phrases such as “Produced in the USA,” “Built in the USA,” or “Manufactured in the USA,” as conveying

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Mitigate Consumer Litigation Risk by Watching the FTC: Five Good Reasons

March 8, 2017

Authors

Bryan Cave and Doug Thompson

Mitigate Consumer Litigation Risk by Watching the FTC: Five Good Reasons

March 8, 2017

by: Bryan Cave and Doug Thompson

2017 already has been, and surely will continue to be, a year of great change. Regulatory agencies are re-envisioning their mandates. Many have or soon will have new leadership. And advocacy groups for consumers are mobilized.

Some of the regulatory changes may favor retail businesses. But others may continue to bring increased scrutiny and require more transparency with consumers. What can retail businesses do to help mitigate their risk and understand the headwinds they may be facing?  One thing that may be helpful would be to monitor the Federal Trade Commission (FTC)’s website. Why? Five good reasons.

  • Consumers are going to the FTC website. You should know what your customers are learning.
  • The Consumer Information section of the site offers a breadth of information, including tabs for Money & Credit, Homes & Mortgages, Health & Fitness, Jobs & Making Money, and Privacy, Identity & Online Security. In addition,

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    Monitoring Employees’ Email and Internet Use Raises Legal Considerations

    March 3, 2017

    Authors

    Bryan Cave and David Zetoony

    Monitoring Employees’ Email and Internet Use Raises Legal Considerations

    March 3, 2017

    by: Bryan Cave and David Zetoony

    Retailers should be aware that federal laws prohibit the interception of another’s electronic communications, but these same laws have multiple exceptions that generally allow employers to monitor employees’ email and internet use on employer-owned equipment or networks.

    As a result, under federal law, when retail employees use an organization’s telephone or computer system, monitoring their communications is broadly permissible, though there may be exceptions once the personal nature of a communication is determined. For example, under the National Labor Relations Act, employers cannot electronically spy on certain types of concerted activity by employees about the terms and conditions of employment.

    Although monitoring is broadly permitted under federal law, some states, including Connecticut and Delaware, require that employers notify employees that they may be monitored. Even in states that do not require notice, employers often choose to provide notice since employees who know they are being monitored are less likely to

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    How to Avoid ADA Claims as Service Animals Increase in Popularity

    February 24, 2017

    Authors

    Bryan Cave and Merrit Jones

    How to Avoid ADA Claims as Service Animals Increase in Popularity

    February 24, 2017

    by: Bryan Cave and Merrit Jones

    As retailers see an increasing number of customers seeking to bring animals into their stores, they should ensure that they have well-defined policies and train their employees concerning compliance with the ADA’s provisions regarding service animals. This is the third in a three-part series addressing ADA compliance. In earlier posts we addressed how to improve accessibility and reduce potential liability for premises barriers and website accessibility.

    Title III of the ADA prohibits discrimination against individuals “on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages or accommodations of any place of public accommodation,” which includes retail stores.

    Under regulations issued by the Department of Justice, service animals are dogs (or miniature horses, since some people are allergic to dogs) that are individually trained to do work or perform tasks for people with disabilities. Some state laws define service animals

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    Woman Claims Her Picture is Worth $2 Billion in Right of Publicity Suit

    February 3, 2017

    Authors

    Bryan Cave, Leila Knox and Nick Williamson

    Woman Claims Her Picture is Worth $2 Billion in Right of Publicity Suit

    February 3, 2017

    by: Bryan Cave, Leila Knox and Nick Williamson

    Could a promotional photograph of a restaurant scene that includes a customer with her hand partially obscuring her face be worth more than $2 billion?  That’s what a lawsuit brought by the customer claims.

    In an action pending in the U.S. District Court for the District of Colorado, plaintiff Leah Caldwell of Sacramento, California, who is representing herself, claims the restaurant chain Chipotle used the “iconic” image of her for advertising between 2006 and 2015.  The lawsuit includes a claim for right of publicity under California’s misappropriation statute, stemming from Ms. Caldwell’s allegation that she is “readily identifiable and depicted in the photograph as a woman of color wearing a white, long-sleeved shirt, hair up, and large eyes looking directly at the camera.”  Ms. Caldwell says that she was approached by the photographer on the day of the photo shoot, which took place at a Chipotle restaurant in Denver, Colorado,

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    Disclose and Follow Standards for Collection and Sharing of Customers’ Online Behavioral Data

    January 31, 2017

    Authors

    Bryan Cave and David Zetoony

    Disclose and Follow Standards for Collection and Sharing of Customers’ Online Behavioral Data

    January 31, 2017

    by: Bryan Cave and David Zetoony

    Many retailers engage in behavioral advertising, which refers to the use of information to predict the types of products or services of greatest interest to a particular consumer. Online behavioral advertising takes two forms. “First party” behavioral advertising refers to situations in which a website uses information that it obtains when interacting with a visitor. “Third party” behavioral advertising refers to situations in which a company permits others to place tracking cookies on the computers of people who visit the site, so that those individuals can be monitored across a behavioral advertising network.

    Two self-regulatory associations – the Network Advertising Initiative (“NAI”) and the Digital Advertising Alliance (“DAA”) – have created standards for companies engaged in third-party online behavioral advertising.  They recommend clear, meaningful and prominent disclosure on a retailer’s website that describes its data collection, transfer and use practices.  With respect to third-party behavioral advertising, they recommend

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    Retailers Seek to Improve Website Accessibility Following Surge of ADA Claims

    January 19, 2017

    Authors

    Bryan Cave and Merrit Jones

    Retailers Seek to Improve Website Accessibility Following Surge of ADA Claims

    January 19, 2017

    by: Bryan Cave and Merrit Jones

    Retailers have faced a wave of demand letters and lawsuits recently alleging that their websites are inaccessible in violation of the Americans With Disabilities Act of 1990 (the “ADA”), despite the fact that the ADA and its implementing regulations do not expressly address websites. This is the second in a three-part series addressing ADA access claims.  In a December 1st post we addressed how to reduce potential liability for premises issues, and this post focuses on website accessibility.

    Title III of the ADA prohibits discrimination against individuals “on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages or accommodations of any place of public accommodation,” 42 U.S.C. § 12182(a), which includes brick and mortar retail stores.

    The Department of Justice (“DOJ”) is the government agency that enforces the ADA and issues regulations concerning its implementation. The DOJ is in the

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    Reduce Potential Liability for Data Security Breaches by Negotiating Coverage in Payment Processing Agreements

    January 13, 2017

    Authors

    Bryan Cave and David Zetoony

    Reduce Potential Liability for Data Security Breaches by Negotiating Coverage in Payment Processing Agreements

    January 13, 2017

    by: Bryan Cave and David Zetoony

    Credit cards are the primary form of payment received by most retailers. In order to process a credit card, a retailer must enter into an agreement with a bank and a payment processor. Payment processing agreements often have significant impacts on a retailer’s financial liability in the event of a data breach. In many cases, the contractual liabilities that flow from a payment processing agreement surpass all other financial liabilities that arise from a data breach, including the cost to investigate an incident, defend litigation, and defend a regulatory investigation.

    The following checklist describes common data security related provisions to look for within most payment processing agreements:

  • Incorporation of Payment Brand Rules. Most payment processing agreements incorporate by reference the rules, regulations, and guidelines of the payment brands (American Express, Discovery, MasterCard, and/or Visa). When negotiating a payment processing agreement, it is important to determine whether the obligation to abide
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  • California Extends Prop. 65 Point-of-Sale Warning for BPA for Businesses That Report Food and Beverage Product Information

    January 3, 2017

    Authors

    Bryan Cave and Merrit Jones

    California Extends Prop. 65 Point-of-Sale Warning for BPA for Businesses That Report Food and Beverage Product Information

    January 3, 2017

    by: Bryan Cave and Merrit Jones

    California’s Office of Environmental Health Hazard Assessment (OEHHA) has extended for another year the regulation allowing businesses to provide a Prop. 65 point-of-sale warning for bisphenol A (BPA) in canned and bottled food and beverage products.

    In order to rely on the point-of-sale warning for another year, however, businesses must provide information to OEHHA concerning any such products where BPA has been intentionally added.

    The requested information includes the brand name, product description, FDA product category, and UPC code or other specific information. Where bsiphenol A is no longer used in the product but the product is still available in commerce, the last expiration or “use by” date should be given.  The information can be provided in a form or template on OEHHA’s website by clicking here.

    The regulation allows businesses to rely on the point-of-sale warning through December 30, 2017. After that date, businesses will need to sell

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    Retailers Face False Advertising Cases on Discounts From Original Prices, Rewards Points

    December 22, 2016

    Authors

    Bryan Cave and Merrit Jones

    Retailers Face False Advertising Cases on Discounts From Original Prices, Rewards Points

    December 22, 2016

    by: Bryan Cave and Merrit Jones

    Retailers that advertise sale prices in comparison with regular prices in California should ensure that the products were actually offered for sale at those regular prices within the preceding three months, in order to avoid potential litigation.

    Los Angeles prosecutors have sued four national retailers for allegedly failing to do just that, accusing them of misleading shoppers into believing they got bigger discounts than they actually did by falsely stating the original prices in advertising sales prices on thousands of products.

    The lawsuits assert false advertising and unfair competition based on alleged violation of a state law that prohibits advertising a former price unless it was “the prevailing market price” within three months before the ad runs, unless the ad “exactly and conspicuously” states the date when that price was in effect.  California law also prohibits as a deceptive practice “[m]aking false or misleading statements of

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    NYC Passes Sweeping Freelance Worker Protection Law

    December 16, 2016

    Authors

    Bryan Cave, Sarah Bloom and Jay Warren

    NYC Passes Sweeping Freelance Worker Protection Law

    December 16, 2016

    by: Bryan Cave, Sarah Bloom and Jay Warren

    Retailers who contract with freelance workers in New York City should be aware of landmark legislation just passed to protect the wages of freelance works, including artists. The law takes effect on May 15, 2017.

    The Act, appropriately named “Freelancers Aren’t Free” protects these workers by (1) requiring freelancer contracts to be in writing, (2) requiring timely payment, (3) prohibiting retaliation, and (4) providing specific remedies and damages available to aggrieved freelance workers. The law does not apply to sales representatives, attorneys or licensed medical professionals.

    Writing Requirement: Contracts with freelancers for services of $800 or more (including the amounts for contracts between the same parties in the immediately preceding 120 days) must be in writing. The contract must include the name and address of the hiring party and the freelance worker, an itemization of the services the freelancer will provide and a price schedule for those services, and the

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