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Supreme Court Hears Oral Arguments on State Taxation of Online Retailers

The U.S. Supreme Court heard long-awaited arguments yesterday in South Dakota v. Wayfair, the case brought by the state against several retailers, hoping that the court will overturn over 25 years of precedent on the issue of the collection of sales tax from businesses located outside of the state.

A transcript of the oral arguments is available here, and an audio recording will be available on the Supreme Court’s website this Friday.

South Dakota brought the suit, acknowledging that its position defies the Supreme Court’s holding in the 1992 case Quill Corp v. North Dakota, by arguing that the development of the internet and ensuing growth in online shopping necessitate reconsideration of the requirement that a business have a physical presence within a state in order to be subject to that state’s sales tax collection obligations.

Many await the high court’s decision, from numerous retailers, large and small,

California’s Cage-Free Eggs Law Faces Supreme Court Challenge By Other States

Briefing is now complete in a lawsuit filed by more than a dozen states asking the United States Supreme Court to block a California law requiring any eggs sold within the state to come from chickens that have sufficient space to stretch out in their cages.

In the lawsuit, filed directly with the high court in December, Missouri, Iowa and 11 other states allege that “California has single-handedly increased the costs of egg production nationwide by hundreds of millions of dollars each year” due to its stringent regulations prohibiting confinement of egg-laying hens. The complaint contends that California’s requirements violate the Constitution’s interstate commerce clause. The lawsuit also alleges that California’s regulations are preempted by the Egg Products Inspection Act (EPIA), a federal law requiring uniformity of labeling, standards, and other provisions allowing for free movement of eggs and egg products in interstate commerce. To support their claims, plaintiffs rely

FTC Warns Against Warranty Conditions That Violate Magnuson-Moss Warranty Act

The FTC has sent warning letters to six major companies that market and sell automobiles, cellular devices, and video gaming systems warning against warranty tie-in provisions that state consumers must use specified parts or service providers to keep their warranties intact.

Unless warrantors provide the parts or services for free or receive a waiver from the FTC, such statements generally are prohibited by the Magnuson-Moss Warranty Act, the federal law that governs consumer product warranties.

Each company that received a warning letter used different language, but here are examples of questionable provisions:

  • The use of [company name] parts is required to keep your . . . manufacturer’s warranties and any extended warranties intact.
  • This warranty shall not apply if this product . . . is used with products not sold or licensed by [company name].
  • This warranty does not apply if this product . . .  has had

D.C. Circuit Rejects FCC’s Interpretation of Automatic Telephone Dialing System Under TCPA

April 6, 2018

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As retailers continue to be sued for alleged violation of the Telephone Consumer Protection Act (“TCPA”), a long-awaited ruling by the D.C. Circuit on the FCC’s 2015 Declaratory Ruling and Order (“2015 Order”) may provide some relief.

The TCPA restricts telemarketing and the use of SMS text messages, automatic dialing systems, artificial or prerecorded voice messages, and fax machines. Importantly, for autodialers and voice messaging systems, it requires identification and contact information of the entity using the device to be contained in the message. For SMS text messages, it requires obtaining express consent from individuals before sending them text messages, and providing information on how they can stop receiving text messages.

In ACA International v. Federal Communications Commission, et al., the D.C. Circuit issued its long-awaited opinion on the FCC’s 2015 Order interpreting various sections of the TCPA.

Of note, the Court specifically rejected and set aside the FCC’s

Retailers Should Ensure Compliance With CAN-SPAM Act and State Laws

Email is an important marketing tool for many retailers, who need to be aware of the legal requirements regarding sending email to customers and potential customers.

Since its enactment in 2003, the Controlling the Assault of Non-Solicited Pornography and Marketing (“CAN-SPAM”) Act has attempted to curb the number of unwanted emails and impose some rules on a largely unregulated frontier.  In addition, at least thirty-seven states have laws regulating unsolicited electronic mail advertising. A state-by-state summary is available by clicking here.

When followed, the CAN-SPAM Act’s restrictions give email recipients some control over their inboxes and also maintain fairness in how emails present themselves.  All businesses, retailers included, can face penalties of up to $16,000 per violation for failure to follow the CAN-SPAM Act.

As a practical matter, many retailers use vendors for their email marketing and other email services, and those vendors often assist the retailers in complying

Eleventh Circuit to Consider Whether Prior Settlement Moots Website Accessibility Case

The Eleventh Circuit Court of Appeals is set to hear oral arguments on April 11 concerning whether a website accessibility plan pursuant to a prior settlement agreement moots injunctive relief claims under Title III of the Americans With Disabilities Act.

In Haynes v. Hooters of America, LLC, the U.S. District Court for the Southern District of Florida granted Hooters’ motion to dismiss on grounds that the company has already agreed to make its website accessible pursuant to a prior settlement agreement.  Judge Robert Scola held that the prior agreement rendered moot the plaintiff’s ADA action, since the ADA does not provide for recovery of damages, only injunctive relief.  Judge Scola is the judge that previously ruled after trial that Winn Dixie’s website was not accessible in violation of the ADA.

Other retailers, including Outback Steakhouse and Panda Express, have also been successful in using the same argument against the same plaintiff to

Washington Bans PFAs in Food Packaging

Washington Bans PFAs in Food Packaging

March 27, 2018

Authored by: Bryan Cave and Merrit Jones

Washington has signed into law the Healthy Food Packaging Act (H.B. 2658/S.B. 6396), making the state the first in the country to ban perfluorinated chemicals (PFAs) in food packaging.

If the Washington’s Department of Ecology identifies safer alternatives to PFAs by January 1, 2020, the law will ban PFAs in paper food packaging effective January 1, 2022. If the state is unable to find a safer alternative, the law will not go into effect and the Department of Ecology must annually review the availability of alternatives. When the department finds an acceptable alternative, the ban will go into effect two years later.

Washington is not the only state to target chemicals in food packaging.  California is considering regulating food packaging as part of its Green Chemistry Initiative and the Safer Consumer Products (SCP) implementing regulations, based in part on use of perfluoroalkyl and polyfluoroalkyl substances that “create grease-proof and

California Considers Regulating Food Packaging Under Green Chemistry Initiative

As part of its Green Chemistry Initiative and the Safer Consumer Products (SCP) implementing regulations, California’s Department of Toxic Substances Control (DTSC) has released its Draft Three Year Priority Product Work Plan (2018-2020).  The Plan indicates that for the first time it will “address exposures from harmful chemicals that migrate from consumer products into food.”

DTSC selected a total of seven product categories to include in the Plan. Five categories have been carried over from the 2015-2017 Plan:

  • Beauty, personal care, and hygiene products
  • Cleaning products
  • Household, school, and workplace furnishings and décor
  • Building products and materials used in construction and renovation
  • Consumable office, school, and business supplies

DTSC has also added two additional categories – food packaging and lead-acid batteries. Clothing products and fishing and angling equipment, two of the product categories from the prior Plan, will not be evaluated under this Plan.

The Plan states

Avoiding the Blame Game: How to Avoid Liability for Other Companies’ Employees

Retailers often hire labor hired by outside vendors, such as employees who stock shelves, take inventory, or provide cleaning, security or deliver services.  Retailers should consequently be keenly aware of various joint employment doctrines that are frequently used to hold companies liable for violations of the law alleged by individuals who companies do not consider their employees.  There are variations of the joint employment doctrine, and their application depends on the type of employment case brought by the individual.

For wage-and-hour cases brought under the Fair Labor Standards Act (FLSA), courts will apply the “economic realities” test to determine whether an employer-employee relationship exists between a company and a plaintiff.  This test primarily assesses whether an employee’s actual working relationship with an alleged employer forms the basis for the employee’s economic livelihood.  If parties are held to be joint employers under the FLSA, then both entities are held liable for the

Beware the Empty Space: No Slack in Slack Fill Cases, Which Continue to Flood Courts

As we previously reported, slack fill litigation remains on the rise.  Plaintiffs continue to file consumer lawsuits – typically putative class actions – alleging food packaging is deceptive because it contains empty space, or nonfunctional slack fill, and disguises the amount of product in the package.

This roundup of recent decisions demonstrates that more plaintiffs are getting past early pleading challenges but likely will face significant barriers to success at summary judgment and class certification.

On February 16, 2018, a Missouri federal district court denied Nestlé’s motion to dismiss in Hawkins v. Nestlé USA, Inc., No. 4:17CV205 -HEA, 2018 WL 926130 (W.D. Mo. Feb. 16, 2018) challenging allegations that boxes of Raisinets candy contain 45 percent nonfunctional slack fill. In its motion to dismiss, Nestlé argued that a reasonable consumer would instantly realize the package was half-empty because of its “maraca-like rattle.”  The court rejected this argument because Nestlé relied on

Retailers Can Maintain Drug Free Workplace Despite State Legalization of Marijuana

Many retailers wonder what effect, if any, legalization of recreational marijuana has on their ability to maintain a drug free workplace.

Recreational marijuana has been legalized in Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon and Washington. Marijuana still remains an illegal Schedule I substance under the federal Controlled Substances Act, and therefore still subject to prosecution under federal law.

Legalization of marijuana in the above states does not affect an employer’s ability to enact and enforce workplace restrictions related to drug possession, use, impairment, and testing. For example, California’s “Control, Regulate, and Tax Adult Use of Marijuana Act,” commonly referred to as Proposition 64, contains express language specifying that it does not:

  • affect the rights and obligations of public and private employers to maintain a drug and alcohol-free workplace;
  • require an employer to permit or accommodate the use, consumption, possession, transfer, display, transportation, sale, or growth of marijuana in

National Consumer Protection Week: Consumers Join Forces With Agencies

This week is National Consumer Protection Week. How does it impact your company? It’s an opportunity for you to understand today’s consumer protection environment and to hear what is concerning your customers and regulators and law enforcement. This is the 20th anniversary of NCPW. Click here for a link to the FTC webpage.

Consumer businesses should understand the level of collaboration and coordination among consumers and federal and state agencies. It is also important to understand how many avenues there are for consumers to complain and for agencies to investigate. Your risk management efforts should include increasing understanding and awareness of these possibilities and planning for any adverse events.

NCPW involves more than 100 partners. Partner efforts are led by a 16-entity Steering Committee, which includes, among others, AARP, Better Business Bureau, FCC, FTC, Federal Reserve System, OCC, National Association of Attorneys General (NAAG), and the US Postal Inspection

Going Global Webinar: Avoiding the Inadvertent Franchise in U.S. and International Expansion

When expanding across borders, retailers may unknowingly be considered a franchisor under dozens of statutes worldwide and be surprised by the regulations and restrictions with which they must comply. Join Bryan Cave’s industry-leading franchise attorneys Nicole Simonian, Kenneth Costello and Jonathan Solish on Tuesday, March 6 from 9-10 a.m. Pacific for a discussion on how to mitigate the risks associated with international franchising. Key topics will include how to determine what constitutes a franchise under applicable country law, best practices for structuring agreements, and tips for managing ancillary issues and avoiding litigation.  To register, click HERE.

EU’s General Data Protection Regulation Takes Effect in May — Are You Compliant?

February 22, 2018

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The European Union’s General Data Protection Regulation (“GDPR”), arguably the most comprehensive – and complex – data privacy regulation in the world, goes into force on May 25, 2018. As retailers and other companies prepare, there continues to be a great deal of confusion regarding the requirements of the GDPR.

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Beware of Phantom Price Markdowns: Ruling Against Hobby Lobby Highlights Risk

February 16, 2018

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Over the past several years, there has been a rise in class action lawsuits against retailers for allegedly deceptive price comparison advertising. Many of these lawsuits have alleged that retailers advertised “phantom” discounts from their own “former” or “original” prices, or “retail” or “list” prices at which the products were never actually offered for sale.

As we recently reported, fashion retailer Ann Taylor recently settled for $6.1 million a false discounting class action in New York federal court alleging that prices at its outlet stores were listed as “marked down” from prices that never applied to the items.

In another recent example, last week a California federal court denied Hobby Lobby’s motion to dismiss a proposed class action lawsuit alleging the retailer used a fake marked price to create the false perception that products were being sold at a discounted rate. In Chase v. Hobby Lobby Stores, Inc.,

Investigating Claims of Harassment – Part 2: Interviewing the Complainant and Planning the Investigation

February 15, 2018

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You have received a complaint of harassment.  What next?  In this second part of a six-part series, we focus on interviewing the complainant and planning the rest of the investigation.  As always, bear in mind that each harassment investigation is different and must be tailored to fit the particular circumstances.

The interview of the complainant is usually the first and most important interview that will be conducted, and therefore, should be carefully planned beforehand. This interview, and all others, should be conducted in a private, neutral meeting space at your location. The following provides an illustration of the areas that should be covered by the investigator during the interview of the complainant.

At the beginning of the meeting, the investigator should:

  • Identify his/her role as investigator (i.e., you are a neutral conducting an investigation on behalf of the company).
  • Ask the complainant whether he/she is comfortable with the investigator
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