Hunton Retail Law Resource

In a move affecting manufacturers, distributors and retailers in the furniture and other wood-based industries, the Environmental Protection Agency (“EPA”) recently issued a series of amendments to its Final Rule implementing the Formaldehyde Standards for Composite Wood Products Act (the “Formaldehyde Final Rule”), which added Title VI to the Toxic Substances Control Act (“TSCA”). The Formaldehyde Final Rule, 40 CFR Part 770, sets formaldehyde emissions standards for composite wood products and includes requirements for the testing, third-party certification, import certification and labeling of covered products by manufacturers of those products. The Final Rule also imposes requirements on downstream fabricators, distributors and retailers to keep records for at least three years demonstrating that covered products they use, distribute and/or sell are TSCA Title VI-compliant.

Earlier this month, Canada’s transport minister announced that a drone had collided with a commercial aircraft, the first confirmed collision of its kind in North America. Thankfully, the aircraft sustained only minor damage and was able to land safely. But this recent incident, which many commentators believed was inevitable given the proliferation of consumer and commercial drones, highlights the potential risks associated with drone operations.

Employers in the retail sector are constantly faced with the balancing act of relying on their workforce to operate a profitable business while also managing employees who are unable to work at full capacity due to an illness or disability. The patchwork of laws and regulations requiring employers to provide leave or accommodation can overlap with one another, creating uncertainty as to when employers can terminate sick or disabled employees. For example, it is a common scenario for an employee to exhaust his/her 12-week medical leave under the Family Medical Leave Act (“FMLA”) and then request additional leave as an accommodation under the Americans with Disabilities Act (“ADA”).   

This past week, several consumer actions made headlines that affect the retail industry.

District Court Sides with FTC Over Weight-Loss Supplement Marketers

A federal district judge in Atlanta issued an order last week finding several supplement marketers in contempt for violating previous court orders and continuing to market weight-loss dietary supplements. The contempt order, which imposes a judgment in excess of $40 million, provides that the FTC may use the money to refund product purchasers. The defendants, including one FTC repeat offender, deceptively marketed their supplements as fat-burning and appetite-curbing, and promised rapid and extreme weight loss.

On October 23, 2017, the Federal Trade Commission issued a policy enforcement statement providing additional guidance on the applicability of the Children’s Online Privacy Protection Rule (“COPPA Rule”) to the collection of children’s audio voice recordings. The FTC previously updated the COPPA Rule in 2013, adding voice recordings to the definition of personal information, which led to questions about how the COPPA Rule would be enforced against organizations who collect a child’s voice recording for the sole purpose of issuing a command or request.

Have you ever seen an advertisement for a product that seemed a little too good to be true? Truth in advertising is a hotly contested issue, and advertising that may cross the line could be drawn into a dispute with the Federal Trade Commission or into court by a competitor. But did you know that there is another group that monitors and polices advertising? The National Advertising Division ("NAD") of the Better Business Bureau is an industry group set up to review false or misleading advertising and referee complaints between competitors.

On September 21, 2017, the Securities and Exchange Commission ("SEC") and the staff of the SEC’s Division of Corporation Finance issued interpretive guidance to assist public companies with complying with the “pay ratio” rule and to address compliance concerns with respect to the rule’s flexible framework. According to the SEC press release, “[the] guidance on pay ratio...encourages companies to use the flexibility incorporated in our prior rulemaking to reduce costs of compliance.” The new guidance provides some accommodations that publicly traded retailers ...

Last month, the solar eclipse captivated the United States and many consumers flocked to purchase solar eclipse glasses to safely observe the astronomical phenomenon. We previously reported how NASA issued a safety alert advising consumers on the proper eye protection they should seek. Now, some consumers have filed a class action lawsuit against a major online retailer for allegedly selling “unfit, extremely dangerous, and/or defective” solar eclipse glasses. As a result, the consumers allege “varying degrees of eye injury ranging from temporary discomfort to permanent blindness.”

Leveraged loans may have a role in recent retail bankruptcies. Leveraged loan volume is nearing pre-recession highs and is on track to surpass 2007 levels, concerning many regulators and investors. Leveraged loans are typically offered to companies that already have large amounts of debt, and therefore, leveraged loans carry higher interest rates due to an increased risk of borrower default. Companies often use leveraged loans to finance mergers, refinance debt or for general company purposes. Private equity firms also utilize leveraged loans in order to fund takeovers of companies, including struggling retailers. Loans issued to fund leveraged buyouts from private equity firms rose 74 percent in 2017 and totaled 88.5 billion dollars. Additionally, nearly a third of loans to companies backed by private equity firms are leveraged six times or more.