Hunton Retail Law Resource

Responding to a challenge from Align Technology, Inc. (Align), maker of Invisalign, the National Advertising Division (NAD) recommended that SmileDirectClub (SDC) modify certain of its comparative advertising claims, while finding that others were sufficiently substantiated.

Many recent government orders require “nonessential” businesses to close due to COVID-19, resulting in massive financial losses for many retail businesses. The orders also change how “essential” retailers do business. For instance, Miami-Dade County’s mayor issued an executive order requiring people who visit or work at, among other places, grocery stores, restaurants and pharmacies to use face coverings. Los Angeles County issued a similar order. These orders may result in businesses’ turning away noncompliant customers, which will cause further financial harm. Regardless of the jurisdictions where your retail business is located, it is likely that there is a governmental order affecting its operations. Your business is likely sustaining or will sustain substantial losses as a result, and incur additional expenses to comply with evolving requirements and guidelines and in resuming operations as soon as possible.

Importers that have suffered “significant financial hardship” due to COVID-19 may qualify for a 90-day pay extension for certain tariffs. On April 19, 2020, following calls for trade liberalization to ease economic pressures, the Trump administration issued an executive order, along with a temporary final rule by the US Department of Homeland Security’s Customs and Border Protection (CBP), which postpones the time to deposit certain duties, taxes and fees. However, the 90-day pay extension is limited in scope and certain goods are not eligible for the extension.

Trade dress, which includes the total look of a product (size, shape, color) is registrable as a trademark if, like a trademark, it identifies the source of a product. Thanks to a recent decision, In re Forney Industries Inc., Appeal No. 2019-1073, by the US Federal Circuit Court of Appeals (Federal Circuit), it may now be easier for businesses to obtain federal trademark registration for some color-based product packaging trade dress.

On April 21, the FTC announced a record-setting $9.3 million settlement with online retailer Fashion Nova for violating the decades-old Mail Order Rule by failing to meet advertised shipping times and failing to adequately compensate consumers affected by the delays.

As previously reported on the Hunton Insurance Recovery Blog, our lawyers discuss the types of claims that may arise from COVID-19, and the impact the pandemic may have on D&O insurance policyholders and their insurers.

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As reported on the Hunton Employment & Labor Perspectives blog, Texas Governor Greg Abbott has issued two executive orders to begin the process of reopening businesses in the state. These executive orders, which will go into effect in the coming week, pertain to businesses that provide non-essential retail services, and hospital capacity in the face of COVID-19.

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The COVID-19 pandemic poses unique and novel challenges to publicly-traded retailers, particularly with respect to design and testing of both internal controls over financial reporting and disclosure controls and procedures. We recommend that retailers assess what has changed in the current financial reporting environment, consider whether existing controls are sufficient to prepare financial statements and disclosure documents at the reasonable assurance level, and determine what new controls (if any) are necessary to reduce the risk of errors and fraud.

As previously reported in the Hunton Employment & Labor Perspectives Blog, on April 7, 2020, the City of Los Angeles joined San Diego County and issued an Order that requires certain workers to wear cloth face coverings. Notably, the Order is more expansive than San Diego County’s face-covering mandate because it covers workers in more occupations, applies to customers and visitors of certain businesses, provides face-covering maintenance requirements, and requires certain employers to furnish face coverings and other sanitary products.

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The COVID-19 pandemic has changed most aspects of the economy. The world of consumer products is no exception to this trend. The CPSC has the following notice posted on its website warning that not all recall remedies may be currently available:

Listen as Phyllis H. Marcus, partner at Hunton Andrews Kurth and Co-Chair of the ABA Antitrust Law Section’s Privacy and Information Security Committee, speaks about the privacy concerns over using smart devices on the ABA’s Our Curious Amalgam podcast, Is Your Assistant Spying on You? Understanding the Privacy Law Issues Involving In-Home Assistants.

On April 3, 2020, the United States Environmental Protection Agency (EPA) and leading retailers participated in a conference call to discuss ways to protect American consumers from fraudulent COVID-19 disinfectant product claims. As the pandemic continues to wage on, some manufacturers have started to advertise their products as effective against the virus despite a lack of scientific evidence supporting the claim. Such advertising may violate federal law and potentially endangers consumer health and the environment, and could expose retailers to liability.

On March 30, 2020, the United States Environment Protection Agency (EPA) issued its long-awaited draft risk evaluation for asbestos. In it, EPA preliminarily concludes that certain uses of asbestos pose unreasonable risks to human health. If those conclusions are made final, EPA will issue regulations addressing those risks in what would arguably be the most significant action the agency has taken to regulate asbestos since its 1989 ban was successfully challenged by industry groups.

Williams-Sonoma, Inc., has agreed to pay $1 million to the FTC in settlement of claims that the home furnishing company made false and unsubstantiated representations that certain products were made in the United States. In its complaint, the FTC alleged that Williams-Sonoma—also doing business as Pottery Barn, West Elm, Rejuvenation, Outward, Mark & Graham and other brands—deceptively claimed that the company’s Goldtouch Bakeware products, Rejuvenation-branded products and Pottery Barn Teen- and Pottery Barn Kids-branded upholstered furniture were made in the USA. In reality, many of these products were wholly imported or contained significant imported materials.

The United States Environmental Protection Agency (EPA) has announced that it will provide retail companies with significant relief from its Toxic Substance Control Act (TSCA) Fees Rule. In a formal “No Action Assurance” (NAA) letter released to the public on March 25, 2020, EPA confirmed that companies importing products containing any amount of certain common “high-priority” chemicals will not be required to share in the fees for EPA’s upcoming risk evaluations for those chemicals. EPA also announced that it will provide exemptions for companies that manufacture a high-priority chemical only as a byproduct or impurity.