Posts tagged Consumer Products.
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On Monday, January 30, 2023, the Third Circuit in In re LTL Management, LLC1 ordered debtor LTL Management, LLC’s (“LTL”) chapter 11 petition dismissed for failure to demonstrate that the petition was filed in good faith pursuant to the Bankruptcy Code.2 The dismissal of LTL’s bankruptcy will also result in the termination of an injunction staying numerous lawsuits against third-parties—including lawsuits against certain third-party retailers being sued for allegedly having sold certain allegedly contaminated products.

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The FTC has just announced a release of updated “Health Products Compliance Guidance” to help advertisers ensure that claims about the benefits and safety of health-related products are truthful, not misleading, and supported by science.

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In a case sure to send retail pharmacy corporate-types scurrying to board room meetings to ensure their bases are covered, a Northern District of California federal judge held that Walgreens’ Co.’s 15 year-long pattern of filling opioid prescriptions for customers without performing adequate due diligence as to the medical legitimacy of the prescription substantially contributed to the opioid crisis in San Francisco. As a result, Walgreens must—to a degree later to be decided in court—abate the opioid crisis in San Francisco that it helped to create. While the scope of Walgreen’s court-mandated abatement is not yet known, the fact that a retail pharmacy was held to be at least partially liable for the down-the-line harm stemming from its customers’ misuse of the prescriptions it fills is a headline holding, carrying with it the potential to raise the stakes of the everyday retail pharmacy work of filling prescriptions. In good news for other retail pharmacies generally and for Walgreens retail pharmacies in other states, the holding turned on two hinges that could swing the door of liability shut in other scenarios: 1) the habitual, 15 year-long practice of San Francisco Walgreens of skirting the due diligence required of them under the federal Controlled Substances Act (“CSA”), and 2) the application of California-specific nuisance law that many other states have yet to apply in the same way.

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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:

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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.

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This month’s Recall Roundup starts with the wish that the coronavirus could be recalled. Perhaps the would-be CPSC commissioner who could deliver that recall would be unanimously approved.

On the topic of would-be commissioners, President Trump recently announced his intent to nominate Dr. Nancy Beck to be Chairman and Commissioner of the agency. Beck currently serves as the Principal Deputy Assistant Administrator for the EPA’s Office of Chemical Safety and Pollution Prevention. She previously worked in various capacities at the EPA and Office of Management and Budget during the Clinton, Bush and Obama administrations. Beck also worked as the Senior Director for Science Regulatory Policy at the American Chemistry Council, which is a chemical industry lobbyist group.

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The new year ushered in a series of warnings from the CPSC about inclined infant sleepers posing suffocation risks and dressers posing tip-over risks to consumers. Both products have been under scrutiny by the CPSC over the past year.

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A new bill introduced in Congress earlier this month could increase litigation risk for the retail industry by leaving companies unable to prevent the Consumer Product Safety Commission (CPSC) from disclosing inaccurate or premature information about potential product hazards. The Safety Hazard and Recall Efficiency (SHARE) Information Act, introduced on January 9, 2020, by U.S. Representative Bobby L. Rush (D-IL), would also increase the maximum civil penalty for violations of the Consumer Product Safety Act (CPSA) from $15 million to $50 million. Largely seen as a response to public criticism over the perceived delays in the CPSC’s disclosure of hazards associated with infant inclined sleepers over the last year, the SHARE Information Act would allow the CPSC to tell the public that a product may pose a safety issue before the hazard has been confirmed.

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Innovation and developments in technology bring both opportunities and challenges for the retail industry, and Hunton Andrews Kurth has a sophisticated understanding of these issues and how they affect retailers. On January 23, 2020, our cross-disciplinary retail team, composed of over 200 lawyers, released our annual Retail Industry Year in Review. The 2019 edition, Spotlight on Technology, provides an overview and analysis of recent developments impacting retailers, as well as what to expect in 2020 and beyond. Topics discussed include: braille gift cards as the next wave of ...

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The theme for this Recall Roundup is effectiveness of recalls. In October, the US Senate Committee on Commerce, Science, and Transportation released an investigative report criticizing the CPSC’s data-handling breaches from the spring. This month, the Office of Oversight and Investigations Minority Staff from the same US Senate committee released a report criticizing the CPSC’s handling of three “high-profile failures to effectively recall dangerous products” last year. The report summarizes the CPSC’s actions related to jogging strollers, infant reclined sleeping products and home elevators. The report concludes that the CPSC’s “failures” are “the result of a pattern of inappropriate deference to industry that has characterized CPSC leadership in recent years.” The report recommends that the CPSC “at a minimum” increase the use of imminent health and safety warnings, fine companies that fail to timely report substantial products hazards and use refunds or consumer-friendly repairs as default remedies.

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The Ninth Circuit Court of Appeals dismissed a consumer-fraud class action lawsuit against Diet Dr Pepper maker Dr Pepper/Seven Up, Inc., holding that use of the word “diet” in the product’s name was not false or deceptive advertising in the proper context of the soft drink market. The court found that, despite allegations that the product was long promoted with advertising featuring thin models, the common consumer would not read the “diet” in a soda’s brand name to promise the weight loss or other health benefits commonly associated with the word. Rather, given the ...
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Last month, the CPSC and three affiliated retailers issued a joint warning to consumers after the retailers discovered they sold nearly 1,200 units of 19 previously recalled consumer products between 2014 and 2019. The range of products at issue varied, including infant sleepers, scarves, portable speakers, barstools, children’s cardigan sets, hoverboards, beer mugs, coffee presses and infant rattles. It remains to be seen whether any further CPSC action, such as a civil penalty or a requirement to implement stronger recall systems and protocols, will be taken with respect to these three retailers.

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This month, the US Senate Committee on Commerce, Science, and Transportation released its investigative report on the CPSC’s data handling breaches from the spring. In April, the CPSC issued notices to multiple manufacturers explaining that “nonpublic manufacturer information” was released to the public without complying with Section 6(b) of the Consumer Product Safety Act. Section 6(b) prohibits the CPSC from disclosing information reported by product manufacturers without complying with the procedures for and restrictions on the commission’s public disclosure of such information. Section 6(b) aims to incentivize manufacturers to provide more safety information without fear of public backlash. The Senate committee’s report is troubling. It found that the CPSC made “improper disclosures to 29 unique entities” that “contained information on approximately 10,900 unique manufacturers, as well as street addresses, ages, and genders of approximately 30,000 consumers.” The Senate committee reviewed “hundreds of documents and emails and conducted multiple interviews” to conclude that the CPSC’s violations of Section 6(b) “were due to a lack of training, ineffective management, and poor information technology implementation.” The report cited several examples, such as that CPSC employees had “little to no Section 6(b) training” and were provided with “three different software applications to access and process relevant data without the necessary training on how to use these often confusing and idiosyncratic systems.” The Senate committee ended with a list of recommendations for the CPSC to remedy these problems and avoid future data-handling breaches.

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With Acting Chairman Ann Marie Buerkle’s earlier announcement  that she will leave the CPSC this fall, this month the commissioners elected Commissioner Robert Adler as the new acting chairman. Adler has been affiliated with the CPSC for more than 40 years. He has served as a commissioner since 2009 and previously served as the acting chairman from December 2013 through July 2014.

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This month serves as a reminder to manufacturers, distributors, retailers and importers that consumer products carry strong liability risks when they pose risks of serious injury or death. Steps should be taken to reduce that liability, including the issuance of alerts and recalls to remove the products from the stream of commerce.

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With summer in full swing, several U.S. senators have taken a public step to focus the CPSC’s efforts on dangers at the beach. Airborne umbrellas have become a serious hazard to beachgoers. In fact, CPSC data indicates that there have been over 31,000 beach umbrella-related injuries from 2008 to 2017, including the death of a vacationer after she was struck in the torso and killed by a rogue umbrella in Virginia Beach in 2016. In an unusual move, four senators recently issued a letter urging the CPSC to be more proactive about addressing the dangers posed by beach umbrellas. The senators requested more detailed information about umbrella-related injuries, asked about safety standards to prevent such injuries, and encouraged the creation of a public safety campaign to educate the public about the dangers of beach umbrellas.

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The National Advertising Division (NAD) affirmed that Reckitt Benckiser, Inc.’s claim of “#1 Carpet Cleaning Brand” for its Resolve Carpet Cleaner product line is supported by the appropriate underlying unit sales data. Responding to a challenge brought by BISSELL Homecare, Inc., NAD noted that Reckitt Benckiser’s “#1 Brand” claim is properly understood to mean that the brand itself, rather than any specific product, holds the highest market share in its relevant category. To that, Nielsen tracking data for units of products sold to consumers in the “carpet cleaning brand” category supports Reckitt Benckiser’s “#1 Brand” sales superiority claim for the Resolve products. Still, NAD noted that Reckitt Benckiser fails to properly identify the time period and scope for the relevant data in its disclaimer. Reckitt Benckiser has agreed to comply with NAD’s recommendation of a modified disclaimer in the future use of its “#1 Brand” claim.

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The FTC and the FDA jointly sent warning letters to four manufacturers of flavored e-liquid products, citing the absence of particular disclosures in paid social media endorsements as potentially in violation of the Federal Food, Drug, and Cosmetic Act and the FTC Act.

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Court rulings interpreting the Consumer Product Safety Act (CSPA) are rare because parties subject to the act typically resolve any issues directly with the CPSC through administrative actions or settlements. This month, the Seventh Circuit issued such a rare ruling, which makes it more difficult for manufacturers, distributors or retailers to argue the statute of limitations has run on failure-to-report claims.

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The CPSC this month issued notices to multiple consumer product companies explaining that the CPSC “recently discovered that nonpublic manufacturer information identifying your company by name along with product model name and/or model number was released in error to the public without following the procedures of 15 U.S.C. § 2055,” which provides procedures for and restrictions on the Commission’s public disclosure of manufacturer and product-specific information. The notice offers few details about the unauthorized disclosure’s nature or scope, raising questions about whether the released data comes from inspections, product safety investigations, recalls, consumer safety complaints or other possibly confidential or commercially sensitive information. This kind of disclosure may have a chilling effect going forward on the candor encouraged between the CPSC and regulated companies by Section 6(b) of the Consumer Product Safety Act.

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The National Advertising Division (“NAD”) has recommended that Goya Foods, Inc. toss claims that its Excelsior brand pasta is “Puerto Rico’s Favorite Pasta,” following a challenge by Goya’s competitor, Riviana Foods, Inc. Riviana, the maker of Ronzoni pasta, argued that Goya had not substantiated its “favorite” claim through consumer survey or sales data. Goya responded that its claim was classic puffery. NAD disagreed with Goya, finding that “favorite” is objectively measureable and means a product is preferred over all others. NAD ...
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The U.S. Department of Justice announced major news in the world of consumer products this month. A federal grand jury recently indicted two corporate executives for their roles in an alleged scheme involving residential dehumidifiers. The executives were charged with conspiracy to commit wire fraud, conspiracy to defraud the CPSC, and failure to furnish timely information under the Consumer Product Safety Act.

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With the partial federal government shutdown over, the CPSC appears to be quickly returning to normal—it issued 18 recalls in this month. The agency also took an unusual and noteworthy step by issuing notice that the CPSC would regard clothing storage units that do not meet the industry standard designed to reduce tip-over events to have a defect which could present a substantial product hazard.

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The partial federal government shutdown forced the U.S. Consumer Product Safety Commission (“CPSC” or “Commission”) along with other agencies to close for 35 days. In fact, the last recall on the Commission’s website is dated December 20, 2018—two days before the unprecedented shutdown began.

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As reported on the Hunton Insurance Recovery Blog on January 18, 2019, policyholders facing any type of products liability scored a win in a recent decision from the District Court for the Northern District of Illinois. The court found that an insurance company must defend its insured against claims arising out of a recall while simultaneously funding the insured’s affirmative claims for recovery.

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In a recent unpublished ruling, the Ninth Circuit affirmed the dismissal of a putative class action lawsuit alleging that Blue Diamond Growers mislabeled its almond beverages by failing to identify products as “imitation milk.” Painter v. Blue Diamond Growers, No. 17-55901 (9th Cir. Dec. 20, 2018).

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December was a quiet month in the world of recalls for two reasons. First, there were only 19 product recalls—the second lowest number of monthly recalls in 2019. Second, the partial federal government shutdown has forced the CPSC along with other agencies to close until President Trump and Congress can resolve their well-publicized funding dispute.

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In a 2017 interview, Nigel Travis, former CEO of Dunkin’ Brands, stated that “delivery will be the next wave” in the restaurant industry and that it would “be like a revolution,” occurring “faster than anyone thinks.” Travis was not wrong; in fact, recent statistics shared by Melissa Wilson at the 2018 Restaurant Leadership Conference show Travis’ prediction quickly taking hold – 86% of consumers are using off-premise delivery services at least monthly and one third of consumers are using it more than they did a year ago. By some estimates, delivery services are projected to grow at least 12% per year over the next five years. While a handful of restaurants are filling the delivery demand themselves, more and more restaurants are looking to third-party delivery service providers to help them connect with the consumer. In fact, “third-party delivery services like UberEats, Grubhub, and Postmates currently represent $9 billion in restaurant sales today, and they are predicted to account for $16 billion in sales by 2022.”

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The FTC has proposed amendments to its Energy Labeling Rule. The Rule requires manufacturers to attach yellow EnergyGuide labels providing estimated annual energy cost, energy consumption, and a comparability range to covered products, and prohibits retailers from removing these labels or rendering them illegible. The Rule also requires sellers, including retailers, to post label information on websites and in paper catalogs from which consumers can order products.

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With a new commissioner confirmed in September, the Commission once again has five commissioners. A philosophical divide along party lines surfaced this month in two decisions.

The first decision involved the settlement of an administrative lawsuit filed by the CPSC in February. The lawsuit alleged that a distributor refused to recall three-wheeled jogging strollers after consumer complaints that the front wheel can detach suddenly during use, causing injuries to at least 50 children and 47 adults. To settle the lawsuit, the distributor agreed to notify dealers and retailers and to “develop and launch an information campaign that will include an instructional video demonstrating how to safely and correctly operate” the stroller.  Eligible consumers who participate in this campaign can receive “incentives,” such as hardware to repair the stroller or a 20% discount towards the purchase of a new stroller from the same distributor.

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October began with a CPSC announcement that a major retailer agreed to pay a $3.85M civil penalty for failing to report that a trash can it sold contained a defect or created an unreasonable risk of serious injury. The retailer sold 367,000 of the trash cans nationwide between December 2013 and May 2015. Allegedly the trash can’s plastic collar may dislodge, exposing a sharp edge and posing a laceration hazard to consumers. The retailer received 92 consumer complaints about this alleged defect but did not immediately notify the CPSC of the defect. The CPSC announced a recall of the trash can in July 2015. In addition to the civil penalty, the retailer agreed to maintain a compliance program and a system of internal controls and procedures to ensure it discloses information to the CPSC in accordance with applicable law. The Commission voted unanimously (4-0) to accept the settlement.

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

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Brick and mortar retailers are rapidly diversifying checkout and payment methods to combat the erosion of sales to online channels and provide an improved shopping experience for consumers. From self-checkout kiosks, to store-specific mobile applications for payment, scan-as-you-go devices, and even ‘just walk out’ models, retailers are reinventing consumer’s notions of the traditional checkout line by going cashierless. Some estimates predict that these automated technologies could account for 35% of retail sales in the next 20 to 30 years.

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September ushered in a shift in political power at the CPSC with the confirmation of a new commissioner. In June, the U.S. Senate confirmed President Trump’s nomination of Dana Baiocco—a Republican—to the CPSC. Commissioner Baiocco’s appointment created the potential for a 2-2 voting tie if issues presented to the CPSC give rise to voting along party lines. One CPSC vacancy remained for which President Trump nominated Peter Feldman—another Republican—in June to both complete the remainder of former Commissioner Joe Mohorovic’s term, which expires in October 2019, and to serve a full seven-year term starting in October 2019. 

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

Federal Court in Florida Grants FTC a Win in Gastric Bypass Alternative Case

A U.S. district court in Florida has ruled in favor of the FTC in its longstanding litigation against Roca Labs, Inc., a seller of weight-loss powders advertised as an alternative to gastric bypass surgery. The court found that Roca Labs had made deceptive weight-loss claims and misrepresented that one of its promotional websites was an objective information site. The court also found that Roca Labs’ gag clause, which the company used to sue and threaten to sue customers who shared negative comments or complained about their dissatisfaction with the product, was unfair under the FTC Act. After additional briefing, the court will decide how much of the defendants’ $26.6 million in gross sales should be awarded in consumer redress.

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

“Black Truffle Flavored Extra Virgin Olive Oil” Case Dismissed Against Trader Joe’s

On August 30, 2018, the Southern District of New York dismissed class action claims for consumers who purchased Trader Joe’s “Black Truffle Flavored Extra Virgin Olive Oil.” The complaint alleged that the product label contained the words “black truffle” in large black letters, with the words “flavored” and “extra virgin olive oil” in smaller cursive letters underneath. However, DNA testing revealed that the oil did not contain actual truffle, but rather 2,4-dithiapentane, a petroleum-based synthetic injection that imitates the taste and smell of truffles.

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Just weeks after a federal judge called the science behind the alleged carcinogenicity of glyphosate “shaky,” a California state court jury hammered Monsanto with a $289 million verdict, blaming a former groundskeeper’s non-Hodgkin’s lymphoma on his exposure to the Roundup® chemical. The August 10, 2018, verdict in Johnson v. Monsanto Co., No. CGC16550128 (California Superior Court, County of San Francisco)—which included $250 million in punitive damages—was just the first in the nearly 8,000 Roundup-related cases currently pending against Monsanto, many of ...

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July served as another quiet month in the world of recalls. With only 11 recalls issued, July has had the fewest recalls for any month in over a year.

The CPSC made an important announcement this month regarding cedar chests. A company designed cedar chests with lids that automatically lock when closed. The company stopped making the cedar chests in 1987. From 1977 to 2015, 14 children have suffocated to death after climbing into the cedar chests and becoming locked inside. During this time, the company recalled 12 million cedar chests and offered a replacement latch to remedy the defect. Still, the CPSC predicts that millions of these cedar chests remain unfixed in consumers’ homes, posing a continuing danger to children. The CPSC’s announcement served as a plea urging consumers to immediately replace or remove the dangerous latches.

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On July 3, 2018, Governor David Ige of Hawaii signed SB 2571 into law, banning the sale or distribution of any “SPF sunscreen protection personal care product” that contains chemicals oxybenzone or octinoxate without a prescription issued by a licensed healthcare provider. “SPF sunscreen protection personal care product” is broadly defined to include, without limitation, any lotion, paste, balm, ointment, cream, solid stick applicator, brush applicator, roll-on applicator, aerosol spray, non-aerosol spray pump, and automated and manual mist spray. The ban, which Governor Ige indicated is intended to protect marine ecosystems including coral reefs, will go into effect on January 1, 2021. Estimates indicate that at least 70 percent of sunscreen products contain oxybenzone or octinoxate.

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It has been a quiet month in the world of recalls with only 13 product recalls issued in June. Still, other CPSC-related news is noteworthy.

Last month, the U.S. Senate confirmed President Trump’s appointment of Dana Baiocco to serve as a CPSC commissioner. If political ideology translates into voting trends on consumer safety issues—and it may not—Baiocco’s appointment creates a potential 2-2 voting “tie” at the CPSC, with two Republican and two Democratic commissioners. Now, Trump seeks to add a third Republican to the CPSC. On June 4, 2018, Trump nominated Peter Feldman to be a commissioner. Feldman is senior counsel to the U.S. Senate Committee on Commerce, Science and Transportation, and therefore advises on consumer protection, product safety, data and privacy issues. If confirmed, Feldman will complete the remainder of former Commissioner Joe Mohorovic’s term, which expires in October 2019. Feldman’s confirmation would mean that for the first time in nearly 12 years, Republican appointees would outnumber Democratic appointees at the CPSC. 

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These past two weeks, several consumer actions made headlines that affect the retail industry.

FTC: Come One, Come All to Discussion of 21st Century Impacts

On June 20, 2018, the Federal Trade Commission announced that it will hold public hearings on competition and consumer protection in the 21st Century. The FTC is looking to assess whether competition and consumer protection laws must change due to recent economic changes, evolving business practices, technological advancements and international developments. According to the FTC, the hearings may identify areas for enforcement and policy guidance, including improvements to the FTC’s investigation and law enforcement processes, as well as areas that warrant additional study. The FTC is soliciting public comments until August 20, 2018, on a variety of related topics; the hearings are set to take place from September 2018 to January 2019.

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

Federal Court OKs Large Warning Requirement for Cigar Products

A federal court has upheld forthcoming health warning requirements that will take up 30 percent of the principal panels of cigar product packages and 20 percent of cigar product advertisements. The court found that the textual warnings were “unambiguous and unlikely to be misinterpreted by consumers,” and that the cigar sellers retained sufficient space on their packaging and advertisements “in which to effectively communicate their desired message.” It also concluded that, under the Zauderer standard for commercial speech, the size, format and other design features of the warning statements were reasonably related to the government’s substantial interest in “providing accurate information about, and curing misperceptions regarding, the health consequences of cigar use.” The case is captioned Cigar Assoc. of Am. et al. v. FDA et al. No. 1:16-cv-1460 (D.D.C.).

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The CPSC experienced a political shake-up this month when the U.S. Senate confirmed Dana Baiocco as the newest commissioner. In September, President Trump nominated Baiocco, a Republican and former partner at Jones Day, but the Senate did not act on the nomination by the end of the 2017 calendar year. So President Trump resubmitted his nomination of Baiocco in January. On May 22, 2018, the Senate confirmed Baiocco by a vote of 50-45, mostly along party lines. Her seven-year term will run through October of 2024.

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

Federal Court in New York Dismisses Diet Pepsi Case

A federal judge dismissed a complaint accusing Pepsi-Cola Co. of misrepresenting that its “diet” drinks help consumers lose weight. In the proposed class action, plaintiffs claimed that Diet Pepsi is made with no-calorie sweeteners, which allegedly contributes to weight gain and increased risk of metabolic disease, diabetes and cardiovascular disease. The judge rejected the plaintiffs’ studies, finding that the evidence indicated an association between the sweeteners and weight gain, but not causation. The judge also concluded that reasonable consumers understand that the “diet” label simply means low calorie.

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Bumble Bee Foods’ woes continue to mount as its CEO, Christopher Lischewski, has been indicted for price fixing. The indictment alleges that Lischewski participated in the price fixing conspiracy from approximately November 2010 until about December 2013. Lischewski is not the first Bumble Bee executive to be charged: in late 2016 and early 2017, two Bumble Bee Senior Vice Presidents pled guilty to price fixing, and in May 2017, Bumble Bee agreed to pay $25 million in fines for price fixing. 

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

FTC Expands Agency’s Leadership Team with New Consumer Protection Director

Federal Trade Commission Chairman Joseph Simons announced the appointment of Andrew Smith as Director of the agency’s Bureau of Consumer Protection, beginning next week. Smith is Chair of the American Bar Association’s Consumer Financial Services Committee and a Fellow of the American College of Consumer Financial Services Lawyers. From 2001-2004, he served as Assistant to the Director of the Bureau of Consumer Protection and FACT Act Program Manager, leading implementation of the FACT Act rulemaking, proceedings and studies. The vote to install Smith was 3-2, with the FTC’s two democratic commissioners filing statements in opposition.

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

FTC Swats Misleading Advertising Claims Just in Time for Mosquito Season

The FTC and makers of the “Aromaflage” line of products have agreed to settle charges that Mike & Momo, Inc., deceptively marketed its mosquito-repelling perfume sprays and scented candles. The company agreed to stop making unsubstantiated claims that its products repel disease-carrying mosquitos, work for 2.5 hours, and are as effective as 25 percent DEET. The FTC also alleged that Mike & Momo packed its Amazon storefront with five-star reviews written by the owners and close family members; under the proposed consent order Mike & Momo must disclose any “unexpected material connection” between the company and any endorsers.

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April was an historic month for the CPSC. The agency approved a $27.25 million civil penalty—the largest in CPSC history. The significance of this record amount cannot be overstated. The previous record was held by a $15.45 million civil penalty approved in March of 2016. In fact, except for in 2016, the CPSC has never approved civil penalties that totaled $27.25 million in each of the last ten calendar years. Now, it is has done so in 2018 with just one civil penalty.

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This past week, several self-regulatory advertising decisions made retail headlines.

Finish Quantum Dishwasher Detergent Beaten by “Unbeatable” Claim

In response to a challenge brought by P&G, the NAD recommended that Reckitt Benckiser LLC, manufacturer of dishwasher detergent brand Finish Quantum, discontinue its claims that the detergent provides an “unbeatable clean.” After reviewing Finish Quantum’s test data, the NAD determined that the “evidence was not sufficiently reliable to support the challenged ‘unbeatable clean’ claim.” Finish Quantum can, however, continue use of its value claim that its product provides “25% more loads,” so long as the claim is qualified by adding the phrase, “based on retail pack size comparison” between Finish Quantum and leading alternatives such as Cascade Platinum. Reckitt Benckiser stated that it will comply with the NAD’s recommendations.

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On the heels of a recent $5 million civil penalty, the CPSC recently secured a $1.5 million civil penalty with help from the U.S. Department of Justice (“DOJ”). The civil penalty concludes a long saga between the CPSC and a large arts and crafts retailer about vases with allegedly defective thin glass that rendered them prone to shattering.

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

FTC v. AT&T Mobility: “Good News for Consumers” Per FTC Chairman

The Ninth Circuit Court of Appeals rules en banc in FTC v. AT&T Mobility, LLC, that the FTC could challenge AT&T’s broadband data throttling practices, despite the fact that AT&T is a “common carrier” subject to exemption under the FTC Act. The court ruled that the common carrier exemption was activity-based rather than status-based. Therefore, the FTC may challenge a carrier’s non-carriage unfair or deceptive acts or practices. Simply put, “a phone company is no longer just a phone company. The transformation of information services and the ubiquity of digital technology means that telecommunications operators have expanded into website operation, video distribution, news and entertainment production, interactive entertainment services and devices, home security and more.” Acting FTC Chairman Maureen K. Ohlhausen issued a statement praising the Ninth Circuit’s decision as “good news for consumers.”

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The CPSC has flexed its regulatory muscle during the first months of 2018 with respect to products that pose risks to children. With the U.S. Department of Justice’s (“DOJ’s”) help, the CPSC secured a $5 million civil penalty against a drug company for its allegedly deficient child-resistant packaging. In December, the DOJ filed a complaint in federal court against the drug company alleging that it knowingly violated the Poison Prevention Packaging Act and the Consumer Product Safety Act by distributing five household prescription drugs with non-compliant child-resistant packaging and failing to report the noncompliance to the CPSC. The complaint alleges that the drug company’s engineers drafted a “risk analysis” memo identifying the packaging as non-compliant. Rather than halt distribution and immediately report the non-compliance to the CPSC, the drug company continued distribution with non-compliant packaging while concurrently developing compliant packaging. The company also waited nearly 15 months before notifying the CPSC of its non-compliant packaging. In January, the federal court entered a consent decree for the matter. The drug company agreed to pay a $5 million civil penalty, implement and maintain a compliance program, and maintain and enforce a system of internal controls and procedures.

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

TA Sciences Prohibited from Making False and Unsubstantiated Health Claims

Telomerase Activation Sciences, Inc. (“TA Sciences”) has agreed to stop making certain claims as to the anti-aging and other health properties of two of its supplement products, in response to FTC allegations that it made false or unsubstantiated claims regarding the products’ health benefits. The FTC’s order prohibits TA Sciences from misrepresenting that its products are clinically proven to reverse human aging, prevent or repair DNA damage, restore aging immune systems or increase bone density, or misrepresenting that such evidence or studies exists. The order also prohibits the company from (1) representing that paid commercial advertising is independent programing; (2) failing to disclose material connections between a product endorser and the company; (3) representing that any endorser is an independent user of the product; or (4) helping anyone else make false or misleading health and efficacy claims about its products.

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Two recent decisions out of California—one in state court and one in federal—provide defendants new ammunition for defeating class certification. The Ninth Circuit’s decision in In re Hyundai & Kia Fuel Economy Litigation and the Fourth District Court of Appeal’s decision in Apple Inc. v. Superior Court have important implications for California retailers opposing class certification. But Hyundai also poses challenges to retailers looking to settle class claims on a nationwide basis.

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

Advertising Agency Pays $2 Million to FTC and State of Maine to Settle Unsubstantiated Weight-Loss Claim

The FTC and the State of Maine have settled a case against ad agency Marketing Architects, Inc. (“MAI”) for MAI’s role in creating and disseminating deceptive radio ads replete with unsubstantiated claims for weight-loss products. MAI had been retained to create the ads by dietary supplement supplier, Direct Alternatives, Inc., whom the FTC and Maine had sued in 2016. Under the agreement with MAI, the ad agency is banned from making any of the seven “gut check” weight-loss claims that the FTC has publicly advised are always false. MAI also must have competent and reliable science to support weight-loss claims and must not misrepresent facts relating to return and cancellation policies of the products marketed. Finally, the order imposes a $2 million judgment on MAI, which may be used to provide refunds to consumers harmed by the conduct.

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With the arrival of 2018, President Trump resubmitted his nominations for CPSC leadership vacancies to the Senate. In 2017, Trump nominated Commissioner Ann Marie Buerkle to serve as CPSC Chair and Dana Baiocco to serve as a commissioner replacing Democrat Commissioner Marietta Robinson, whose term expired. But, under Senate rules, nominations not acted on are returned to the President. At the end of the Senate’s 2017 session, this meant that roughly 120 nominations were returned to Trump. Both nominees—Buerkle and Baiocco—are expected to receive Senate confirmation this year.

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

FTC Crack Down on “American Made” Marketing Claims Continues in Settlement with Bollman Hat Company

The FTC announced a settlement in the third case in the last 12 months involving deceptive “Made in USA” claims. Here, the FTC alleged that the Bollman Hat Company and its subsidiary deceived consumers with marketing campaign slogans of “Made In USA,” “American Made Matters,” and “Choose American” for its hats and third-party products, despite more than 70 percent of their hat styles being wholly imported finished products. The FTC also alleged that Bollman launched an “American Made Matters” seal campaign in 2010 that misled consumers in which and how many products Bollman and the companies that leased the seal were actually made in America.

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Several consumer actions affecting the retail industry have made headlines since the New Year.

FTC Issues Multi-Level Marketing Guidance

On January 4, 2018, the FTC issued updated business guidance to multi-level marketers (“MLMs”) to assist organizations in understanding and complying with the law. The FAQ-style guidelines address how core consumer protection principles apply with equal force to MLMs’ interactions with its own current and prospective participants, especially with regard to the compensation structures that MLMs are famous for. The FTC highlights several distinct MLM practices, explaining how each related to the FTC’s regulatory power and focus, and provides advice on how MLMs could best avoid running afoul of the law.

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A reflection on 2017 reveals several highlights showing that the CPSC is in a transition phase.

The CPSC’s composition has changed and will continue to do so. At the beginning of 2017, the agency was led by three Democrats and two Republicans. In October, Republican Commissioner Joseph Mohorovic resigned his seat to return to the private sector. Thus, the CPSC now has four commissioners: three Democrats and one Republican. But the Democrats’ grip on the agency will soon slip. Indeed, after the election of President Trump, Republican Commissioner Ann Marie Buerkle became the CPSC chair. Further, President Trump has nominated a private-sector lawyer named Dana Baiocco to replace Commissioner Marietta Robinson, a Democrat whose term has expired. Further, an additional Republican nominee is expected to fill Mohorovic’s resignation. Thus, 2018 will likely see a Republican majority leading the CSPC for the first time in over a decade.

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There is plenty of recall activity to report but no civil penalty news to report for November. Perhaps the holiday spirit prevails at the CPSC in this holiday season.

Hoverboards were last year’s hottest toy during the holiday season, but they also caused alarm due to the tendency of their lithium-ion battery packs to overheat while charging, causing the hoverboards to catch fire or explode. This year, the CPSC is taking a proactive approach to hoverboards. In May and again this month, hoverboards by the same manufacturer caused house fires and prompted the CPSC to warn consumers to stop using those hoverboards altogether. Further, a hoverboard by a different manufacturer recently caught fire and caused $40,000 of property damage to a consumer’s home. These serious reports culminated in the CPSC issuing seven recalls this month for hoverboards by different manufacturers due to their potential fire and explosion hazards.

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October ushered in a case that might, on one hand, provoke a sigh of relief for manufacturers, distributors and retailers concerned about the upward trend in multimillion dollar civil penalties from the CPSC or, on the other hand, raise some eyebrows of concern about the extent of a court’s authority to prospectively impose auditing, compliance and training measures. See United States v. Spectrum Brands, Inc., No. 15-CV-371-WMC, 2017 WL 4339677 (W.D. Wis. Sept. 29, 2017).

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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.

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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.”

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August was a busy month in the world of recalls. First, the end of August ushered in a hefty $5.7 million civil penalty against a major retailer in the United States. The retailer was allegedly selling and distributing recalled products and has agreed, in addition to the civil penalty, to maintain a compliance program and a system of internal controls and procedures. The CPSC voted 4 to 1 to accept the settlement, with Acting Chairman Buerkle voting to accept a lower civil penalty.

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On August 7, 2017, the FTC announced that it obtained a court order temporarily halting an online marketing scheme that deceptively lured shoppers into expensive negative option plans. The FTC alleged in its complaint that defendants used initial low-cost “trial” offers to hook consumers into expensive monthly shipments for tooth-whitening products without properly disclosing the terms and conditions of the deal or properly obtaining their consent.

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As an update to our Recall Roundup’s focus on the fidget spinning craze from June and July, the Consumer Product Safety Commission (“CPSC”) has released spinner safety tips. Although the CPSC still reports no fidget spinner recalls, Acting Chairman Ann Marie Buerkle used the CPSC’s bully pulpit to warn of the choking dangers that result when fidget spinners break and release small pieces. In addition, she references “reports of fires involving battery-operated fidget spinners.” 

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On July 26, 2017, an amusement ride named “Fire Ball” at the Ohio State Fair broke apart, killing one passenger and injuring seven others. This deadly incident may trigger a CPSC investigation into the matter.

Prior to 1981, the CPSC exercised jurisdiction over all amusement rides. But after several high-profile cases challenged the CPSC’s jurisdiction over amusement rides with mixed results, an amusement parks trade group successfully lobbied Congress to exempt stationary amusement rides from the CPSC’s jurisdiction. In 1981, Congress passed the Consumer Product Safety Amendments, which amended the definition of “consumer product” to explicitly exempt stationary amusement rides.

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On July 10, 2017, in a 775-page release, the Consumer Financial Protection Bureau (“CFPB”) issued its long-awaited final arbitration rule (“Arbitration Rule”) pertaining to consumer finance contracts. The Arbitration Rule, which until now was in the comment stage with its final issuance in question, largely mirrors the proposed rule from May 2016, with a few modifications. The Arbitration Rule is important for three reasons: (1) it prohibits consumer finance companies from relying on class action waivers to block class action lawsuits; (2) it prohibits the inclusion ...

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In the early 1990s, before everyone could instantly buy almost anything from their smartphone, the proposed combination of QVC network and Home Shopping Network (“HSN”) reportedly was shuttered due to antitrust concerns.

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June commenced with another massive civil penalty. A manufacturer agreed to pay a $5.2 million civil penalty and maintain a compliance program for allegedly failing to immediately report defective floorboards in recreational off-highway vehicles. In a three-year period, the manufacturer received over 400 reports of floorboards cracking or breaking in one vehicle model and over 150 similar reports in two other models. Once the manufacturer filed its report, it allegedly underreported the number of floorboard incidents associated with one model and failed to identify altogether the floorboard incidents associated with the two other models. These omissions, according to CPSC staff, constituted a material misrepresentation. The CPSC accepted the settlement by a 4-to-1 vote.

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On June 19, 2017, the United States Supreme Court announced important constitutional limitations on state courts’ ability to exercise specific jurisdiction over nonresidents’ claims against out-of-state defendants. The Court’s nearly unanimous decision in Bristol-Myers v. Superior Court, 582 U.S. (2017) has potentially far-reaching implications for companies facing claims brought by nonresident and resident plaintiffs in states in which those companies are neither incorporated nor maintain their principal place of business. In holding that mere joinder of nonresident plaintiffs’ claims with those of resident plaintiffs does not permit a state court to exercise specific jurisdiction over an out-of-state defendant, the Court’s decision is the latest in a trend of important personal jurisdiction decisions rendered by the high court in recent years which provide companies with significant constitutional protections in terms of where plaintiffs may force companies to litigate.

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May’s 30 recalls—more than any month thus far in 2017—cover furniture, toys, appliances, lithium batteries, recreational vehicles, kitchen gadgets and more. Conspicuously absent so far from the list are fidget spinners, the now viral children’s toy making headlines recently for choking-related dangers. Retailers catching up to the hot demand should keep an eye on those warnings to see if they convert into recall activity in case the gadget is deemed worthy of a market exit that rivals the pace of its entry. In light of the CPSC’s willingness to impose penalties on retailers who sell recalled items, retailers should take stock of their recall plans of action.

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

FTC Jumps to Consumers' Defense in Trampoline Marketing Deception

On May 31, 2017, brothers Son Le and Bao Le agreed to settle FTC charges that their trampoline marketing deceived consumers by directing them to review websites that were not, but claimed to be, independent, and by failing to disclose financial interests when posting online product endorsements. The Le brothers created fictitious trampoline experts, including "Trampoline Safety of America" and the "Bureau of Trampoline Review," and built fake websites with fake expert reviews to induce customers to buy their trampolines. The administrative consent order prevents the Le brothers from engaging in such deceptive behavior and requires clear and conspicuous disclosure of any material connections between the reviewer and the product. 

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Recently, in a case that should remind retailers and their suppliers to consider their First Amendment rights as they relate to the regulation of product labeling, the Eleventh Circuit Court of Appeals held in Ocheesee Creamery LLC v. Putnam, 851 F.3d 1228, that the actions of the Florida Commissioner of Agriculture and the Chief of the Florida Bureau of Dairy Industry (the “State”) violated the dairy company’s First Amendment rights relating to use of the term “skim milk.”

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April served as a microcosm for recent trends in the world of recalls. A gas range manufacturer agreed to pay a $4.65 million civil penalty to the CPSC. In a six-year period, the manufacturer received 170 incident reports that the gas ranges had turned on spontaneously and could not be turned off using the control knobs. But the manufacturer knowingly failed to notify the CPSC immediately. The manufacturer agreed to pay the massive penalty, maintain an enhanced compliance program and maintain a related system of internal controls and procedures.

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The Maui County Liquor Control Commission, which regulates licenses for the importation, manufacture and sale of alcohol within Maui County, has liberalized certain County rules on the sale of alcohol: holders of liquor licenses are now generally permitted to sell alcohol to customers 24 hours per day. Retailers had previously been restricted to selling alcohol during the hours of 6:00 a.m. to 11:00 p.m., while hotels were permitted to serve until 4:00 a.m. Under the new rules, both are subject to the same standards.

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Product recalls are on the rise in many industries. As regulatory and consumer protection standards get tougher, product supply chains are becoming more complex. This increases the risk of errors, defects and contamination at all levels of operation. Too often, these problems do not manifest themselves until after a product hits the market. All of this can lead to staggering expenses for food and product manufacturers facing the risks and realities of product recalls.

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On April 3, 2017, the Antitrust Division of the U.S. Department of Justice announced that it completed its review of Danone S.A.’s acquisition of The WhiteWave Foods Company Inc. (“WhiteWave”). In order to allow the $12.5 billion acquisition to proceed, the Antitrust Division is requiring Danone to divest the Stonyfield Farms business to an independent buyer approved by the U.S. government.

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March was an eventful month in the world of recalls. Children’s products have always been a CPSC focus, and for good reason. A recent study by Nationwide Children’s Hospital examined data over a 21-year period and found that a young child visits the emergency room for an accident involving a nursey product about every eight minutes. That is roughly 66,000 children annually. Last month alone, children’s products were the subject of six recalls. That trend continued in March as six children’s products were again recalled—infant caps, toys, games, sleepwear, bibs and rattles. The CPSC also approved unanimously a new federal safety standard for infant bath tubs. This serves as a notable development because, under the 1981 Amendments to the Consumer Product Safety Act, the CPSC must defer to an existing industry standard if it adequately addresses the risk and fosters adequate compliance. Accordingly, the CPSC has only issued 37 safety standards and roughly one-third of them (14) are for children’s products. The new standard serves as additional evidence that the CPSC is taking a more proactive approach to regulating children’s products.

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Emboldened by its recent victory in SAP v. Diageo (2017) EWHC (TCC) 189, SAP may become even more opportunistic when it comes to auditing its customers’ use of various SAP products. On February 16, 2017, the England and Wales High Court of Justice, Queen’s Bench Division (Technology and Construction Court) ruled that the use by Diageo’s sales representatives and customers of various software systems that pulled data from and pushed data to Diageo’s instance of mySAP ERP, even though there was no direct access to or use of mySAP ERP by such sales representatives or customers, constituted impermissible access to and use of mySAP ERP under Diageo’s license agreement with SAP.

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The CPSC extracted another steep civil penalty this month from a manufacturer of coffee brewers that agreed to pay $5.8 million after it knowingly failed to report a defect or unreasonable risk of serious injury to the CPSC. Specifically, the manufacturer received roughly 200 reports in a four-year period about its coffee brewers spraying out hot liquids and coffee, inflicting burn-related injuries to consumers. As part of the settlement, the manufacturer also agreed to develop, implement and maintain a compliance program to avoid failure-to-report problems in the future. Perhaps the recent change in CPSC leadership will impact the frequency or amount of these civil penalties in the future.

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With a new administration in the White House comes new leadership at the Consumer Product Safety Commission (“CPSC”). The CPSC has five commissioners, all of which are Former President Obama appointees, though no more than three may share the same political party affiliation. Commissioner Elliot Kaye—a Democrat—served as the CPSC’s Chairman until this month, when Commissioner Ann Marie Buerkle—a Republican—was named Acting Chairman. Kaye will continue to serve as a commissioner and Buerkle will remain Acting Chairman until President Trump nominates and the Senate confirms a permanent replacement. Before joining the CPSC in 2013, Buerkle represented New York’s 25th Congressional District in the House of Representatives and served as the U.S. Representative to the 66th Session of the United Nations General Assembly.

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As reported on the Hunton Privacy and Information Security Law blog, on February 6, 2017, the FTC announced that it has agreed to settle charges that VIZIO, Inc., installed software on about 11 million consumer televisions to collect viewing data without consumers’ knowledge or consent. The stipulated federal court order requires VIZIO to pay $2.2 million to the FTC and New Jersey Division of Consumer Affairs. 

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The beginning of the New Year experienced a drop off in recalls as the busy holiday season came to a close. Nevertheless, two important trends developed throughout January.

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On January 31, 2017, Acting SEC Chairman Michael Piwowar issued a statement instructing the SEC staff to reconsider whether its 2014 guidance on the conflict minerals disclosure rule is still appropriate and whether any additional relief for public companies is appropriate. Chairman Piwowar also opened a 45-day public comment period on all aspects of the SEC rule and subsequent guidance.

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As we previously reported, Kelly Faglioni, a partner in our Product Liability group, authored an article identifying and discussing approaches for managing risk that arises from complexity and ambiguity in product regulatory schemes including approaches to the question: “To recall or not to recall?”

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As we previously reported, Kelly Faglioni, a partner in our Product Liability group, authored an article highlighting the sources of ambiguity in the law that governs products in the U.S. and discusses that ambiguity as a purposeful tool in the regulatory tool belt. This post discusses Part 2 of her article. 

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The following consumer protection actions made headlines this week:

Unilever Plans to Appeal NAD’s Findings on Body Wash Product Advertising

The NAD recommended that Unilever discontinue certain advertising claims for Suave Essential Body Wash products, a decision that Unilever announced it will appeal. After a competitor challenge, the NAD concluded that claims comparing Suave fragrances to Bath & Body Works fragrances were not supported by the advertisers’ consumer perception survey. In addition, the NAD did not find the survey sufficiently reliable due to the fact that it did not meet the minimum of 300 respondents to substantiate a parity claim. Unilever responded that it is a “strong and ongoing supporter of NAD,” but nevertheless plans to appeal the decision to the National Advertising Review Board.

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Your product group is planning for the debut of the company’s most exciting new widget. Being responsible company citizens, the group checks in with the legal department to confirm the product regulatory and risk landscape. They start with the seemingly simple questions: “What are the applicable laws and regulations?” and “What are the foreseeable risk scenarios and associated damage potential?” Rather than answers, questions ensue. For example, what are the product components and/or ingredients? Will the product or its components contain anything toxic, corrosive, irritating, sensitizing, flammable or combustible? What are the foreseeable dangers associated with the product? What kind of product claims are envisioned? And so on.

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

New Suit Claims Coca-Cola Falsely Advertised Health Effects of Sugary Drinks

On January 4, 2017, the Praxis Project, a non-profit health organization, sued Coca-Cola, claiming the beverage conglomerate misled the public as to the negative health effects of its sodas. The suit alleges that Coca-Cola peddled industry-supported research deflecting focus from sugary drinks to balancing a healthy lifestyle with more physical activity and argues that Coca-Cola’s marketing created the impression that sugary drinks are not linked to obesity, type 2 diabetes and cardiovascular diseases. The lawsuit seeks an injunction to stop the advertising practices, to require disclosure of all research on the impact of sugary drinks and to require a corrective public education campaign to reduce public consumption of sugary drinks.

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On January 3, 2017, a Ninth Circuit panel (the “panel”) weighed in on a growing split among circuits over Rule 23’s ascertainability requirement—in particular, the extent to which a plaintiff must prove there is an “administratively feasible” means of identifying class members.

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Civil penalties continue to serve as a reminder that noncompliance with the Consumer Product Safety Act can be costly. A major retailer agreed to pay a $3.8 million penalty for failure to implement an internal compliance program for the distribution and sale of recalled products. The retailer sold about 600 recalled products over a five-year period, a pattern of behavior that continued even after informing the CPSC that measures were in place to reduce this risk.

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In August 2016, the Supreme Court of California issued its decision in Bristol-Myers Squibb v. Superior Court, which – as detailed more fully in our earlier post – features an expansive interpretation of specific personal jurisdiction that is difficult to reconcile with the U.S. Supreme Court’s general personal jurisdiction decisions in Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846 (2011) and Daimler AG v. Bauman, 134 S. Ct. 746 (2014). Those decisions significantly limited the exercise of general personal jurisdiction over defendant corporations to their state of incorporation and principal place of business unless “exceptional circumstances” exist. 

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This past week, several consumer and self-regulatory actions made headlines that affect the retail industry.

Court Dismisses ‘Made in USA’ Claims against Citizens of Humanity

A California federal judge dismissed claims against Citizens of Humanity alleging that it falsely labeled its products as “Made in the USA.” While plaintiffs alleged that the fabric, thread, buttons and other components were foreign-made, the court found that this was not enough to satisfy California’s standard, allowing the use of “Made in the USA” labels on products containing 5 to 10 percent of foreign materials. Significantly, the court applied the 5 to 10 percent standard found in the California rule despite the fact that the products at issue had been purchased prior to the rule’s enactments. The court also dismissed claims under the Unfair Competition Law and California Legal Remedies Act, finding that the plaintiffs failed to plead with particularity. 

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November brought a reminder that civil penalties are the trend to watch from the CPSC when a pet goods retailer agreed to a $4.25 million penalty for failing to immediately report to CPSC an alleged defect in fish bowls at risk of breaking, which posed a risk to purchasers of cutting themselves. CPSC’s data shows a hefty increase in the amount of civil penalties extracted, ranging from a low of $700,000 to a high of $4.3 million in fiscal year 2015 and a low of $2 million to a whopping high of $15.45 million in fiscal year 2016. Virtually all of those instances involved a “failure to report” or delay in reporting.

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On November 15, 2016, the Federal Trade Commission released a new policy statement announcing how the agency will examine over-the-counter (“OTC”) homeopathic drugs going forward. The policy statement explains that the FTC will hold OTC homeopathic products to the same standards as non-homeopathic drugs making similar wellness claims in terms of efficacy and safety.

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

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After a long and unconventional campaign, we finally know the election results: early next year, businessman Donald Trump will be sworn in as the 45th president of the United States, supported by a Republican Congress. What the election results mean for the nation’s retailers, however, remains an open question. Trump, as a candidate, staked out bold policy positions on issues with potentially significant effects on retailers. Both positive and negative developments on a wide range of issues are possible over the next four years. Once sworn in, Trump will have considerable latitude to implement his policies through executive branch agencies and their enforcement priorities. In other instances, however, he will require support from the 115th Congress, and in some instances his actions could be constrained by the effect of appointments and policy choices made by the Obama administration and the 114th Congress.

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DOJ Merger Investigation Opened a Whole Can of Worms

Retailers and consumers may have been paying out the gills for canned tuna. The Wal-Mart family of stores has alleged a price fixing scheme for canned tuna in Arkansas federal court. Wal-Mart’s complaint casts a wide net, alleging that Bumble Bee Foods, StarKist, Del Monte Foods (former owners of StarKist) and Tri-Union Seafoods (owners of Chicken of the Sea) engaged in large-scale price fixing in violation of Section 1 of the Sherman Act. The defendants allegedly hatched the scheme between 2008 and 2010 and canned it in July of 2015.

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October was filled with frights as malfunctioning electronics took center stage. With personal panic devices failing to operate and diving computers posing drowning risks, manufacturers should keep in mind that life-threatening hazards dramatically increase their potential liability.

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