Hunton Retail Law Resource

The CPSC took proactive steps in October to address recent concerns with infant sleep products that pose suffocation hazards and could lead to Sudden Infant Death (SID).  This month the agency made a rare proposal for a mandatory consumer product safety standard to address the risks associated with crib mattresses.  The safety standard would incorporate by reference the voluntary standard ASTM F2933-19 (Standard Consumer Safety Specification for Crib Mattresses) with modifications to make the standard even more stringent.  These modifications include increased product performance testing to cover crib mattress firmness, coil spring issues, and face-in-mattress scenarios.  The new rule would also update the product’s warning labels, instructions, and packaging to remove unnecessary wording and emphasize the importance of positioning infants on their backs to sleep.  For example, the proposal compares the voluntary standard’s warning label to the proposed mandatory standard’s warning label:

On October 15, 2020, the United States District Court for the Southern District of Texas granted conditional certification to a class of assistant managers (“AM”s) in 550 wireless retail stores across the country. In Martinez v. Mobilelink, assistant store managers in the wireless retailers’ stores alleged that they were regularly required to work unpaid overtime. The employees sought to certify a class consisting of all current and former AMs employed by Mobilelink from March 2017 through the present.

Nestled midway between Dallas and Austin, Waco, Texas, with a population of around 144,000, is home to the Texas Ranger Hall of Fame and Museum, the Dr. Pepper Museum, Baylor University, and Chip and Joanna Gaines’ Magnolia Market; and it now has one of the busiest courts in the nation for patent infringement cases. Waco is part of the Western District of Texas (WDTX), which covers 92,000 square miles, including San Antonio, Austin, Del Rio, El Paso, Midland, and Pecos. For retailers, this vast footprint means they may have a physical presence in the Western District and thus, potentially be a target for a patent infringement case in Waco.

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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While footwear may not appear to be fertile ground for new inventions, many shoe makers have been granted patent protection for the technologies that go into their products. Sometimes, those inventions are rolled out with little fanfare. Others are, literally, flashy.

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).

Hurricanes Harvey and Irma have devastated portions of Texas, Louisiana and Florida. For retail insureds in particular, the losses due to property damage and business interruption will be staggering. In an article published September 12, 2017, in South Florida’s Daily Business Review, Hunton Insurance lawyers Walter Andrews and Andrea DeField explain why it is critical that policyholders act fast to maximize insurance recovery for their hurricane-related losses. They also provide a checklist to guide policyholders through the claim process and to ensure maximum recovery for any property damage and business interruption losses. As Andrews and DeField explain, business interruption and related coverage endorsements may cover loss resulting from (1) an inability to open for business; (2) reduction in business income when the business remains open but cannot operate at full capacity; (3) civil authority orders barring access to an insured business; and (4) service and utility outages effecting business interruptions — an important coverage in light of Florida’s ongoing power outages.

Earlier this month, the Department of Labor (“DOL”) dropped its defense of an Obama-era regulation that sought to increase the salary level for overtime-exempt employees from $23,660 per year to $47,476 per year. The regulation had been set to take effect in November 2016, but a last-minute preliminary injunction issued by a federal district court in Texas stayed the implementation of the regulation.

In the preliminary injunction ruling, the district court ruled that the new $47,476 salary threshold exceeded the scope of the DOL’s authority because such a high salary level had the effect of making an employee’s salary—and not their primary duty—the determinative factor in the exemption inquiry. Importantly, the district court’s preliminary injunction ruling went well beyond the appropriateness of the particular salary level at issue in the new regulation, and instead expressed the broader view that the DOL lacked the authority to impose any salary level requirement (regardless of the level of salary chosen) because the relevant provision of the FLSA focused on an employee’s duties, not their salary. 

An insured seeking coverage for credit card fees assessed against its third-party payment processor following a data breach recently filed an appeal in the Fifth Circuit Court of Appeals. Spec’s, a liquor store chain with over 160 locations throughout Texas, suffered two major data breaches of its credit card payment system, resulting in the loss of customer information and credit card numbers. Spec’s accepts Visa and MasterCard payments from its customers through a third-party processor, First Data. As a result of the breach, First Data incurred liability assessments from ...

Coastal areas in Texas have already begun evacuating as Hurricane Harvey heads for the Gulf Coast. Weather experts anticipate that the windstorm will reach Category 3 or Category 4 status by the time it makes landfall on the Texas coast late Friday night or early Saturday morning, making it the first Category 3+ storm to make landfall in the United States since Hurricane Wilma hit South Florida in October 2005.

On April 18, 2017, the state of Washington passed House Bill 1493 (“HB 1493”), which sets forth requirements for businesses who collect and use biometric identifiers for commercial purposes. Under HB 1493, a biometric identifier includes a fingerprint, voiceprint, retina, iris or other unique biological pattern or characteristic used to identify a specific individual. Commercial use includes “a purpose in furtherance of the sale or disclosure to a third party for the purpose of marketing of goods or services when such goods or services are unrelated to the initial transaction in which a person first gains possession of an individual’s biometric identifier.” This bill comes after several other states have passed similar legislation regulating the commercial use of biometric identifiers, including the Illinois Biometric Information Privacy Act (740 ILCS 14) (“BIPA”) and the Texas Statute on the Capture or Use of Biometric Identifier (Tex. Bus. & Com. Code Ann. §503.001). 

The American Tort Reform Association recently released the 2016–2017 edition of its “Judicial Hellholes” report. This annual report identifies venues it deems least favorable for civil defendants based on recent decisions and verdicts, as well as state laws and policies.

This past week, several consumer and regulatory actions made headlines:

Federal Guidance

D.C. Federal Judge Vacates Part of FDA Tobacco Guidance

A D.C. federal judge vacated a portion of FDA guidance relating to the labeling of tobacco products. The key issue before the court was whether changing a tobacco product’s label to a distinct new label creates a new tobacco product subject to FDA approval. The court also considered the question of whether changing a product’s quantity resulted in the creation of a new tobacco product subject to the FDA’s “substantial equivalence review process.” The court found that while a change in the existing product’s label did not create a new tobacco product, a change in a product’s quantity did.

If you live in an urban environment, you have likely seen food trucks on city streets, in parking lots or at any number of local events. The mobile food industry has grown significantly over the last few years and, with that growth, vendors and their brick-and-mortar competition have been faced with a changing regulatory landscape. 

This week, the following consumer protection actions made headlines:

Mortgage Scammer Under Water After FTC Settlement

On May 9, 2016, the FTC announced that it is returning $1.87 million to 1,630 consumers who lost money in the Expense Management America telemarketing scheme that never provided debt or mortgage relief services after absconding with homeowners’ up-front fees. The repayment to consumers is a capstone on a three and a half year joint effort with the DOJ, FBI and HUD to crack down on mortgage scammers taking advantage of distressed homeowners. Related efforts, underway since 2008, resulted in a new FTC rule providing increased protection to homeowners by prohibiting any collection of fees until the homeowner has an acceptable written offer from their lender. In prosecuting Expense Management America, the FTC worked closely with various enforcement agencies in Canada to track down and prosecute the scammers.

This week, the following consumer protection actions made headlines:

Federal Trade Commission:

FTC Obtains Multimillion Dollar Judgment Against Repeat Offender

At the FTC’s request, the U.S. District Court for the Southern District of New York entered a $13.4 million judgment against BlueHippo’s CEO, Joseph Rensin, as well as finding Rensin, BlueHippo Funding LLC and BlueHippo Capital LLC, in contempt for violating a 2008 federal court order concerning BlueHippo’s operation of a deceptive computer financing scheme. The FTC charged BlueHippo with contempt in 2009, alleging that the company contracted with thousands of consumers to finance new computers, but failed to provide those computers, in addition to having a deceptive refund policy. In July 2010, the Court issued an order partially granting the FTC’s motion for contempt. The FTC appealed the compensatory sanctions portion of that order, and in August 2014, the United States Court of Appeals for the Second Circuit vacated the damages portion of the order and remanded the case for a reconsideration of damages. The contempt judgment will go towards consumer redress.

This past week, the following regulatory and consumer actions made headlines:

FDA Scratches Out Shionogi’s Misleading Labeling on its Children’s Head Lice Lotion

On April 1, 2016, the Food & Drug Administration (“FDA”) hit Shionogi & Co. Ltd. with a warning letter stating that it had mislabeled its Ulesifa children’s head lice lotion because the labeling failed to inform patients that it should not be used on children under six months old and that it does not eliminate lice eggs. The labeling was in Shionogi & Co.’s recently issued customer co-pay assistance voucher that offered patients discounts to bring their co-pays down to $10. The FDA acknowledged that the voucher’s fine print stated it was only indicated for children over six months of age, but the FDA said that was not enough to avoid mislabeling violations. The agency requested that Shionogi & Co. cease the mislabeling immediately and submit a written response within two weeks.

A recent flurry of Texas law changes have local and national retailers considering whether to prohibit customers from openly carrying weapons inside of their stores.

This past January, Texas’s “open carry” law went into effect, allowing gun owners to carry their weapons holstered either at their hip or on their shoulder. The Texas law does have limitations, including an exclusion banning open carry on the premises of restaurants and bars that make more than 51 percent of their gross profits from alcohol sales, and, significant for retailers, a provision that allows businesses to prohibit open carry on their premises, as long as they post certain specified signage alerting customers of the ban.

This past week, the following regulatory and consumer protection actions made headlines:

Outlet Retailers Sued over Allegedly Deceptive Pricing Practices

Class action lawsuits against several retailers, including Burberry and Dooney & Bourke, allege that outlet discount prices tags that compare the outlet price with purported retail prices deceive consumers into believing they are getting a bargain when, in fact, they are not. Reference pricing rules (e.g., the FTC’s Guides on Deceptive Pricing) prohibit sellers from offering fictitious bargains. In these cases, the plaintiffs allege that the retailers’ practice of offering for sale made-for-outlet goods that never were sold at the referenced price is deceptive.

Last month, the American Tort Reform Foundation (“ATRF”) released the 2015-2016 edition of its annual “Judicial Hellholes” report. Each year, the report identifies the venues it deems the least favorable for defendants and highlights notable pro-plaintiff rulings and practices in each jurisdiction.

Prolonged and torrential rains have caused widespread flooding in Texas, Oklahoma and surrounding areas. It is important that policyholders remain mindful of the substantial benefits that may be available to them for resulting economic and physical losses under ordinary business insurance policies.