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A Checklist for the U.S. Food Retail Industry in Light of COVID-19 Re-openings

May 8, 2020

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On April 24, 2020, Alaska became the first state to allow restaurants to reopen to dine-in customers (subject to certain precautions) since the COVID-19 pandemic began.  On April 27, 2020, Georgia and Tennessee followed suit.  Several other states have announced similar plans to reopen restaurants to dine-in customers throughout May.

Each state has its own requirements for re-opening, and many include some combination of the following restrictions: 1) workers must wear masks; 2) restaurants can only allow outdoor dining; 3) establishments can only be filled to a certain capacity (typically 25% or 50%); 4) reservation-only dining; and 5) hand sanitizer must be available at each table or at the restaurant’s entrance.

In light of these re-openings, we suggest that companies in the food retail industry consider the following, if they have not done so already:

  • Determine whether it is financially feasible to reopen if required to comply with the guidance set forth in the applicable order(s), or, if located in a state that has not yet provided rules for re-opening, consider which requirements would or would not be feasible.
  • Determine what supplies and goods will be required to reopen and develop a plan for sourcing the same.
  • Determine whether any physical modifications to the business will be required (i.e. barriers or screening between employees and customers and the spacing of payment terminal and cash registers).
  • Consider developing a process for providing temperature screening for employees who are showing signs of illness and review sick leave policies in order to

Year in Review: 2019 Food and Beverage Litigation and Regulatory Roundup

2019 was another active year for new regulatory activity and litigation targeting the food, beverage, and supplement industries.

In this roundup, Bryan Cave Leighton Paisner LLP presents a collection of regulatory developments, key court decisions, and notable settlements that were reached in 2019 and early 2020.

The highlights of this 2019 roundup include:

  • New federal legislation governing food labeling.
  • New regulations and a burst of litigation regarding CBD-based products.
  • An update on slack fill litigation.
  • Notable rulings, trials, and settlements.
  • Prop 65 and food safety update.
  • A preview of areas to watch in 2020.

We will continue our commitment to monitoring and analyzing industry trends in these areas and advising clients on legal and regulatory developments.

 

What Rules Will Govern Claims Relating to CBD in Food, Beverages and Supplements?

Within the last two months, three class action lawsuits have been filed in federal courts against companies that sell ingestible products containing cannabidiol (CBD), a chemical compound found in the cannabis plant, alleging that the products contain significantly less CBD than advertised.  Sellers of other food and supplement products facing this type of claim regarding their non-CBD products’ content have successfully argued that such claims are preempted by the federal Food, Drug and Cosmetic Act (FDCA) and its implementing regulations.  But the Food and Drug Administration (FDA) has not yet approved CBD as an ingestible ingredient, food or dietary supplement.  And while some states have followed the FDA’s lead, other states have legalized sales of ingestible, hemp-derived CBD products.  This can leave food, beverage, and supplement companies confused about what rules apply to CBD as an ingredient in ingestible products.

The first of the three class actions was filed on August 16, 2019, in the United States District Court for the Southern District of Florida.  Plaintiff alleges that defendants operate “JustCBD,” which advertises and labels ingestible products as containing certain amounts of hemp-derived CBD, when they really contain much less.  Plaintiff allegedly tested defendants’ products and found that (1) the “JustCBD honey Liquid Tincture” has only 48.92mg of CBD even though it purports to have 100mg, and (2) the “JustCBD Apple Rings Gummies” contain a non-detectable quantity of CBD even though they purport to contain 250mg of CBD.  Plaintiff claims he relied on representations and warranties regarding the quantity of

The ABCs of AB-5: How California’s New Employee Classification Law May Impact Retailers

Following passage and signature into law of California Assembly Bill 5 (“AB-5”), retailers should be aware of how the new law affects whether they can classify workers as independent contractors.

AB-5 codifies a decision last year by the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court of Los Angeles establishing the “ABC test” for determining whether workers can be classified as independent contractors for purposes of wage order claims, and extends the test beyond wage order claims to the California Labor Code, generally.  The new law takes effect January 1, 2020.

Although AB-5 is making headlines for its potential impact on the gig economy, the law may impact any business that uses independent contractors.  For retailers, this may include workers ranging from freelance artists to models.

Under AB-5 and the “ABC test,” a worker is considered an employee rather than an independent contractor unless the hiring entity demonstrates that all of the following conditions are satisfied:

  • The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
  • The person performs work that is outside the usual course of the hiring entity’s business.
  • The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
  • Under AB-5, the “ABC test” now applies to a variety of claims, including claims for overtime,

    Food Suppliers: Understand What Your Contamination and Recall Insurance Policies Cover — Then Plan Accordingly

    Last year saw a massive E. coli outbreak linked to romaine lettuce which left growers, packers and retailers struggling to identify root causes and assign liability – all while trying to protect end users from illness and injury.  To address the costs of contamination and recalls, food producers and manufacturers commonly obtain contamination insurance.  However, typical contamination policies cover only those losses incurred due to actual contamination, while arguably providing no coverage for recalls due to potential contamination.  A company that recalled its salads due to a risk that its romaine was contaminated with E. coli faces the likelihood that its insurer will claim the recall costs are not covered under the standard food contamination insurance policies – even though the recall was in the public’s best interest.  Food suppliers should evaluate whether there is a gap in their insurance coverage created by the limited language in certain contamination policies and how best to close that gap, including through specialized recall insurance or contractual protections with their supply chain partners.

    Several courts have held that product contamination insurance policies do not cover the costs of recalls issued due to potential contamination.  For example, a California District Court held in the Ruiz Food Products case that a policy that covered “any accidental or unintentional contamination … provided that the use or consumption of the Insured product(s) … [h]as resulted in or would result in [bodily injury]” did not cover a recall issued due to potentially contaminated products.1  In Ruiz, an upstream

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