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Retailers Face False Advertising Cases on Discounts From Original Prices, Rewards Points

December 22, 2016

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Retailers that advertise sale prices in comparison with regular prices in California should ensure that the products were actually offered for sale at those regular prices within the preceding three months, in order to avoid potential litigation.

Los Angeles prosecutors have sued four national retailers for allegedly failing to do just that, accusing them of misleading shoppers into believing they got bigger discounts than they actually did by falsely stating the original prices in advertising sales prices on thousands of products.

The lawsuits assert false advertising and unfair competition based on alleged violation of a state law that prohibits advertising a former price unless it was “the prevailing market price” within three months before the ad runs, unless the ad “exactly and conspicuously” states the date when that price was in effect.  California law also prohibits as a deceptive practice “[m]aking false or misleading statements of

Avoid ADA Lawsuits for the Holidays by Ensuring Stores are Accessible

December 1, 2016

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In order to help retailers improve access to all customers and reduce potential liability, this is the first in a three-part series offering tips for compliance with the Americans With Disabilities Act (ADA). This week we offer tips to improve access to brick-and-mortar stores and their facilities.

Title III of the ADA prohibits discrimination against individuals “on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages or accommodations of any place of public accommodation,” which includes retail stores.

Allegations concerning the accessibility of parking spaces, entrances and aisles, checkout and sales counters, and restrooms continue to attract the most ADA lawsuits. Detailed federal regulations covering all of these areas appear in the 2010 Standards for Accessible Design (ADA Standards), and state building codes may provide additional requirements. ADA requirements may differ depending on the construction date of your stores, and

California Upholds Statewide Plastic Bag Ban

November 10, 2016

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California Upholds Statewide Plastic Bag Ban

November 10, 2016

Authored by: Bryan Cave and Merrit Jones

Californians narrowly validated the statewide plastic bag ban previously passed by the state Legislature, while rejecting a proposition that would have required retailers to remit money charged for single-use carry-out bags to an environmental fund.

Proposition 67 was approved by 52 percent of voters. It continues the statewide ban prohibiting grocery stores and other selected retailers from handing out single-use plastic bags, but allows them to sell recycled paper bags and reusable bags for a minimum of 10 cents.

The state Legislature approved the ban and the governor signed it into law in 2014, but a referendum forced the issue onto the ballot. The law applies to the following retailers:

  • Full-line, self-service retail stores with gross annual sales of at least $2 million that sell dry groceries, canned goods, or nonfood items, and some perishable items.
  • Pharmacies with at least 10,000 square feet of retail space.
  • Convenience stores,

Prop. 65 Conference Focuses on Compliance With New Warning and Settlement Regulations

The Prop. 65 Clearinghouse held its annual conference in San Francisco recently, and the speakers and panelists had a number of recommendations for both retailers and manufacturers following the adoption of Proposition 65’s new warning regulations.

The New Warning Regulations

As we reported on September 7th, the Office of Environmental Health Hazard Assessment (OEHHA) has adopted new warning regulations which take effect in two years on August 30, 2018.  Businesses can choose to comply with either the current or new regulations in the interim, but all retailers and manufacturers who sell products in California should review their Prop. 65 compliance protocols to ensure that they will continue to comply.

The new regulations seek to put the primary responsibility for providing warnings on product manufacturers or suppliers, who must either label their products with any required warnings or provide notice and warning materials to retailers.

The regulations expressly

California Adopts New Prop. 65 Warning Regulations

California Adopts New Prop. 65 Warning Regulations

September 7, 2016

Authored by: Bryan Cave, Merrit Jones and Marcy Bergman

California’s Office of Environmental Health Hazard Assessment (OEHHA) has adopted new Proposition 65 warning regulations.  The new regulations will take effect in two years, on August 30, 2018.  In the interim, businesses may choose to comply with either the current or new regulations.

Prop. 65 prohibits businesses from knowingly and intentionally exposing California consumers to a chemical known to the state of California to cause cancer or reproductive harm without first providing a “clear and reasonable warning.”  As we reported on a draft of the regulations in April 2016, the new regulations substantially change what constitutes a clear and reasonable warning.

Products with label warnings manufactured prior to the effective date of the new regulations would continue to receive protection from liability. Parties to existing settlement agreements or court-approved consent judgments also can continue to provide warnings that comply with those agreements or orders.

Regulations Seek to

Receipt With Credit Card Data Constitutes Sufficient Injury for Class Action to Proceed

A recent federal court ruling allows a class action lawsuit to proceed against luxury fashion retailer Jimmy Choo for violating the Fair and Accurate Credit Transactions Act of 2003 (FACTA).  This ruling, which will likely be appealed, has important implications for other consumer class action lawsuits against retailers.

Jimmy Choo was accused of violating FACTA by printing credit card expiration dates on customer receipts in Wood v. J Choo USA, Inc., S.D. Fla. Case No. 15-cv-81487.  Jimmy Choo argued that the plaintiff had no standing to sue because she was not damaged when the retailer printed her credit card expiration date on her receipt. The court disagreed, holding that the consumer was sufficiently damaged to maintain the action as soon as soon as the receipt was printed.

Companies facing lawsuits alleging FACTA violations should be aware that although the U.S. Supreme Court held in Spokeo Inc. v. Robins,

FDA Releases Final Rule Allowing Voluntary Risk Reviews of Food Additives to Continue

The Food and Drug Administration (FDA) says its final rule allowing outside groups to evaluate food additive risks will streamline its “Generally Recognized as Safe” (GRAS) reviews.

The agency recently released its GRAS final rule for its food additive program, switching reviews from a more formal but slower “petition-based” process to a voluntary “notification” process.  For retailers with private label food products, that means that they or their vendors can continue to convene their own expert panels to review the safety of many food additives, and provide notice of their findings to the FDA.

Under the federal Food, Drug and Cosmetic Act (FD&C Act), any substance that is intentionally added to food is a food additive that is subject to premarket review and approval by FDA, unless the substance is generally recognized, among qualified experts, as having been adequately shown to be safe under the conditions of its

New Federal Law Will Require Disclosure of GMO Content in Food

A new federal law will require food makers to disclose when foods contain genetically modified ingredients.

The law, which was recently signed by President Obama, will require such food products to be labeled with text, a symbol, or an electronic code readable by smartphone indicating the presence of GMOs. Small businesses will also have the option to label food products with a telephone number or Internet website directing customers to additional information.

The U.S. Department of Agriculture (USDA) has two years to draft regulations concerning which products require such disclosure, and additional details concerning what food makers must do to comply. After the regulations are finalized, food makers will have at least another year before the law takes effect.

Law preempts state and local GMO labeling laws.

The federal law preempts a similar Vermont law, Act 120, that took effect in July, as well as any other state or local

Personal Care Product Companies Targeted for “All-Natural” Claims

July 18, 2016

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The Federal Trade Commission (“FTC”) has approved four final consent orders against companies that allegedly misrepresented their personal care products as “All-Natural” or “100% Natural.”

In the past several years, numerous private lawsuits have been filed by consumers, particularly in California, alleging that food products labeled and advertised as “natural” violate false advertising laws. The FTC orders demonstrate that other products may be at risk for such claims as well.

The FTC has authority for enforcing the Federal Trade Commission Act, which broadly prohibits “unfair or deceptive acts or practices.” The FTC views labels and ads as deceptive if there is a material misrepresentation or omission that is likely to mislead consumers and affect their choices regarding a product.

The FTC complaints allege the following companies made deceptive all-natural claims in labeling and advertising a variety of personal care products, ranging from sunscreen to shampoo: Trans-India Products, Inc., doing business

California Proposition 65 Notices Allege BPA in Receipts, Water Cooler Jugs

July 11, 2016

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Since the Prop. 65 warning requirement for bisphenol-A (BPA) took effect on May 11, 2016, two 60-day notices have been served alleging harmful exposure to the chemical without providing a warning. Those notices, both served by the Center for Environmental Health (CEH) on June 27, 2016, allege the presence of BPA in receipt paper and polycarbonate plastic water containers used for water coolers.

The receipt paper notices were served against Del Taco and Grewal Superfoods Inc., and the water jug notice was served against Home Depot and DS Services of America, Inc.

BPA is listed under Prop. 65 as a chemical known to cause harm to the female reproductive system. OEHHA recently adopted a safe harbor exposure level for BPA, for dermal exposure from solid materials, of 3 micrograms per day. Exposure below this level does not require a warning. The safe harbor level would apply to BPA in receipt paper.  

California May Collect Certain Information from Businesses to Support Its New Proposition 65 Website

June 23, 2016

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California’s Office of Environmental Health Hazard Assessment (OEHHA) has launched a website, www.P65Warnings.ca.gov, intended to provide both businesses and consumers with information regarding the requirements for Proposition 65 warnings.

The website provides information regarding listed chemicals, including when they were listed, the basis for listing, and whether they are listed as a carcinogen or as causing reproductive harm.  The website also identifies products and places that require a specific Prop. 65 warning under the new regulations being considered by OEHHA, such as alcoholic beverages, furniture products, amusement parks, and dental offices.  It provides the current language for the current Prop. 65 warning for those products as well as the newly proposed language.  It also provides information about the types of listed chemicals likely to be found in those products, the likely routes and levels of exposure, and ways to reduce that exposure.

In order to develop information

Native Advertising: Recent FTC Cases Require Disclosure of Paid Endorsements on Social Media

May 12, 2016

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Two recent cases by the Federal Trade Commission (“FTC”) demonstrate its position that paid endorsements in social media must be disclosed. These cases reinforce the FTC’s stance on transparency in native advertising, which is paid advertising made to look like the media content around it.

The FTC has approved a final consent order with Machinima, Inc. requiring the company to disclose when it has compensated “influencers” to post online videos or product endorsements. According to the FTC’s complaint, the California-based online entertainment network engaged in deceptive advertising by paying influencers to post online videos endorsing a home video game system and several games, without disclosing that they were being paid for their opinions.

Although not yet final, the FTC has also proposed a consent order with department store chain Lord & Taylor, based on that company’s advertising campaign for a new apparel line using a paid article in online fashion

ADA Website Accessibility Cases Continue to Grow

An increasing number of retailers are facing lawsuits or threats of lawsuits regarding website accessibility under the Americans With Disabilities Act (“ADA”), despite the fact that the ADA and its implementing regulations do not expressly address website accessibility.

The Department of Justice first announced in 2010 that it would issue formal regulations regarding website accessibility, but they now are not expected until 2018. In the meantime, the number of cases against retailers and others continue to mount, and judges show no propensity to dismiss or stay the cases while the DOJ works on its regulations.  Last month, a federal magistrate judge in a website accessibility case against Harvard University and the Massachusetts Institute of Technology rejected arguments that the court should dismiss or stay those cases pending issuance of the DOJ regulations.

Further, for what is believed to be the first time in any court, a California judge recently

UPDATE Regarding California Prop. 65: Revised Warning Requirements for BPA in Canned Foods Effective May 11, 2016

May 5, 2016

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The Proposition 65 warning requirement for Bisphenol-A (“BPA”) takes effect on May 11, 2016, but a recent emergency regulation has revised the warning requirements for food and beverage products only.

Pursuant to an emergency regulation proposed by California’s Office of Environmental Health Hazard Assessment (OEHHA), the Proposition 65 warning for such food and beverage products may be posted at all point-of-sale devices. The warning should be at least 5 inches by 5 inches, and the language as revised should state:

WARNING

Many food and beverage cans have linings containing bisphenol A (BPA), a chemical known to the State of California to cause harm to the female reproductive system.  Jar lids and bottle caps may also contain BPA.

You can be exposed to BPA when you consume foods or beverages packaged in these containers.

For more information, go to: www.P65Warnings.ca.gov/BPA

OEHHA

California Prop. 65 Warning Requirement for BPA to Take Effect

April 14, 2016

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The California Proposition 65 warning requirement for Bisphenol-A (“BPA”) takes effect on May 11, 2016, and retailers, manufacturers, and distributors should act now to reduce potential liability.

BPA is used in a wide variety of plastic consumer products, including the epoxy lining in food and beverage cans and bottle lids, some reusable food and drink containers, CDs and DVDs, and electronics and sports equipment made from polycarbonate plastics.  California has not yet adopted a safe harbor level for exposure to BPA below which no warning is required, but recently proposed a safe harbor level of 3 micrograms per day for dermal BPA exposure from solid materials.  The safe harbor level will not be adopted prior to May 11, however, when the warning requirement takes effect.

In the meantime, California’s Office of Environmental Health Hazards Assessment (OEHHA) has proposed an emergency regulation to allow temporary use of a standard point-of-sale warning

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