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California Upholds Statewide Plastic Bag Ban

November 10, 2016

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California Upholds Statewide Plastic Bag Ban

November 10, 2016

Authored by: BCLP 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, foodmarts, or “other entities” with a liquor license and partial grocery line or that sell goods to be consumed off premises.
  • Other retailers that voluntarily agree to comply with the plastic bag ban.

Retailers Can Retain Fees Charged for Carry-Out Bags

California voters rejected a separate initiative that would have required retailers to remit fees charged for carry-out bags to an environmental fund. The fees must be used for the costs of providing recycled paper or reusable bags, costs associated with the retailer’s education materials encouraging the use of reusable bags, or other costs associated with complying with the law. 

Election Day: Time Off to Vote Requirements

Election Day: Time Off to Vote Requirements

November 4, 2016

Authored by: BCLP, Sarah Bloom and Jay Warren

Election Day is less than a week away and employees may have begun already requesting time off to go to the polls. The law varies state-by-state for when employers must honor these requests and grant employees voting leave. It is important to know the laws in your state, as certain states can subject the employer to civil or even criminal liability for failing to comply.

Please click here to view a summary of employers’ obligations to provide employees with time off to vote in the following eight states: Arizona, California, Colorado, Georgia, Illinois, Missouri, New York, and Texas. Each of these states has a law that governs which employees must be given time off, whether advance notice is required, and whether this time must be paid. This list is non-exhaustive and focuses on states where our firm has offices.

Florida, New Jersey, North Carolina, Pennsylvania, and Washington DC do not have specific laws requiring employers to give employees time off to vote.

For information about states not covered in the chart as well as any other questions about voting requirements, please contact an attorney in the Labor and Employment practice group or your regular Bryan Cave LLP contact.

What to Look for When Buying Cyber Insurance

October 27, 2016

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What to Look for When Buying Cyber Insurance

October 27, 2016

Authored by: BCLP and David Zetoony

Most retailers know they need insurance to cover risks to their property such as fire or theft, or their risk of liability if someone is injured in the workplace.  As numerous high-profile breaches demonstrate, retailers also need to carry coverage for data breaches.  While many insurance companies offer cyber insurance, not all policies are created equal.

Why is buying cyber insurance difficult?

  • There is little standardization among competing policies; as a result, it is hard to comparison shop.
  • Policies’ exclusions often swallow coverage; as a result, assessing the value of a policy is difficult unless you have extensive experience with the types of liabilities that arise following data breaches.
  • Policies often cover security but not privacy risks.
  • Items to review when shopping for cyber insurance:

  • Do the sub-limits on coverage match the corresponding risks?
  • Does the policy include sub-retentions (sub-deductibles) that are unlikely to be reached?
  • Does exclusion prevent payment for the largest risks, e.g.,charges that arise following a credit card breach, common theories alleged in class actions, etc.?
  • Is voluntary notification of affected consumers covered?
  • Will credit monitoring for affected consumers be covered?
  • Who does the insurer have on panel for legal representation, forensic investigations and/or crisis management?
  • Yelp Cannot Be Held Liable for Negative Review

    October 20, 2016

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    Yelp Cannot Be Held Liable for Negative Review

    October 20, 2016

    Authored by: BCLP and Flora Sarder

    Retailers are familiar with Yelp.com as a ratings website with a star rating system that allows customers to rate products and services they receive, as well as add individual reviews and comments. Positive reviews can generate business for retailers, and negative reviews can be a source of concern.

    The Ninth Circuit Court of Appeals has ruled, however, that Yelp’s multiple-choice star rating system does not make the review site a publisher or provider of allegedly defamatory content that may be subject to liability. In Kimzey v. Yelp! Inc., the Ninth Circuit affirmed dismissal of an action by a small business owner seeking to hold Yelp liable for a one-star rating by a third party, and challenging Yelp’s immunity under Section 230 of the Communications Decency Act of 1996.

    Section 230 Immunizes Interactive Service Providers From Liability

    Under Section 230, a provider of an “interactive computer service” is immune from liability for allegedly defamatory comments and content by third parties. This is how service providers such as Google, Youtube, and Facebook are able to host user content and comments without being held liable for defamatory comments and content posted by third parties.

    The Ninth Circuit held that Yelp clearly falls under Section 230’s immunity. It rejected Kimzey’s arguments that Yelp created or developed content by causing a review from another site to appear on its page, and that providing a star-rating feature and causing the allegedly defamatory statement to appear as a promotion on Google’s search engine transformed the review into

    Retailers Seek Perfect Balance Between In-Store, Online and Mobile Customers

    Retailers are increasingly under pressure to evaluate their business models and, in particular, the mix of their in-store, online and mobile offerings. Just as there are few pure-play e-tailers, there are very few retailers solely operating a bricks & mortar strategy because today’s customer wants to access their favorite brands in an omnichannel way: browsing online to get a sense of trends, dropping into a store to check the fit and shopping via mobile for impulse or last minute buys. But how do retailers find balance within the omnichannel world?

    In our experience working with national and international retailers, getting the online and mobile experience right requires critical focus and serious investment in the three Ds: Distribution, Delivery and Data.

    Successful ecommerce platforms require well located (and well managed) distribution centers capable of handling the nearly 24-hour demand profile.

    Careful consideration needs to be given to whether an existing distribution center supporting stores can also support online, or whether it would be better to invest in an expanded footprint of distribution centers while reducing the number of stores. Retailers prepared to serve an international online market also need to understand the logistics landscape and either partner with a logistics expert with a solid track record of supporting international online retailers or build in-house expertise to manage not only export and customs issues (so customers can enjoy a hassle free experience) but also local law compliance relating to product labeling and hazardous materials.

    Retailers shouldn’t underestimate that customers want an instant

    Congress Considers Legislative Solutions to Internet Sales Tax War

    October 6, 2016

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    As we reported on September 15,  several states have enacted or proposed laws related to the collection of sales tax from online retailers without a physical presence in those states, as required by United States Supreme Court case Quill v. North Dakota.  South Dakota’s current lawsuit against several internet retailers was specifically brought by the state to force reconsideration of Supreme Court precedent.

    However, there is a small change that Congress may decide the issue before it reaches the Supreme Court, with three bills having been introduced and a fourth pending.

    One of the three bills, cited as the “No Regulation Without Representation Act of 2016“, is more or less a proposal to codify the decision in Quill.  Needless to say, the states who have challenged Quill are highly opposed to this bill.

    The other two bills, the “Marketplace Fairness Act of 2015” and the “Remote Transactions Parity Act of 2015“, both similarly propose a destination-based sales tax system which will allow states the authority to require the collection of sales tax from out-of-state retailers. Among a few differences, the former provides an exception for sellers who have $1,000,000 or less in gross annual sales while the latter does not.

    A fourth proposal not yet formally introduced would base the taxability of purchases on the law of the seller’s location but at the tax rate of the buyer’s location.  The “Online Sales Simplification Act” would require the seller to collect and remit sales tax to

    How to Respond to Civil Subpoenas and Document Requests That Ask For Personal Information

    September 28, 2016

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    Litigants in a civil dispute often use subpoenas, subpoenas duces tecum, and discovery requests to obtain personal information about individuals who may not be present in the litigation. A request for documents and information that include personal information about third parties may conflict with legal obligations imposed upon an organization not to produce information.

    For example, if an organization promises within its privacy policy that it will never share personal information with a “third party,” and does not include an exception for requests made in civil litigation or through judicial process, a consumer could argue that by producing information pursuant to a subpoena or discovery request an organization has violated its privacy policy and committed an unfair or deceptive practice in violation of federal or state law.

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    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 provide, however, that parties can continue to contractually allocate who has responsibility for providing warnings. Retailers should therefore analyze and consider revising their terms and conditions to clarify who is responsible for providing warnings and in what manner, whether retailers will accept and post shelf warnings provided by vendors, and to whom the notice and warning materials should be sent.

    Complying With New Warning Regulations

    The first panel – which included the chief counsel of OEHHA, the presidents of two enforcement groups, an industry lobbyist, and a defense attorney — focused on some of the challenges that the new regulations

    States Battle E-Retailers and Federal Precedent Over Digital Sales Tax

    September 15, 2016

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    South Dakota and several online retailers are currently engaged in a battle over the state’s new internet sales tax law (SB 106) aimed at online businesses who sell products to South Dakota residents but which are not obligated to pay sales tax to the state.

    Decades ago, during the internet’s infancy, the U.S. Supreme Court concluded in Quill v. N. Dakota that states are prohibited from requiring companies without a physical presence in those states to collect sales tax from its residents. Among the four internet retailers sued by South Dakota are the popular Overstock.com and Newegg.com.

    The state acknowledges in its complaint that SB 106 is a violation of Supreme Court precedent. However, it has stated that the purpose of the suit is to facilitate Supreme Court review, because Quill is outdated in the internet age.

    Several outcomes to the case are possible, including a grant of summary judgment for either of the parties with a determination of the applicability of Quill and the constitutionality of SB 106.  If South Dakota’s law is struck down as unconstitutional, other states may face legal challenges to their digital sales tax laws.  If it is upheld, more states are likely to pass such laws.

    South Dakota’s suit is just one of several recent actions taken by states to “modernize” sales tax laws for application to online retailers.  Alabama has enacted its own law, which requires out-of-state retailers without a physical presence in the state to collect sales tax

    California Adopts New Prop. 65 Warning Regulations

    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 Reduce Burden on Retailers

    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 manufacturer or supplier must specifically identify the product requiring a warning, provide all necessary warning materials, receive written or electronic confirmation of receipt from the retailer’s authorized agent, and renew the notice every six months for the first year and annually thereafter.  The manufacturer or other supplier of a product must notify a retailer within 90 days if a new

    Online Seller Wins Dismissal of RICO Claims in Counterfeiting Action by Fashion Retailers

    A New York federal court recently held that defendant Alibaba Group Holding Ltd. (“Alibaba”), which is notorious for allegedly enabling the sale of counterfeit products, did not violate federal racketeering law by selling allegedly counterfeit products on its e-commerce venues.

    Alibaba owns and operates the popular shopping sites Alibaba.com, Taobao.com, and AliExpress.com, and generated $248 billion in gross merchandise volume in 2014 – more than Amazon and eBay combined. Luxury fashion retailers, including Gucci and Yves Saint Laurent, filed suit against Alibabi and seven other corporate entities that had roles in online platforms through which Chinese merchants could connect with consumers worldwide.

    The lawsuit alleges that fourteen Chinese merchants, also named as defendants, sold counterfeit products bearing plaintiffs’ marks in the Alibaba marketplaces. It further alleges that the Alibaba defendants provided the online marketing, data collection, payment processing, financing, and shipping services necessary to sell the products, even though they knew or should have known that the merchant defendants were selling counterfeit goods.

    On August 4, 2016, the U.S. District Court for the Southern District of New York granted the Alibaba defendants’ motion to dismiss two claims asserted against them under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §1961 et seq. (“RICO”).

    Plaintiffs’ first RICO claim was a substantive RICO claim brought pursuant to Section 1962(c), which makes it “unlawful for any person employed by or associated with any enterprise engaged in…interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s

    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, 136 S. Ct. 1540 (2016), that a plaintiff must show that an injury was both “concrete and particularized” and cannot rely on a procedural violation to allege injury in fact, there are instances where an injury may exist solely by virtue of a breach of a statutory prohibition.

    Judge Beth Bloom of the U.S. District Court for the Southern District of Florida said that in certain circumstances—such as in this case involving Jimmy Choo—“the violation of a procedural right granted by statute” is sufficient to constitute injury for purposes of standing.

    FACTA prohibits businesses from printing more than the

    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 intended use, or unless the use of the substance is otherwise excepted from the definition of a food additive.

    The use of a food substance may be GRAS either through scientific procedures or, for a substance used in food before 1958, through experience based on common use in food, which requires a substantial history of consumption for food use by a significant number of consumers.

    Rule adopts pilot voluntary notification program.

    The FDA’s rule implements as final a pilot notification program under which food makers can convene their own expert panels to prepare GRAS reviews and provide notice to the

    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 GMO disclosure laws. The Vermont Attorney General’s office has announced it will suspend enforcement of Act 120.

    Critics of the federal law, including Vermont’s congressional delegation, argued that it falls short compared with Vermont’s tougher labeling law requiring all foods with GMO ingredients to be labeled “produced with genetic engineering.”

    Supporters of the federal law, including many in the food industry, say it avoids a state-by-state patchwork of laws in favor of a national disclosure solution.

    Law will be federally enforced, but may fuel private lawsuits.

    The law will be administered and enforced by the federal government, through the USDA.

    FAA Regulations Clear Way for Delivery Drones

    August 9, 2016

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    FAA Regulations Clear Way for Delivery Drones

    August 9, 2016

    Authored by: BCLP and Flora Sarder

    The Federal Aviation Administration (FAA) has finalized its regulations concerning operational drones, allowing retailers to start using drone delivery systems.

    In making drones available for retail delivery use, the FAA has carved out a space for drones to operate without becoming an “air carrier” under federal law regulating air transportation.

    As a result, drones can now be used to deliver cargo in the mainland United States, except in Washington D.C., or any U.S. territory if the cargo weighs less than a total of 55 pounds, the flight is conducted from the remote pilot’s visual line of sight, the drones fly a maximum speed of 100 mph, and gain a maximum of 400 feet.

    The much anticipated drone regulations bode well for retailers and manufacturers making their way into the drone delivery space.  Just a couple of months ago, Switzerland’s postal service began testing out drone deliveries with Matternet, a company dedicated to creating and mastering drone delivery systems.

    In the United States, Amazon has eagerly been preparing for favorable regulations to allow room for Amazon PrimeAir, a delivery system designed to get to customers in 30 minutes or less.

    Drones must be flown by remote pilots during daylight hours

    Before retailers can start operating delivery drones, the new FAA regulations require that there must be a remote pilot who holds a remote pilot certificate and conducts a pre-flight check before each flight.  The drone must remain in the pilot’s visual line of sight so that it can be readily seen without

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