Bryan Cave Leighton Paisner Retail Blog

Retail Law

US

Main Content

Countdown to the CCPA: What is Legally Considered to be a Data Breach?

When the California Consumer Privacy Act (“CCPA”) takes effect in January 2020, California will become the first state to permit residents whose personal information is exposed in a data breach to seek statutory damages of between $100-$750 per incident, even in the absence of any actual harm.  The class actions that follow are not likely to be limited to California residents, but will also include non-California residents pursuing claims under common law theories.  A successful defense will depend on the ability of the breached business to establish that it implemented and maintained reasonable security procedures and practices appropriate to the nature of the personal information held.  The more prepared a business is to respond to a breach, the better prepared it will be to defend a breach lawsuit. To help our clients get ready for the CCPA, Bryan Cave Leighton Paisner is issuing a series of data security articles to

FTC Issues Guidance on Proper Disclosures for Social Media Influencers

November 6, 2019

Categories

Many retailers and online businesses leverage social media to boost brand awareness and promote product sales. The FTC recently has issued guidance on what social media influencers need to do when endorsing products. The rules are common sense, but influencers may not adopt them completely, creating risk for themselves and potentially for businesses whose products they promote. Marketing teams responsible for sponsorships, partnerships and endorsements should review the FTC’s new guidance and ensure that their influencers are being clear and direct about sponsored product placements. While the FTC indicates that influencers have the obligation to ensure their promotions are truthful, plaintiffs, in the context of potential consumer class actions, may attempt to attribute risk back to your business.

FTC’s Disclosures 101 for Social Media Influencers is an easy read (published  November  5, 2019), and according to the FTC’s press release of the same date, it updates the

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

Are Your Gift Cards Accessible? Lawsuits Assert Gift Cards Should Be Offered in Braille

In addition to concerns surrounding the accessibility of a business’ website, retailers now have a new concern – the accessibility of their gift cards. Plaintiffs have recently filed a number of lawsuits alleging that the failure to sell gift cards containing writing in Braille is a denial of full and equal access to blind and visually impaired individuals, and thus is a violation of Title III of the Americans with Disabilities Act (“ADA”).

On October 24, 2019, twelve lawsuits were filed in the United States District Court for the Southern District of New York against well-known retailers, restaurants, and other businesses. The complaints allege, in part, that because store gifts cards are generally the same size and texture as credit cards, they are indistinguishable by a blind person from credit cards and other gift cards.

To support this new theory of ADA liability, the complaints provide some background into the

Avoid a Catastrophic Loss From a Customer’s Bankruptcy — Five Tips

One day, you get a notice in the mail that an important customer has filed chapter 11. Your customer recently paid $250,000 on invoices that were delinquent for several months and still owes you $500,000. The customer, a brick-and-mortar store, sent form letters to its vendors expressing optimism that the chapter 11 process will allow the store to continue to operate while it locates a buyer which will continue to operate the store.

A few weeks later, no buyer has been located and the customer seems headed into a liquidation. Your inventory will probably be dumped on the market at bargain prices — potentially depressing the price of your product.  You may not see any of the proceeds of the liquidation, which will most likely go to pay the customer’s bank lenders. Lastly, you are losing a significant customer.

Not only are you looking at potentially writing off $500,000 in

California Chamber of Commerce Challenges Prop. 65 Warning for Acrylamide in Food and Beverage Products

October 18, 2019

Categories

The California Chamber of Commerce has filed a lawsuit seeking to prevent the state from “enforcing a requirement to provide a false, misleading, and highly controversial cancer warning for food and beverage [] products that contain the chemical acrylamide.” Cal. Chamber of Commerce v. Becerra, No. 19-0962 (E.D. Cal., October 7, 2019).

The complaint argues that although “certain governmental and scientific entities” have identified acrylamide as a carcinogen in laboratory animals, “[s]cientific studies in humans, however, have found no reliable evidence that exposure to acrylamide in food products is associated with an increased risk of developing any type of cancer. In fact, epidemiologic evidence suggests that dietary acrylamide—i.e., acrylamide that forms naturally in normal cooking of many food products—does not cause cancer in humans or pose an increased risk of cancer in humans. Indeed, some food products that contain acrylamide (e.g., whole grains and coffee) have been shown to reduce the risk

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

CCPA Loyalty Club FAQ: Is a Retailer Required to Delete Information Concerning a Loyalty Member?

October 11, 2019

Categories

Typically no.

Loyalty programs can be, and are, structured in a variety of different ways.  Some programs track dollars spent by a consumer, others track products purchased.  Some programs are free to participate in, others require consumers to purchase membership.  Some programs offer consumers additional products, other programs offer prizes, money, or third party products.  All loyalty programs share one thing in common however – they provide some form of reward to a consumer in recognition of (or in exchange for) their repeat purchasing patterns.

One of the rights conferred by the CCPA is the ability of a consumer to request that a business delete personal information “which the business has collected from the consumer.”  While numerous retailers have expressed confusion regarding whether that right requires the deletion of loyalty program related data, it is important to remember the right to deletion is not an absolute right and may rarely

Supreme Court Denies Review in Website Accessibility Case Against Domino’s Pizza

Businesses should expect that lawsuits and demand letters alleging that their websites violate the Americans with Disabilities Act (“ADA”) will continue to increase in the wake of the United States Supreme Court’s October 7, 2019 decision denying Domino’s Pizza’s (“Domino’s”) petition for a writ of certiorari in the Robles v. Domino’s Pizza case. The Supreme Court’s decision to deny certiorari to Domino’s petition will send the lawsuit back to the United States District Court for the Central District of California to be tried on its merits.

Guillermo Robles (“Robles”) filed this lawsuit in September 2016 alleging, in part, that Domino’s website contained barriers to accessibility in violation of the ADA. Robles alleged that he unsuccessfully tried to order custom pizza online from a nearby Domino’s location. Robles sought, in part, a permanent injunction requiring Domino’s website to comply with the Web Content Accessibility Guidelines (“WCAG”) 2.0.

In March 2017, the District

Stop the CCPA Fearmongering: Retailer Loyalty Programs Will Survive

Anytime a new statute or regulation comes along, some law firms unfortunately flag issues that may not be of true concern to companies, or highlight problems that may not, in fact, exist.  Unfortunately, that continues to happen in connection with the California Consumer Privacy Act (“CCPA”).  In the context of retailer loyalty or reward programs, firms have said that the CCPA may spell the “end of loyalty programs,” or implied that the CCPA could lead to “the potential elimination of loyalty programs due to the nondiscrimination requirements.”  Some law firms have gone so far as to advise retailers to “address the issue[s]” caused by their loyalty programs by “not offer[ing] preferential pricing through loyalty programs” or by “mak[ing] loyalty program pricing available to all customers” regardless of whether they are, in fact, members of the loyalty program.  Such changes would, of course, destroy the business-case for having a loyalty program

Congress Presses FDA to Act on CBD Regulations

Congress Presses FDA to Act on CBD Regulations

September 26, 2019

Authored by: Bryan Cave, Brandon Neuschafer and Merrit Jones

Following statements by the U.S. Food and Drug Administration that cannabidoil (CBD) in food and beverage products remains illegal, and amid the patchwork of state laws and enforcement actions, a group of U.S. lawmakers, led by Reps. Chellie Pingree (D-Maine) and James Comer (R-Ky.), have urged the FDA to “quickly adopt a policy of enforcement discretion and to consider issuing an interim final rule to regulate CBD as a dietary supplement and food additive while simultaneously moving forward with a robust framework for evaluating the safety and accurate labeling of these products.” The letter stated that the agency’s “current regulatory posture on CBD has created significant regulatory and legal uncertainty for participants in this quickly evolving industry. We are discouraged by FDA’s estimation that a rulemaking process could span 3 to 5 years. We believe there are more expeditious measures that FDA could take that would establish regulatory clarity

New York Law to Take Effect Requiring Warning, Tip Restraints for Clothing Storage Units

September 20, 2019

Categories

New York furniture retailers and manufacturers have until October 12, 2019 to comply with a New York state law that requires that clothing storage units be labeled with a permanent tip hazard warning and sold with a tip restraint device.

The law, named “Harper’s Law” after a 3-year-old boy who died from a furniture tip-over incident, requires that clothing storage units comply with a voluntary industry safety standard, ASTM F2057, which provides minimum stability standards, requires that covered furniture come with wall-anchoring kits, and be labeled with a permanent tip-hazard warning.

Sale of Crib Bumpers Banned: Also taking effect on October 12, a New York law bans the sale of crib bumper pads and prohibits their use in child care facilities or places of public accommodation. New York State is the third U.S. state to ban crib bumper pads, along with Maryland and Ohio. Crib bumpers are also

FTC Warns Companies Against Advertising CBD Products as Treating or Curing Diseases

The U.S. Federal Trade Commission has announced that it sent warning letters to three companies that sell “oils, tinctures, capsules, ‘gummies,’ and creams containing cannabidiol (CBD),” a chemical compound derived from the cannabis plant. The letters warn the companies, which have not been identified, that “it is illegal to advertise that a product can prevent, treat, or cure human disease without competent and reliable scientific evidence to support such claims.”

The FTC states that each company marketed its CBD products as being able to “treat or cure serious disease and health conditions,” such as relieving “’even the most agonizing pain’ better than prescription opioid painkillers,” or treating cancer, Alzheimer’s disease, multiple sclerosis (MS), fibromyalgia, cigarette addiction, colitis, schizophrenia, anxiety, depression, Lou Gehrig’s Disease (ALS), stroke, Parkinson’s disease, epilepsy, traumatic brain injuries, diabetes, Crohn’s disease, psoriasis, and AIDS.

In the letters, the FTC urges the companies to review all claims

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

No Longer a “Whisper” – California Appellate Court Joins List of Courts to Weigh in on Website Accessibility

In the first decision by a California appellate court addressing the application of Title III of the Americans with Disabilities Act (“ADA”) to websites, the court in Thurston v. Midvale Corp. (Sept. 3, 2019) 2019 WL 4166620, affirmed summary judgment for the plaintiff and held that the ADA, as incorporated by California’s Unruh Act, applies to websites connected to a brick and mortar business.

California’s Court of Appeal for the Second Appellate District declined to adopt the position of the U.S. Court of Appeals for the Third Circuit that the ADA applies only to physical locations. Instead, the court followed the position of the U.S. Court of Appeals for the Ninth Circuit, holding that “including websites connected to a physical place of public accommodation is not only consistent with the plain language of Title III, but it is also consistent with Congress’s mandate that the ADA keep pace with changing

Senate Members Ask DOJ to Take Action as Number of Website Accessibility Lawsuits Continues to Rise

Members of Congress are once again asking the U.S. Department of Justice (“DOJ”) to take action addressing website accessibility under the Americans with Disabilities Act (“ADA”) in light of the increasing number of lawsuits and claim letters asserting violation of the ADA.

Based on the first six months, 2019 is likely to exceed the records set in 2018 for the number of website accessibility cases filed, according to digital accessibility solutions provider AudioEye, which tracks such case filings. More than half of the cases filed, or 55 percent, were against retailers, followed by complaints against defendants in the hotel, restaurant, banking, and real estate industries. Many of those defendants have been hit with more than one lawsuit.

Despite the increasing number of lawsuits and claim letters, the DOJ has not issued regulations concerning website accessibility under the ADA. As we previously reported, the DOJ issued an Advanced Notice of

The attorneys of Bryan Cave Leighton Paisner make this site available to you only for the educational purposes of imparting general information and a general understanding of the law. This site does not offer specific legal advice. Your use of this site does not create an attorney-client relationship between you and Bryan Cave LLP or any of its attorneys. Do not use this site as a substitute for specific legal advice from a licensed attorney. Much of the information on this site is based upon preliminary discussions in the absence of definitive advice or policy statements and therefore may change as soon as more definitive advice is available. Please review our full disclaimer.