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NAAG Polices COVID-19 Price Gouging, Demands Fair Pricing Policies and Actions

April 6, 2020

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The National Association of Attorneys General (NAAG) is actively monitoring consumer product prices and working to eliminate price gouging in the U.S. during the COVID-19 pandemic. At least 33 attorneys general signed on to letters issued recently to a number of major online retailers and online sales platforms.

The letters indicate that while the AGs “appreciate reports of the efforts made by platforms and online retailers to crack down on price gouging,…we are calling on you to do more at a time that requires national unity.”

Specifically, the letters ask for three concrete actions:

  • Set policies and enforce restrictions on unconscionable price gouging during emergencies.
  • Trigger price gouging protections independent of, or prior to an emergency declaration.
  • Create and maintain a ‘Fair Pricing’ Page/ Portal where consumers can report price gouging incidents to you directly.
  • In connection with these actions, the AGs are asking companies to proactively monitor consumer

    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.

     

    U.S. CORONAVIRUS RELIEF BILL: The CARES Act – Provisions Affecting Employers and Employees

    April 3, 2020

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    Following tense negotiations throughout last week, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act” or “Act”) became law on March 27, 2020.  The CARES Act represents the third Phase of Congressional relief responding to the novel coronavirus (COVID-19) pandemic.  Phase I (Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 (P.L. 116-123)) and Phase II (Families First Coronavirus Response Act (P.L. 116-127)) were signed into law on March 6 and 18, respectively.   At 883 pages, the CARES Act is the largest relief bill in U.S. history and addresses on multiple fronts the hardships faced by individuals and businesses throughout this crisis.  These efforts include an unprecedented expansion of unemployment benefits, significant funding for the health care industry, aid to large and small businesses valued in the billions, and even direct payments to individuals.

    The majority of economic relief provisions for U.S. workers and employers is provided in

    Bay Area Counties Require Essential Businesses to Establish and Post Social Distancing Protocols

    Seven Bay Area counties renewed and modified their shelter-at-home orders yesterday, extending the shutdown period through May 3, and in all cases but one, requiring that all essential businesses that remain open establish and post social distancing protocols by April 2 at 11:59 p.m.: San Francisco, Marin, Contra Costa, Santa Clara, San Mateo, Alameda, and Santa Cruz.

    Santa Cruz County also extended its order through May 3, but does not include the same provision requiring establishment and posting of social distancing protocols.

    The orders specify that social distancing protocols must be substantially in this form, and be posted at or near the entrance of the business where it is easily viewable by the public and employees. A copy of the social distancing protocol must also be provided to each employee performing work at the business.

    The social distancing protocol must explain

    U.S. Congress CARES: Legislative Overview of Tax Provisions

    April 1, 2020

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    The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act” or “Act”) was signed into law by President Trump on Friday, March 27, 2020.  The Act provides tax benefits to businesses and individuals and includes a number of changes to the Internal Revenue Code, including changes to the limitations on the deduction for net operating losses (“NOLs”) and business interest expense.  A number of the CARES Act provisions reverse or defer the effective time for certain changes made by Public Law 115-97, informally known as the 2017 Tax Cuts and Jobs Act (“TCJA”).  We will be releasing additional alerts to provide more in-depth analysis of certain of the tax benefits included in the CARES Act.

    Tax Benefits for Businesses 1. NOL carryback and excess business losses

    The CARES Act temporarily repeals the prohibition on the carryback of NOLs in order to obtain a current refund of U.S. federal income taxes paid

    COVID-19: Considerations for Retailers on Employee Furloughs in U.S. and California

    As an alternative to laying off employees, many retailers may be considering furloughs – unpaid leaves or drastic reductions in work hours or work schedules – that allow them to retain employees and possibly continue to provide certain benefits. Retailers should be aware that furloughs still likely trigger notice requirements under state WARN laws, and in California may be considered a termination of employment requiring payment of final wages.

    This post provides an overview of furlough considerations with respect to unemployment benefits, WARN laws, possible termination implications, reduced hours or work share, use of vacation time, and benefits.

    Unemployment Insurance

    Furloughed employees, as well as many employees with reduced hours, are eligible for unemployment insurance benefits. In California, Governor Newsom’s Executive Order N-25-20 removes the waiting period to receive benefits. More information on filing for unemployment benefits is available here.

    WARN Laws

    The federal Worker Adjustment and Retraining

    Lead Generation and the TCPA: How to Protect Your Company from Downstream Bad Actors

    Many businesses, including retailers, rely on inbound lead generators to identify prospective customers for telephone or text-based direct marketing campaigns.  Sourcing inbound leads from a variety of providers allows firms to tap into market segments that might otherwise be unavailable to them and improve conversion rates on their marketing spend.  But outsourcing lead gen to downstream providers also carries risk, as it is not uncommon for the original source of the lead to be several layers removed, making it difficult to verify the quality of the leads or to ensure that the proper consents were obtained.  Given the daily deluge of class action lawsuits brought under the Telephone Consumer Protection Act, 47 U.S.C. § 227 (”TCPA”) by industrious plaintiff’s lawyers, it is only a matter of time before your company comes into their crosshairs.  How can you protect your company?

    The TCPA prohibits calls or texts to a cellular telephone

    What Retailers Need to Know About the CARES Act, SBA Lending, and Loan Forgiveness

    March 26, 2020

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    The Coronavirus Aid, Relief, and Economic Security, or “CARES Act”—the third emergency bill that Congress has prepared in response to the Coronavirus (COVID-19) pandemic—is likely to be signed into law by Friday, March 27, 2020. Bryan Cave Leighton Paisner lawyers have been analyzing drafts of the bill, scouring its relevant provisions, and stand ready to advise clients on what impact it may have on their businesses and whether those businesses may be eligible for assistance.

    The bill has significant relief for small businesses, including $349 billion in Small Business Administration (SBA) loan guaranties and subsidies and additional funding for SBA programs. Highlights include:

    • Expansion of SBA’s 7(a) Loan Program to Support New “Paycheck Protection Program” Loans. The SBA’s existing 7(a) program will see:
      • Increase in maximum loan amount to $10 million.
      • Allowable uses expanded to include:
        • Payroll support (including paid sick or medical leave);
        • Employee salaries;
        • Mortgage, rent and

    U.S. COVID-19: Commercial Leases – Rent Obligations in the United States

    March 26, 2020

    Categories

    While it is true that a number of States and local municipalities have stopped all eviction proceedings and many courts are currently closed, the issue of rent remains front and center between landlords and tenants. The following sets forth some guidelines to begin thinking about these issues:

    • Review your Leases. Payment obligations will generally rest on the specific language of the lease, but the answers may not be as clear as a landlord or tenant might assume. Provisions often relegated to the “Miscellaneous” section in leases (e.g., force majeure, severability, independent covenants etc.) may take center stage.
      • Lease provisions that landlords should focus on include:
        • Requirements that rent be paid without deduction or set-off;
        • Provisions that afford a landlord broad rights to shut down its building in an emergency without any abatement of rent;
        • Force majeure clauses that carve out monetary obligations from their applicability;
        • In the retail setting,

    COVID-19: Employee Assistance, Benefits and HR Guidance for Retailers

    March 24, 2020

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    As retailers continue to respond to the COVID-19 crisis, the following posts from our colleagues at BCLP At Work and Benefits BCLP can help navigate through the various employee assistance and benefits programs, and help answer human resources questions.

    CRA Advises California Distribution Centers Can Stay Open Under State Order

    California Governor Newsom has clarified that distribution centers in California can remain open under his Safer At Home order, stating that “distribution centers are part of critical infrastructure for many industries,” according to the California Retailers Association.  CRA also reports that it has obtained oral confirmation from the governor’s office that online sales and shipping activities can continue under the order.

    As we previously reported, Governor Newsom on Thursday issued a statewide order directing all individuals to stay at home “except as needed to maintain continuity of operations of the federal critical infrastructure sectors.” The order went into effect on Thursday, and is in place until further notice.

    As to exempt business activities, the order and web page providing more information on the order both refer to the Guidance on the Essential Critical Infrastructure Workforce by the U.S. Dept. of Homeland Security’s Cyber Infrastructure (CISA),

    COVID-19: California Issues Statewide Stay At Home Order; What It Means for Retailers

    Following COVID-19 shelter-in-place orders by nearly a dozen different California counties, Governor Gavin Newsom on Thursday evening issued a statewide order directing all individuals in the state to stay home “except as needed to maintain continuity of operations of the federal critical infrastructure sectors.”

    The web page providing more information on the order directs residents to stay at home “except for essential needs.”  As under county shelter-in-place orders, it advises that essential services will remain open such as:

    • Gas stations
    • Pharmacies
    • Food: Grocery stores, farmers markets, food banks, convenience stores, take-out and delivery restaurants
    • Banks
    • Laundromats/laundry services

    The following are closed statewide:

    • Dine-in restaurants
    • Bars and nighclubs
    • Entertainment venues
    • Gyms and fitness studios
    • Public events and gatherings
    • Convention centers

    Governor Newsom’s order expressly orders that Californian’s working in 16 federal critical infrastructure sectors may continue their work “because of the importance of

    COVID-19 in 19 Teleconference: Force Majeure Provisions

    March 19, 2020

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    In the first of our series of 19-minute teleconferences on the impacts of COVID-19, leaders of our COVID-19 Task Force will discuss force majeure provisions and the doctrine of impracticability as they apply to commercial contracts in the United States.

    Presented by Meryl Macklin and Mark Duedall

    Event Details

    Date Friday, March 20, 2020 Time 10:30 a.m. to 10:49 a.m. PT 11:30 a.m. to 11:49 a.m. MT 12:30 p.m. to 12:49 p.m. CT 1:30 p.m. to 1:49 p.m. ET Dial-In Instructions Provided to registrants in advance of the teleconference.

    Register

    COVID-19: Four Steps to Help Protect Supply Chains in Face of Shelter-in-Place Orders

    Effective March 17, 2020, San Francisco and six other Bay Area counties passed “Shelter in Place” ordinances preventing workers not engaged in providing Essential Activities, working at Essential Businesses or providing Essential Government Services from leaving their homes to go to work. Such laws are now being considered throughout the country. This alert provides actionable steps companies can take to ensure that Shelter in Place laws in their jurisdictions do not inadvertently block employees from getting to work at their Essential Businesses.

    First, be proactive, contact your state and local government officials to make sure they understand why your business is essential. If your product or service is truly essential, no government official is going to want to be blamed for inadvertently causing a shortage of that product. Note the Bay Area Orders define Essential Businesses to include “Businesses that supply other essential businesses with the support or supplies necessary

    FDA Labeling Guidance: Making Structure/Function Claims for Dietary Supplements

    Dietary supplement manufacturers seeking to explain and market their products must carefully craft statements on supplement labels to ensure compliance with the Food and Drug Administration’s (“FDA’s”) regulations regarding supplements.

    The FDA permits supplements to so-called “structure-function claims,” which are claims that describe the role of a nutrient or dietary supplement “intended to affect the structure or function in humans” or characterize the “documented mechanism” by which the nutrient acts to maintain such structure or function, but do not claim to “diagnose, mitigate, treat, cure, or prevent a specific disease or class of diseases.”  21 U.S.C.A. § 343.  Structure/function claims are permissible without pre-approval by the FDA if the statement satisfies three criteria:

    (a) the manufacturer possesses “substantiation” that such statement is truthful and not misleading;

    (b) the product label “prominently displays” the following statement: “This statement has not been evaluated by the Food and Drug Administration. This product is

    Retailers Face Class Actions Based on Automatic Renewal of Fee-Based Loyalty Programs

    March 2, 2020

    Categories

    Retailers are being targeted by class action lawsuits alleging that automatic renewal of loyalty programs requiring an annual fee violates California law. In the past year and a half, more than 100 lawsuits have been filed alleging violation of California’s Automatic Renewal Law, or ARL.[1]

    The ARL took effect July 1, 2018 and prohibits automatic renewal of subscription or service fees without first presenting consumers with certain terms, and obtaining their affirmative consent.  Prior to charging a consumer a loyalty program fee, retailers should ensure that:

    • They obtain affirmative consent of the consumer to “automatic renewal offer terms” that are presented in a “clear and conspicuous” manner. The law specifies that this means in larger type than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same size, or set off from the surrounding text of the same size by
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