Hunton Retail Law Resource

In the first four months of 2021, Virginia, New Mexico, New York and New Jersey passed laws legalizing or decriminalizing, in some form, recreational marijuana.  Exactly how these laws will affect employers in these states is still an open question, but for now, employers should understand the nuances of the laws so they can prepare for the emerging reality that is legal marijuana.  For retail employers, this means renewed attention to drug use and drug testing policies.  Retailers, for the most part, are still able to enforce policies against drug use at work, but must be mindful of how these policies, especially with regards to testing and marijuana, could leave them open to claims of discrimination or state law violations.  At a minimum, retailers should review their policies for each state in which they operate, as a “one-size-fits-all” approach may no longer be practical.

On June 1, 2021, the U.S. Court of Appeals for the D.C. Circuit overturned a NLRB determination that a manager’s incorrect blaming of a union for discrepancies in an employee’s paid-leave time constituted an unfair labor practice. The pivotal issue was whether the manager’s statements had a reasonable tendency to interfere with employees’ labor rights. As discussed below, the D.C. Circuit rejected the NLRB’s determination that the manager’s statements had a reasonable tendency to interfere with employees’ labor rights, reasoning that the manager’s misstatements were lawful expressions of the employer’s opinions.

In the world of consumer products, the month of May was all about infant sleep products. The CPSC recently approved a new federal standard for infant sleep products for infants up to five months of age since such inclined sleepers, bassinets, and in-bed sleepers that have been linked to multiple infant deaths. Beginning in June 2022, infant sleep products must meet a new federal safety standard. The new federal standard incorporates a voluntary ASTM safety standard with further modifications to strengthen it. If the products do not already meet the requirements of an existing CPSC standard, then the products must pass testing to confirm that the sleep angle surface is 10 degrees or lower and comply with the CPSC’s safety standard for bassinets and cradles.

This week, the FTC voted 3–1 to accept a settlement agreement with MoviePass, Inc., its parent company, and two of the now-defunct company’s former employees, after allegations of data security issues and deceptive trade practices. The Commission brought an enforcement action against MoviePass pursuant to the FTC Act and the Restore Online Shoppers’ Confidence Act (“ROSCA”), the latter of which requires disclosure of all material terms, a consumer’s informed consent, and a simple mechanism to stop recurring charges when marketing negative option services.

In a recent case, Trimble Inc. v. PerDiemCo LLC, No. 2019-2164 (May 12, 2021), the Federal Circuit found that, sometimes, threatening a patent infringement action, or entering extensive patent license negotiations prior to filing suit, with a company having a presence in a particular state could subject you to jurisdiction in that state, even if you are located elsewhere.

The CPSC most commonly works with manufacturers, sellers, or those in the distribution chain to prompt them to issue warnings or recall notices to consumers. Recently, however, the CPSC has taken the far more unusual step of independently issuing its own warnings to consumers about dangerous products in three circumstances involving treadmills, youth ATVs, and bed rails.

The Second Circuit just affirmed the dismissal of a data breach class action predicated on an alleged increased risk of identity theft on Article III standing grounds.  McMorris v. Carlos Lopez & Assocs., LLC, No. 19-4310, 2021 WL 1603808 (2d Cir. Apr. 26, 2021).  Notably, the district court that dismissed the action raised the issue of standing sua sponte in advance of a scheduled class settlement fairness hearing.

In 1973, Congress amended the FTC Act by adding §13(b), giving the Federal Trade Commission (“FTC”) equitable powers to remediate any violation of any law under its purview.  Using that power, the FTC has sought equitable monetary relief, including restitution and disgorgement. The lower courts routinely authorized such relief and Congress seemingly acknowledged the FTC’s power when it reauthorized the FTC Act. Despite those headwinds, today the Supreme Court unanimously held in a highly-anticipated case, AMG Capital Management, LLC v. FTC, that the FTC cannot seek or obtain equitable monetary relief pursuant to §13(b).

The Consumer Product Safety Commission (CPSC) has proposed a Direct Final Rule implementing the new federal upholstered furniture flammability standard.  The Direct Final Rule, published by the CPSC on April 9, 2021, would codify California’s TB 117-2013 flammability standard as mandated by Congress, but with the following significant clarifications:

The Fifth Circuit recently issued an opinion concluding that the CPSC violated the APA when it issued a final rule in 2017 limiting phthalate content in children’s products. The Consumer Product Safety Improvement Act of 2008 (CPSIA) bans children’s toys and child care articles containing more than 0.1 percent of several phthalate chemicals because of concerns that ingestion can have harmful health effects on children. Phthalates are used to make soft and pliable plastics, such as vinyl. The CPSIA also directed the agency to promulgate a final rule regarding phthalates. In 2017, the CPSC issued a final rule expanding the list of phthalates covered by the ban.