Hunton Retail Law Resource

The upcoming election offers opportunities for leadership changes at the CPSC.  The agency currently has four commissioners and one vacancy:

On October 1, 2020, New York state implemented a ban on businesses charging a “pink tax” for their products or services. The new law prohibits any individual or entity, including retailers, suppliers, manufacturers or distributors, from charging a different price for two “substantially similar” goods or services based on the gender for whom the goods or services are marketed.

The COVID-19 pandemic continues to cause uncertainty for employers across the country, but, as the National Labor Relations Board reiterated on September 18, it does not excuse labor law violations.

Last week the Eleventh Circuit delivered a surprising blow to class action settlement practice finding that 19th century Supreme Court precedent “prohibit[s] the type of incentive award that the district court approved here–one that compensates a class representative for his time and rewards him for bringing a lawsuit,” a type of incentive award that is “commonplace in modern class-action litigation.” Retailers and other defendants in class action cases should take note, because this ruling may impact how settlements in the Eleventh Circuit should be structured going forward.

While there were already a number of high profile retail bankruptcies in 2019, current economic conditions and pandemic-related market challenges have exacerbated an already difficult retail environment, which has led to a significant increase in bankruptcies in 2020. Year to date, more than 30 major retail and restaurant chains have filed for bankruptcy, which is more than in all of 2019. Furthermore, 2020 is on track to have the highest number of retail bankruptcies in 10 years. Although the Q4 holiday season often provides the strongest quarterly financial performance for many retailers, which may slow the pace of bankruptcy filings, projected holiday sales numbers may be uncertain this year, and additional bankruptcies are still likely to follow by year end.

Your product development team spent years designing a product, working out every design detail until it is just right. Your company spent significant time and money marketing the product, shoring up a great reputation for the product and the company that stands behind it. Then, a copycat comes along with a knockoff and starts selling a product that looks eerily similar—or even identical—to yours. When your customers search online for your long-developed and lauded product, the knockoff appears, and at a fraction of the price. You are certainly surprised, and likely dismayed.

On September 4, 2020, the United States Environmental Protection Agency (EPA) released the final scoping documents for the next 20 chemicals it has designated as “high priority” for risk evaluation under the Toxic Substances Control Act (TSCA). If EPA’s risk evaluation process identifies an “unreasonable risk” associated with any use of a chemical, TSCA requires the agency to regulate the risk. That means manufacturers, distributors, and retailers alike may soon be grappling with new regulations and increased litigation risk as EPA moves forward with its analyses and public scrutiny of these chemicals intensifies.

Even in a pandemic, some things do not change.  This month’s Recall Roundup finds the CPSC focusing on dangers that have been front and center for some time.  Specifically, the CPSC continues to focus its regulatory efforts on protecting consumers from product defects in all-terrain vehicles (ATV) and other recreational off-highway vehicles such as snowmobiles, golf carts, and utility vehicles.  The CPSC recently issued a warning to consumers about the risks associated with such products, especially as more consumers look for outdoor activities during the pandemic.  The warning cites to the CPSC’s Annual ATV Report of 2018, which identified almost 82,000 ATV-related injuries that required hospital treatment.  Nearly one-fourth of these injuries were sustained by children under 16 years old, the highest fraction of any age group.  There were also 264 ATV-related deaths in 2018, though this number is expected to rise as reporting is ongoing.  So far, the CPSC has issued 15 recalls for recreational off-highway vehicles in 2020.  In 2019, that figure was 20 recalls.

On July 22, 2020 Leaflink, a B2B cannabis marketplace, closed a $250 million senior secured credit facility with an undisclosed private lender. In the press release, Leaflink described the deal as “one of the largest debt financing deals completed in cannabis to date and…an important milestone for the industry.” When most people think of cannabis industry financing for retailers or operators, rather than debt financing, they think of sale-leasebacks with a cannabis real estate investment trust (REIT). Leaflink intends to use the money to provide supply chain financing options to its retailer clients through its new platform Leaflink Financial. This blog post gives a brief overview on why sale-leasebacks are ubiquitous and why debt financing is on the rise.

Earlier this year, The Retail Equation, a loss prevention service provider, and Sephora were hit with a class action lawsuit in which the plaintiff claimed Sephora improperly shared consumer data with The Retail Equation without consumers’ knowledge or consent. The plaintiff claimed The Retail Equation did so to generate risk scores that allegedly were “used as a pretext to advise Sephora that attempted product returns and exchanges are fraudulent and abusive.”