Hunton Retail Law Resource

Should you have to pay to see CPSC’s adopted safety standards?  That is the question raised by a lawsuit filed in the Third Circuit this month, which challenges the CPSC’s adoption of mandatory safety standards for consumer products that are not available for free to the public.  The American Society for Testing and Materials (“ASTM”) is a well-recognized independent organization that develops consensus-based, voluntary standards for children’s products.  In 2019, ASTM updated its safety specifications for infant bath seats, which includes changes to labeling, product performance, and safety testing (ASTM F1967-19).  The CPSC later promulgated an agency rule adopting the updated ASTM standard as legally binding on infant bath seat manufacturers (16 C.F.R. § 1215).  On behalf of a new mother, a civil rights group filed a petition with the U.S. Court of Appeals for the Third Circuit pursuant to 15 U.S.C. § 2060 challenging the CPSC’s rule.  The mother claims that she asked the CPSC for a copy of the standard and the CPSC instead directed her to buy a copy from ASTM.  ASTM charges $56 for a copy of the standard—almost double the price of an infant bath seat.  The petition asks the Third Circuit to vacate the rule, order the CPSC to make any binding standard freely accessible to the public whenever the CPSC proposes to promulgate a new rule, and order the CPSC to make any binding standard freely accessible to the public permanently after the CPSC adopts it in a final rule.

According to U.S. Census Bureau estimates, retail sales plummeted 16.4% in April 2020. As state and local governments across the country begin to lift or ease Stay at Home Orders and business closures, retailers reopening their doors are grappling with how to protect their employees’ health and reassure customers that it is safe to shop.

A consumer advisory issued on June 1, 2020 by the United States Environmental Protection Agency (EPA) clarifies which hard-surface disinfectant products may legally make claims regarding expected efficacy against the COVID-19 virus. The advisory, titled “What You Need to Know Regarding Products Making Claims to Kill the Coronavirus Causing COVID-19,” also warns retailers of potential enforcement actions if they sell non-compliant products.

The COVID-19 pandemic has driven a large shift toward online retail transactions. In April of 2020, nonstore sales, mostly conducted through e-commerce, increased by nearly 30 percent while overall retail sales in the US are down 16 percent year over year, according to the Department of Commerce. The recent flood of e-commerce has left unprepared retailers struggling to fulfill orders, as they currently lack the requisite warehouse space and other supply chain capabilities. At the same time, other retailers have been forced into bankruptcy as a result of COVID-related closures. The changing needs of retailers who are adopting e-commerce strategies and the market exits of others are altering the industry’s real estate footprint.

COVID-19 has had an unprecedented effect on the retail industry across the United States, as many retailers grapple with government mandates that either require closure or impose stringent restrictions on being open, employment and supply chain disruptions, and an overall decline in consumer demand as market conditions remain volatile and unemployment rates continue to rise. The devastating consequences of the coronavirus began to come into focus at the same time many companies were preparing to issue quarterly or annual results and convene investor calls.

A consumer recently filed a products liability lawsuit against Keurig regarding its mini plus brewing system—a coffee maker that Keurig recalled at the end of 2014. Keurig recalled the brewing system after receiving about 200 consumer reports, including 90 reports of burn-related injuries, regarding the brewing system’s pressurized water overheating and spraying out of the machine. The lawsuit alleges that Keurig waited too long to recall the brewing system and therefore failed to warn consumers of the product’s defects. This lawsuit serves as a reminder to manufacturers, distributors and retailers that actions or inactions prior to issuing a recall may be subject to scrutiny and litigation.

The National Advertising Division (NAD) has recommended that Factor Nutrition Labs, LLC, discontinue its claim that its Focus Factor brain health supplement is “America’s #1 Clinically Studied and Patented Brain Health Formula.” NAD’s decision follows a challenge by Quincy BioScience, Inc. (Quincy), the maker of Prevagen brain health dietary supplement.

The COVID-19 pandemic has wreaked havoc on retailers in an already battered industry. Commencing in mid-March, governors from a majority of states issued executive orders requiring nonessential businesses to close to combat the spread of COVID-19. Retailers who rely on foot traffic to support their businesses felt a swift and severe impact. Retailers who recently had filed bankruptcy under chapter 11 had their reorganization efforts disrupted in unprecedented fashion.

On May 6, 2020, the United States Supreme Court held oral argument in William P. Barr, et al. v. American Association of Political Consultants, et al., No. 19-631 (Nov. 14, 2019). In Barr, the Court was asked to consider the constitutionality of the government debt collection exemption to the Telephone Consumer Protection Act (TCPA). Under that exemption, calls placed to collect a debt owed to or guaranteed by the United States government are not subject to the TCPA’s autodialing restrictions. The questions before the Court were (1) is the government debt collection exemption unconstitutional under the First Amendment and (2) if so, whether the constitutionality can be addressed by simply severing that exemption from the statute or whether the entire statute should be invalidated. Based on the tone of the oral argument, the tide may be changing for the TCPA.

Responding to a challenge from Align Technology, Inc. (Align), maker of Invisalign, the National Advertising Division (NAD) recommended that SmileDirectClub (SDC) modify certain of its comparative advertising claims, while finding that others were sufficiently substantiated.