Hunton Retail Law Resource

On February 15, 2018, by a vote of 225 to 192, the House of Representatives passed the ADA Education and Reform Act (HR 620). Title III of the Americans with Disabilities Act (“ADA”) was enacted to ensure access for persons with disabilities to public accommodations. Too often, however, serial litigants have abused Title III to shake down businesses for quick settlements over minor, technical violations without actually seeking to improve access. By amending the ADA to include a notice and cure provision, proponents of HR 620 say this bill will curb predatory public accommodations lawsuits brought by serial plaintiffs and their lawyers against businesses. 

Two recent decisions out of California—one in state court and one in federal—provide defendants new ammunition for defeating class certification. The Ninth Circuit’s decision in In re Hyundai & Kia Fuel Economy Litigation and the Fourth District Court of Appeal’s decision in Apple Inc. v. Superior Court have important implications for California retailers opposing class certification. But Hyundai also poses challenges to retailers looking to settle class claims on a nationwide basis.

This past week, several consumer actions made headlines that affect the retail industry.

Advertising Agency Pays $2 Million to FTC and State of Maine to Settle Unsubstantiated Weight-Loss Claim

The FTC and the State of Maine have settled a case against ad agency Marketing Architects, Inc. (“MAI”) for MAI’s role in creating and disseminating deceptive radio ads replete with unsubstantiated claims for weight-loss products. MAI had been retained to create the ads by dietary supplement supplier, Direct Alternatives, Inc., whom the FTC and Maine had sued in 2016. Under the agreement with MAI, the ad agency is banned from making any of the seven “gut check” weight-loss claims that the FTC has publicly advised are always false. MAI also must have competent and reliable science to support weight-loss claims and must not misrepresent facts relating to return and cancellation policies of the products marketed. Finally, the order imposes a $2 million judgment on MAI, which may be used to provide refunds to consumers harmed by the conduct.

Once the sole province of hedge funds and special interest groups, many mainstream institutional investors have now also embraced a more activist perspective with regard to their portfolio companies. In his most recent letter to CEOs, Blackrock chairman Larry Fink advocated in favor of a series of Environmental-Social-Governance (“ESG”) issues and rhetorically asked companies, “What role do we play in the community?” Other institutional money managers, like New York City’s Comptroller Scott Stringer, have also accelerated their ESG-focused shareholder activism in recent years, targeting well-known retailers such as Kroger, Walmart and Home Depot in the process. 

Recently, President Trump announced that he sent names of four nominees to serve as commissioners on the five-member Federal Trade Commission (“FTC”) to the Senate for approval. If all four of the nominees are confirmed, it will still leave one remaining vacant seat on the FTC, which has been operating as a bipartisan two-member interim agency since early last year. The nominees, three of whom were announced last fall, consist of three Republicans—Joseph Simons, Noah Phillips and Christine Wilson—and one Democrat, Rohit Chopra.

With the arrival of 2018, President Trump resubmitted his nominations for CPSC leadership vacancies to the Senate. In 2017, Trump nominated Commissioner Ann Marie Buerkle to serve as CPSC Chair and Dana Baiocco to serve as a commissioner replacing Democrat Commissioner Marietta Robinson, whose term expired. But, under Senate rules, nominations not acted on are returned to the President. At the end of the Senate’s 2017 session, this meant that roughly 120 nominations were returned to Trump. Both nominees—Buerkle and Baiocco—are expected to receive Senate confirmation this year.

This past week, several consumer actions made headlines that affect the retail industry.

FTC Crack Down on “American Made” Marketing Claims Continues in Settlement with Bollman Hat Company

The FTC announced a settlement in the third case in the last 12 months involving deceptive “Made in USA” claims. Here, the FTC alleged that the Bollman Hat Company and its subsidiary deceived consumers with marketing campaign slogans of “Made In USA,” “American Made Matters,” and “Choose American” for its hats and third-party products, despite more than 70 percent of their hat styles being wholly imported finished products. The FTC also alleged that Bollman launched an “American Made Matters” seal campaign in 2010 that misled consumers in which and how many products Bollman and the companies that leased the seal were actually made in America.

Businesses, financial institutions and governmental entities (state and local) are required to file tax information returns with the U.S. Social Security Administration (“SSA”) or Internal Revenue Service (“IRS”). Common information returns include W-2 and 1099 forms for employees and contractors, 1098s for mortgage interest, and various 1099s for dividends, interest and miscellaneous income. Some organizations file hundreds of thousands of these forms on a regular basis.

On January 18, 2018, Hunton & Williams LLP’s retail industry lawyers, composed of more than 100 lawyers across practices, released their annual Retail Year in Review publication. The Retail Year in Review includes many topics of interest to retailers including blockchain, antitrust enforcement in the Trump Administration, ransomware's impact on the retail industry, SEC and M&A activity in 2017, cyber insurance, vulnerability to class actions, and the reduced tax rate.

Due to volatile and record-breaking valuations, cryptocurrencies and their underlying technology, blockchain, have been at the forefront of financial news headlines. Blockchain technology is, very simply, a decentralized digital ledger that records economic transactions in a way that cannot be copied or destroyed, therefore eliminating fraudulent or duplicative transactions. Bitcoin is perhaps the best known cryptocurrency, and for which blockchain technology was invented. Bitcoins are discovered through “mining,” a process whereby computers use processing power to solve difficult puzzles. The miner who finds the solution receives bitcoins, essentially digital tokens, as a reward. Unlike traditional currencies, bitcoin and other cryptocurrencies do not require a third party or central authority for its users to transfer value.