Hunton Retail Law Resource

These past two weeks, several consumer actions made headlines that affect the retail industry.

Competitor Pacified After Infant Cereal Maker Discontinues Advertising Claims

Beech-Nut Nutrition Company said it will stop advertising claims connected to infant cereal products that a competitor challenged before the NAD. The challenged claims include “0” grams of sugar, “natural,” “complete” nutrition, and “formulated to be gentle on baby’s tummy,” among others. The NAD will treat the discontinued claims as if it had recommended they be discontinued and Beech-Nut complied.

On November 10, 2017, the New York Department of Labor released a set of proposed regulations affecting the Minimum Wage Order for Miscellaneous Industries and Occupations, which applies to most employers, except hotels and restaurants.

The Westside Pavilion—the 755,000 square foot, 1970s fortress-style mall located in West Los Angeles—has been put up for sale by its owner, Santa Monica-based REIT Macerich Co. Tom O’Hern, Macerich’s CFO, predicted that the property would likely sell within a year. And although the Westside Pavilion is facing many of the same systemic pressures that other malls are facing nationwide, those are not the only reasons the mall is up for sale.

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

FTC Seeks Public Comment on Sears’ Petition to Modify Prior Order

Sears Holding Management Corporation has requested that the FTC reopen and modify a 2009 Commission Order settling charges that Sears inadequately disclosed the scope of consumer data collected through the company’s software application. The initial FTC complaint alleged that Sears represented to consumers that its downloadable software application would track users’ “online browsing,” but in fact tracked nearly all of the users’ Internet behavior. Sears petitioned the FTC to modify the Order’s definition of “tracking system,” which the company contends is overbroad and impracticable. The FTC is seeking public comment on Sears’ petition, which it will receive until December 8, 2017.

On November 1, 2017, the staff of the Securities and Exchange Commission (“SEC”) issued Staff Legal Bulletin No. 14I, which provides additional guidance for public companies (including retailers) seeking to exclude certain shareholder proposals from their proxy materials. Under this bulletin, the SEC staff now expects boards of directors to analyze shareholder proposals before companies make no-action requests to exclude such proposals from proxy materials under Rule 14a-8(i)(7) (the ordinary business exception) or Rule 14a-8(i)(5) (the economic relevance ...

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

Hilton Reaches $700,000 Settlement with New York and Vermont Over Data Breaches

The Attorney Generals of New York and Vermont announced a $700,000 settlement with Hilton Domestic Operating Company, Inc., formerly Hilton Worldwide, Inc. (“Hilton”), over two data breaches in 2014 and 2015.

Hilton was notified in February 2015 that it had likely suffered a data breach in December of 2014. In July of 2015, Hilton was notified of a second data breach from the prior three months. Hilton did not provide notice of either data breach until November 24, 2015. New York law requires that businesses provide notice in the “most expedient time possible and without unreasonable delay.” Vermont requires that businesses provide notice of data breaches to the Vermont Attorney General within 14 days of discovery, and within 45 days of discovery to consumers.

Under the terms of the settlements, Hilton has agreed to pay New York $400,000 and Vermont $300,000 and to comply with certain behavior remedies related to their notification and security procedures.

October ushered in a case that might, on one hand, provoke a sigh of relief for manufacturers, distributors and retailers concerned about the upward trend in multimillion dollar civil penalties from the CPSC or, on the other hand, raise some eyebrows of concern about the extent of a court’s authority to prospectively impose auditing, compliance and training measures. See United States v. Spectrum Brands, Inc., No. 15-CV-371-WMC, 2017 WL 4339677 (W.D. Wis. Sept. 29, 2017).

In a move affecting manufacturers, distributors and retailers in the furniture and other wood-based industries, the Environmental Protection Agency (“EPA”) recently issued a series of amendments to its Final Rule implementing the Formaldehyde Standards for Composite Wood Products Act (the “Formaldehyde Final Rule”), which added Title VI to the Toxic Substances Control Act (“TSCA”). The Formaldehyde Final Rule, 40 CFR Part 770, sets formaldehyde emissions standards for composite wood products and includes requirements for the testing, third-party certification, import certification and labeling of covered products by manufacturers of those products. The Final Rule also imposes requirements on downstream fabricators, distributors and retailers to keep records for at least three years demonstrating that covered products they use, distribute and/or sell are TSCA Title VI-compliant.

Earlier this month, Canada’s transport minister announced that a drone had collided with a commercial aircraft, the first confirmed collision of its kind in North America. Thankfully, the aircraft sustained only minor damage and was able to land safely. But this recent incident, which many commentators believed was inevitable given the proliferation of consumer and commercial drones, highlights the potential risks associated with drone operations.

Employers in the retail sector are constantly faced with the balancing act of relying on their workforce to operate a profitable business while also managing employees who are unable to work at full capacity due to an illness or disability. The patchwork of laws and regulations requiring employers to provide leave or accommodation can overlap with one another, creating uncertainty as to when employers can terminate sick or disabled employees. For example, it is a common scenario for an employee to exhaust his/her 12-week medical leave under the Family Medical Leave Act (“FMLA”) and then request additional leave as an accommodation under the Americans with Disabilities Act (“ADA”).