Hunton Retail Law Resource

On July 10, 2017, in a 775-page release, the Consumer Financial Protection Bureau (“CFPB”) issued its long-awaited final arbitration rule (“Arbitration Rule”) pertaining to consumer finance contracts. The Arbitration Rule, which until now was in the comment stage with its final issuance in question, largely mirrors the proposed rule from May 2016, with a few modifications. The Arbitration Rule is important for three reasons: (1) it prohibits consumer finance companies from relying on class action waivers to block class action lawsuits; (2) it prohibits the inclusion ...

Commercial general liability policies typically provide coverage to insureds for losses resulting from property damage caused by an “occurrence,” usually defined in the policy as “an accident, including continuous or repeated exposure to substantially the same harmful conditions.” Specific product recall insurance policies and contamination policies also typically require that the insured’s loss be caused by accidental or unintentional contamination or impairment. In the context of product recalls, however, the exact cause of damage or contamination may be unknown. This creates uncertainty, and in turn, a coverage dispute over whether the cause of damage was indeed accidental, and thus a covered “occurrence” or “event” under the policy.

Last month, the Public Company Accounting Oversight Board (“PCAOB”) adopted a series of new audit standards that will impact the audit reporting model for public companies, including publicly traded retailers. The standards must still receive final approval from the Securities and Exchange Commission, but assuming the SEC approves them, the new standards will make substantial changes to the form of the annual auditor’s report, most notably by requiring a new discussion of “critical audit matters.”

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On July 11, 2017, the Consumer Financial Protection Bureau (“CFPB”) adopted a final rule that bars financial firms from forcing consumers into mandatory arbitration clauses as a condition of opening an account.

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

Judge Stays Chicago Soda Tax at Last Minute

On June 30, 2017, a Cook County Circuit Court judge granted a temporary restraining order halting a new county law taxing sugar sweetened beverages. The tax was enacted in November of 2016 and originally was scheduled to go into effect on July 1, 2017. Siding with the Illinois Chamber of Commerce and several grocers, the judge found the tax to be unconstitutionally vague, as it applies only to bottled sodas and coffees, not prepared drinks from servers ...

In the early 1990s, before everyone could instantly buy almost anything from their smartphone, the proposed combination of QVC network and Home Shopping Network (“HSN”) reportedly was shuttered due to antitrust concerns.

June commenced with another massive civil penalty. A manufacturer agreed to pay a $5.2 million civil penalty and maintain a compliance program for allegedly failing to immediately report defective floorboards in recreational off-highway vehicles. In a three-year period, the manufacturer received over 400 reports of floorboards cracking or breaking in one vehicle model and over 150 similar reports in two other models. Once the manufacturer filed its report, it allegedly underreported the number of floorboard incidents associated with one model and failed to identify altogether the floorboard incidents associated with the two other models. These omissions, according to CPSC staff, constituted a material misrepresentation. The CPSC accepted the settlement by a 4-to-1 vote.

When say-on-pay (i.e., shareholders with the right to vote on the remuneration of executives) was introduced under the Dodd-Frank Wall Street Reform and Consumer Protection Act, there was a requirement that companies conduct say-on-pay frequency votes every six years for shareholders to decide whether say-on-pay votes should be held every one, two or three years. Companies first held say-on-pay frequency votes in 2011, so for many companies the 2017 proxy season is the first time that shareholders have revisited the matter since then.

The Department of Justice’s (“DOJ’s”) often criticized rulemaking delays have resulted in no new website accessibility rules for places of public accommodation to receive notice of and implement. Notwithstanding the obvious due process concerns raised by these delays, more and more website accessibility cases are being threatened and filed every day. Most, not unexpectedly, settle. Winn-Dixie did not, and what happened next is worth a closer look.

This past week, several regulatory and self-regulatory actions made headlines that affect the retail industry.