Hunton Retail Law Resource

This past week, the following consumer protection actions made headlines:

NAD Actions

Rust-Oleum to Appeal NAD Ruling on “2X” Product Names and Marketing

The National Advertising Division of the Advertising Self-Regulatory Council (“NAD”) has recommended that Rust-Oleum Corp. stop making claims that its “Painter’s Touch Ultra Cover 2X Spray Paint” has double the coverage capacity as competing spray paints. The NAD also has recommended that Rust-Oleum change the product name. Rust-Oleum plans to appeal NAD’s decision to the National Advertising Review Board. NAD also found Rust-Oleum’s in-house testing to be lacking and its marketing claims to be unsupported by testing.

This past week, the following consumer protection actions made headlines:

Food Marketing: Consumers Respond to Motion to Dismiss their Claims Against Walmart’s Missing Pork

On March 9, 2016, plaintiffs in a suit against Walmart Stores, Inc. responded to the company’s  motion to dismiss, saying that their complaint sufficiently put the retailer on notice of allegations that Walmart’s Great Value Pork & Beans in Tomato Sauce lacked an important ingredient: pork. The plaintiffs argue that the USDA requires pork and beans products to contain at least 12 percent pork in order to advertise pork on its labels, and that plaintiffs’ testing did not show any traces of pork in the product. Walmart contends in its motion to dismiss that its labels plainly state that the product contains less than 2 percent pork, and that plaintiffs’ claims are preempted by food labeling laws.

This past week, the following consumer protection actions made headlines:

Retail Pricing: Class Action Complaint Against Gap Dismissed

A putative class action, alleging that The Gap, Inc.’s deceptive advertising in stores confuses customers as to what products are actually discounted and tricks many into buying products at full price, was tentatively tossed by a California state judge last week. The Court granted Gap’s demurrer in part because the named plaintiff failed to identify particular advertisements relied upon in her purchases and, more importantly, could not allege that she was actually injured by Gap’s alleged practices. In fact, the Court stated that being “psychologically committed” to an item such that the named plaintiff did not return it was not enough to state a claim. The court gave the plaintiff one last chance to allege an injury.

For the past several years, the industry and the plaintiffs’ bar have been litigating over what is “natural” and what is not when it comes to food products. This issue hit home with retailers with news of multimillion dollar settlements resolving claims concerning use of the term “natural” on food product labels. The issue certainly became blurred when it came to modern processing methods and advances in biotechnology, particularly with respect to ingredients like high fructose corn syrup or genetically modified fruits and vegetables. Late last year, however, in response to four consumer petitions, the U.S. Food and Drug Administration (“FDA”) requested public comments concerning the use of the term “natural” on food labels. Whether and how the FDA ultimately defines the term “natural” will surely impact cases in the long-run. But the FDA’s decision to request comment has more immediate effects. It arms defendants with potential means to bring pending litigation to an immediate halt.

This past week, the following consumer protection actions in federal courts and agencies made headlines:

The Ninth Circuit

The Ninth Circuit was busy addressing consumer protection issues this week. Two proposed class actions brought against Apple, Inc. were decided in favor of the company. In the first action, Hodges v. Apple, Inc., a three-judge panel affirmed a lower court’s dismissal of a putative class action alleging deceptive practices in the advertising and sale of Apple’s MacBook Pro with retina display computers. The plaintiff was dissatisfied with the quality of his retina display screen, but the Ninth Circuit agreed with the lower court that Apple had not misled consumers about the retina displays in its advertising. In the second case, a three-judge panel again upheld a dismissal of a proposed class action against Apple that accused the company of misrepresenting the speech capabilities of its iPhone 4S product. The majority of the appeals court agreed with the lower court’s assessment that the allegations about the capabilities of the Siri speech recognition software were too broad, and did not meet the pleading requirements under the Federal Rules of Civil Procedure.

Finally, a three-judge panel revived a class action that had previously been dismissed by a district judge against Hain Celestial’s Alba Botanica skincare line. Plaintiffs claimed that marketing the products as “natural” misled consumers into buying products that contained synthetic substances at a higher cost.

This past week, the following regulatory and consumer protection actions made headlines:

Outlet Retailers Sued over Allegedly Deceptive Pricing Practices

Class action lawsuits against several retailers, including Burberry and Dooney & Bourke, allege that outlet discount prices tags that compare the outlet price with purported retail prices deceive consumers into believing they are getting a bargain when, in fact, they are not. Reference pricing rules (e.g., the FTC’s Guides on Deceptive Pricing) prohibit sellers from offering fictitious bargains. In these cases, the plaintiffs allege that the retailers’ practice of offering for sale made-for-outlet goods that never were sold at the referenced price is deceptive.

This past week, the following regulatory and consumer actions made headlines:

National Advertising Division Weighs in on “Scary Bleach” Claims

After a challenge by The Clorox Company, the National Advertising Division (“NAD”) recommended that Church & Dwight, the maker of OxiClean White Revive non-chlorine bleach, modify its television ad campaign suggesting that chlorine bleach could be “scary.” The commercials in question highlighted garment care labels directing consumers to “use only non-chlorine bleach, when needed,” thus implying that Chlorox’s product was damaging to the kinds of white garments depicted in the ads. The NAD found that Church & Dwight was required to provide a reasonable basis for its use of care labels in its ads, particularly advertising claims that denigrated Chlorox’s product. This decision followed on a 2014 NAD recommendation that Church & Dwight avoid conveying the unsupported message that chlorine bleach is damaging to white garments.

Each week, we will present a summary of key consumer protection developments affecting the retail industry. This past week, the following regulatory and consumer actions made headlines:

FTC Continues Focus on False Weight Loss Claims, Settles with Sale Slash for $43 million

After a nearly year-long litigation, California company Sale Slash LLC has agreed to pay $43 million to settle Federal Trade Commission charges that the company deceptively sold “bogus” weight loss pills, including through unauthorized celebrity endorsements. As part of the settlement, Sale Slash may not represent that its products are endorsed by any specific individual, or claim that its products aid in weight loss or are safe for consumers unless the claims are supported by “competent and reliable scientific evidence.”

Prospective buyers of property for retail development face a plethora of issues when negotiating a purchase from a potential seller. Aside from the obvious issues of purchase price, contingencies and financing, prospective Southern California buyers are also confronting issues related to the availability of parking. As developers try to maximize their leasable footprint, there is a growing trend to look to subterranean parking, according to James W. Abbott, Jr., a broker at Realty Advisory Group in Los Angeles, California, who specializes in retail and institutional sales in the hot Venice Beach area.

This post has been updated. 

As reported on the Employment and Labor blog, the Equal Employment Opportunity Commission (“EEOC”) announced on January 29, 2016, its proposed revision to the Employer Information Report (EEO-1) that would obligate businesses with 100 or more employees to annually turn over pay data by gender, race and ethnicity. Although employers will not have to divulge specific pay-rate information for individual employees, they would have to report pay information across 10 different job categories and by 12 pay bands.

Large-scale food safety issues have been hard to miss in the news lately. Chipotle’s multi-state E. Coli outbreak and listeria monocytogenes found in samples of Blue Bell Creamery ice cream products are some of the recent examples. After a product recall, retailers and other companies involved must focus resources on finding out what went wrong, remedying the problem and rectifying the company image. Hunton & Williams Insurance Coverage Counseling and Litigation attorneys recently authored an article, Insureds Find Place to Roost in Foster Poultry Contamination Case

Last month, the American Tort Reform Foundation (“ATRF”) released the 2015-2016 edition of its annual “Judicial Hellholes” report. Each year, the report identifies the venues it deems the least favorable for defendants and highlights notable pro-plaintiff rulings and practices in each jurisdiction.

Please join us via webinar for a dynamic roundtable discussion with our distinguished panel of experts who will share their thoughts on changes in the law, what steps a company should take to comply with the new law and issues employers should consider as they evaluate their employee compensation.

Tuesday, January 19, 2016
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As reported in the Privacy & Information Security blog, the U.S. District Court for the Central District of California recently granted, only in part, a motion to dismiss a data breach class action against Sony Pictures Entertainment, Inc. (“Sony”) in Corona v. Sony Pictures Entertainment, Inc. The case therefore will proceed with some of the claims intact.

Read the full post.

As reported in the Hunton Employment & Labor Law Perspectives blog, the San Francisco Board of Supervisors recently enacted two ordinances – which are being called the “Retail Workers Bill of Rights” – that provide extensive new protections to employees of “formula retail establishments” in San Francisco.  The new ordinances regulate how covered employers manage their workers’ schedules and impose additional financial and administrative burdens on those employers.

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As reported in the Privacy & Information Security Law blog, rent-to-own retailer Aaron’s, Inc. (“Aaron’s”) entered into a $28.4 million settlement with the California Office of the California Attorney General related to charges that the company permitted its franchised stores to unlawfully monitor their customers’ leased laptops.

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On May 13, 2014, in Millennium Laboratories, Inc. v. Darwin Select Insurance Company, Case No. 12-CV-2742 H (KSC), a California federal district court ruled that Darwin Select Insurance Company breached its duty to defend Millennium in a pair of lawsuits in which two business rivals accused Millennium of false advertising, finding that the underlying lawsuits sufficiently alleged covered disparagement claims. In so doing, the court reaffirmed the longstanding rule in California that a carrier’s duty to defend is broad and requires the carrier to defend where there exists a ...

California’s Safer Consumer Products (SCP) regulations became effective October 1, 2013. These regulations apply to any “product or part of the product that is used, bought, or leased for use by a person for any purposes.” Given this ample language, the regulations have the potential to affect a wide range of industries and parties in a distribution chain, including manufacturers, assemblers, importers, and even retailers.