Hunton Retail Law Resource

On May 9, 2024, the First Circuit became the first federal appellate court to address whether national retail websites’ use of session replay code creates specific personal jurisdiction for wiretapping claims allowing website users to hale retailers into court in any state where they visited these websites. The First Circuit concluded that it does not. It held that a website user failed to demonstrate that Ohio-based Bloomingdales.com intentionally targeted its website and its accompanying use of session replay software at users in Massachusetts and, therefore, failed to establish specific personal jurisdiction over Bloomingdales.com for alleged violations of the Massachusetts Wiretapping Act and Massachusetts Invasion of Privacy Statute. Rosenthal v. Bloomingdales.com, LLC, No. 23-1683, 2024 WL 2074685 (1st Cir. May 9, 2024). 

The Federal Trade Commission and six states have filed suit against Roomster Corp. and two corporate executives, accusing the residential rental listing platform of using fake reviews and unverified listings to generate tens of millions of dollars in business. According to the complaint, these practices often occur at the expense of vulnerable customers who rely on Roomster to find safe low-cost housing within expensive housing markets.

In a major win for retailers operating in the commonwealth of Massachusetts, the Massachusetts highest court determined, among other things, that the so-called ABC independent contractor test is not the correct metric to determine join employer status. All retailers using subcontractors to support various parts of their businesses should breathe a sigh of relief, although such retailers should immediately evaluate the way that they operate with their subcontractors and the contractual agreements in place to reduce the likelihood of a finding of joint employer liability now that the proper standard has been articulated relating to the Massachusetts wage act.

Commercial tenants who are unable to pay their rent as a result of COVID-19 shutdown and capacity-limit orders have, thus far, found little relief from courts, who have by and large rejected their common law defenses seeking a discharge of lease obligations. One recent Massachusetts case, however, sides with a commercial tenant, albeit under narrow circumstances, approving of the often-unsuccessful “frustration of purpose” defense.

On September 10, 2020, the United States District Court for the District of Massachusetts issued a Memorandum and Order granting summary judgment in favor of a franchisor in response to claims by a purported class of franchisees that they were not truly independent contractors, but employees of the franchisor. This ruling is particularly applicable to retailers using the franchise business model (especially those in Massachusetts), as it aids in the preservation of the franchise business model and the rights of franchisors to operate in compliance with federal law.

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.

As reported on the Hunton Employment & Labor Perspectives Blog on May 14, 2019, Massachusetts’ highest court, The Supreme Judicial Court (“SJC”), recently issued its long awaited decision in Sullivan v. Sleepy’s LLC, SJC-12542, in which the SJC responded to certified questions of first impression from the United States District Court for the District of Massachusetts.

Retail stores and businesses are generally free to develop their own policies regarding acceptance or non-acceptance of certain forms of payment. For years, many small businesses have refused credit card payments entirely or credit card payments for transactions under a certain amount due to high transaction costs. Smaller retailers may also refuse certain brands of credit cards. However, a different trend has emerged in recent years as an increasing number of retailers are refusing to accept cash and instead accepting only credit/debit and smartphone payments.

The increase in the use of noncompetition agreements in industries such as retail and food service has caught the eye of several state legislatures, and they are beginning to take measures to curb the trend.

A Massachusetts law recently signed will limit employers’ ability to restrict hourly workers from engaging in competitive work after the end of their employment. The bill, signed by the governor on August 10, 2018, and effective October 1, 2018, prohibits employers from enforcing employment noncompetition agreements against employees who are classified as nonexempt under the Fair Labor Standards Act. In effect, the law will eliminate an employer’s ability to limit where hourly retail employees can work after the end of their employment, even if they want to go to work for a direct competitor.

April served as a microcosm for recent trends in the world of recalls. A gas range manufacturer agreed to pay a $4.65 million civil penalty to the CPSC. In a six-year period, the manufacturer received 170 incident reports that the gas ranges had turned on spontaneously and could not be turned off using the control knobs. But the manufacturer knowingly failed to notify the CPSC immediately. The manufacturer agreed to pay the massive penalty, maintain an enhanced compliance program and maintain a related system of internal controls and procedures.

With Christmas falling on a Sunday this year, employers should be mindful of state blue laws, which sometimes require premium pay to hourly employees working on Sundays or holidays. Although most state laws, as well as federal law, do not require premium pay for work performed on holidays (unless, of course, the employee has worked more than 40 hours that week), there are a few exceptions, such as Massachusetts and Rhode Island. 

This week, the following consumer protection actions made headlines:

Litigation

Claims Dismissed in San Francisco Soda Suit

A federal judge dismissed several constitutional claims in a suit against the city of San Francisco over its ban on ads for sugary drinks, because the ordinance has since been repealed. Both San Francisco and the plaintiffs, including the American Beverage Association and other trade groups, asked the judge to dismiss the free speech and due process violation claims from the original complaint. Although the advertising component of the ordinance was repealed in December, the suit continues over a new ordinance, set to take effect on July 25, 2016, that requires ads for soda and other sugary drinks to display a mandatory health warning. The judge previously declined to enjoin the ordinance, saying that it was not likely for the plaintiffs to succeed on their First Amendment claim under the rational basis test for commercial speech.