Hunton Retail Law Resource

This past week, several regulatory and self-regulatory enforcement actions made headlines:

FTC Settles with NutraClick Over Deceptive Billing Practices

The FTC has settled claims that supplement maker NutraClick engaged in deceptive billing practices. According to the FTC, NutraClick offered “free” samples through its website, but consumers who ordered these samples were then enrolled into a membership program with monthly bills of $29.99 - $79.99. Over 70,000 people registered complaints about these practices with the FTC.

This past week, several consumer actions made headlines:

General Mills Faces Potential Class Action Over Health Claims of Sugary Foods

General Mills has been sued in the Northern District of California over claims that it has put misleading labels on a number of its products. According to the complaint, labels with phrases such as “whole grains” and “fiber” are deceptive “because they are incompatible with the significant dangers of the excessive added sugar.” General Mills and other large food companies have been facing similar suits over labelling recently, including a lawsuit over the protein content of its “Cheerios Protein” brand.

Earlier this month, the U.S. Securities and Exchange Commission ("SEC") charged publicly traded RPM International Inc. ("RPM") and its general counsel with violations of the antifraud provisions of the federal securities laws due to failures to disclose and account for material information related to an ongoing government investigation under the False Claims Act. The SEC alleges that the general counsel advised RPM’s CEO and audit committee of the investigation as early as April 2011, but in subsequent years, the general counsel allegedly failed to inform the company’s CEO, CFO, audit committee and external auditor of particular information known to him that showed RPM’s true financial exposure arising out of the investigation. As a result of the general counsel’s conduct, the SEC alleges that RPM filed various false and misleading reports with the SEC, thereby misleading investors about the company’s financial results, internal controls and the accuracy of its books and records. RPM ultimately restated its financial results. The SEC’s complaint seeks permanent injunctions, disgorgement and financial penalties.

Under the Fair Labor Standards Act’s (“FLSA’s”) white-collar exemptions, an employee must meet both a duties and a salary basis test in order to be exempt from overtime requirements. Currently, the salary basis test requires that the employee receive at least $455 per week in salary. However, under a recent Department of Labor rulemaking, the weekly salary amount is set to more than double to $913 per week effective December 1, 2016. Thus, employers must ensure that any white-collar-exempt employee making less than $913 per week either (1) receives a salary increase to at least $913 per week to continue the overtime exemption or (2) is reclassified to non-exempt and receives overtime when working more than 40 hours in a week. 

On September 12, 2016, the House of Representatives passed the Consumer Review Fairness Act (the “Fairness Act”), aimed at preventing companies from penalizing consumers who post negative reviews online. The law is a response to non-disparagement clauses such as the one challenged by the FTC in litigation filed last year against Roca Labs, Inc.

This past week, several consumer, self-regulatory and regulatory actions made headlines:

Clearblue Label Not So Clear

A Second Circuit panel affirmed a district court ruling that SPD Swiss Precision Diagnostics GmbH, maker of the Clearblue Advanced Pregnancy Test with Weeks Estimator, violated the Lanham Act. While medical professionals estimate the length of pregnancy by the date of a woman’s last menstrual period, the Clearblue test estimates it by the length of time since a woman ovulated, but does not disclose this difference in measurement. The appeals court rejected Clearblue’s argument that the Lanham Act claim was precluded because it's label and marketing materials had been approved by the U.S. Food and Drug Administration. The case was brought by competitor Church & Dwight Co. Inc.

Hunton & Williams LLP focuses on product issues ranging from compliance, recall issues, investigations and products-related litigation in state and federal courts and in various administrative forums. Our lawyers have managed and consulted on recall or potential recall issues for a number of clients requiring involvement with the Consumer Product Safety Commission, the Federal Trade Commission, the Food and Drug Administration, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the state attorneys general. Our lawyers have conducted broad-based federal and 50-state research to identify applicable regulatory schemes, consulted with clients regarding compliance strategy and litigation risk management issues, and litigated numerous products liability claims (gas controls, valves, water heaters, tires) in state and federal courts.

As reported on the Privacy & Information Security Law blog, on September 15, 2016, the New Jersey Senate unanimously approved a bill that seeks to limit retailers’ ability to collect and use personal data contained on consumers’ driver and non-driver identification cards. The bill, known as the Personal Information and Privacy Protection Act, must now be approved by the New Jersey Assembly.

This past week, several consumer, self-regulatory and regulatory actions made headlines:

Regulatory Actions

FTC Releases Newly Approved Energy Labeling Rules, Considering Other Changes

The FTC has approved changes to the Energy Labeling Rule, which it says are designed to improve access to energy labels and the labeling for refrigerators, ceiling fans, central air conditioners and water heaters. The labeling is designed to help consumers understand the energy cost of consumer products and make it easier for consumers to compare different product models.

This past week, several consumer, self-regulatory and regulatory actions made headlines:

Full Throttle: Ninth Circuit Dismisses FTC Data Suit Against AT&T

On August 29, 2016, the Ninth Circuit dismissed a suit brought by the FTC against AT&T Mobility LLC, ruling that the telecommunications company is exempt as a “common carrier” from enforcement under the FTC Act. The FTC claimed that AT&T had not properly informed customers with grandfathered unlimited data plans that their internet speed would be reduced after using a certain amount of data in a billing cycle. While the district court denied AT&T’s motion to dismiss, the Ninth Circuit reversed that ruling, finding that, based on the language and structure of the FTC Act, the common carrier exception was a status-based, not activity-based, exemption and that AT&T, as a common carrier, was not covered by Section 5.

Zara USA, Inc. (“Zara”), the popular European-based fashion retailer which boasts several celebrity clientele, has been targeted in a class action complaint filed in federal court, accused of allegedly carrying out a systematic “bait-and-switch” overpricing scheme.