The CPSC has recently focused its enforcement efforts on children’s products. Fisher-Price recalled two of its infant sleep products—Rock ‘n Glide Soothers and Soothe ‘n Play Gliders—after four infant deaths were reported involving the first product. All four infants were placed in the products unrestrained on their backs and were later found on their stomachs deceased. This news comes after the CPSC’s actions last month to approve a new federal standard for infant sleep products and to recall two more products related to infant sleep.
Business re-openings, increased hiring, and a fresh batch of stimulus checks have driven a recovery in retail sales during the first half of 2021. However, the collective sigh of relief that many retailers (and their landlords and lenders) are breathing is not being shared by all. The recovery is not benefitting every retailer evenly, and some may never recover their pre-pandemic sales as COVID-19 has accelerated trends towards e-commerce and away from larger brick and mortar locations. Many commercial tenants who were unable to secure rent forgiveness from their landlords still owe rent from April and May 2020, when nearly half of commercial retail rents went unpaid. As struggling retailers weigh their options, some recent cases involving The Gap, Inc. offer insight into how courts may treat attempts by commercial tenants to break their leases using COVID-19 as justification.
In a recent post (“Environmental, Social and Corporate Governance: What are the Risks, Really?”), we discussed the various risks, trending issues, and emerging concerns arising from environmental, social, and corporate governance factors (“ESG”). As noted previously, neglecting ESG considerations can result in a number of risks to a company, including risks associated with the reputational, financial, and legal impacts of handling ESG issues poorly. We also observed how managing ESG issues well can enhance corporate value and performance, and create competitive advantages for companies. Given these emerging risks and opportunities, it is perhaps unsurprising that ESG has begun to play a larger role in the M&A context in recent years.
In the first four months of 2021, Virginia, New Mexico, New York and New Jersey passed laws legalizing or decriminalizing, in some form, recreational marijuana. Exactly how these laws will affect employers in these states is still an open question, but for now, employers should understand the nuances of the laws so they can prepare for the emerging reality that is legal marijuana. For retail employers, this means renewed attention to drug use and drug testing policies. Retailers, for the most part, are still able to enforce policies against drug use at work, but must be mindful of how these policies, especially with regards to testing and marijuana, could leave them open to claims of discrimination or state law violations. At a minimum, retailers should review their policies for each state in which they operate, as a “one-size-fits-all” approach may no longer be practical.
On June 1, 2021, the U.S. Court of Appeals for the D.C. Circuit overturned a NLRB determination that a manager’s incorrect blaming of a union for discrepancies in an employee’s paid-leave time constituted an unfair labor practice. The pivotal issue was whether the manager’s statements had a reasonable tendency to interfere with employees’ labor rights. As discussed below, the D.C. Circuit rejected the NLRB’s determination that the manager’s statements had a reasonable tendency to interfere with employees’ labor rights, reasoning that the manager’s misstatements were lawful expressions of the employer’s opinions.
In the world of consumer products, the month of May was all about infant sleep products. The CPSC recently approved a new federal standard for infant sleep products for infants up to five months of age since such inclined sleepers, bassinets, and in-bed sleepers that have been linked to multiple infant deaths. Beginning in June 2022, infant sleep products must meet a new federal safety standard. The new federal standard incorporates a voluntary ASTM safety standard with further modifications to strengthen it. If the products do not already meet the requirements of an existing CPSC standard, then the products must pass testing to confirm that the sleep angle surface is 10 degrees or lower and comply with the CPSC’s safety standard for bassinets and cradles.
This week, the FTC voted 3–1 to accept a settlement agreement with MoviePass, Inc., its parent company, and two of the now-defunct company’s former employees, after allegations of data security issues and deceptive trade practices. The Commission brought an enforcement action against MoviePass pursuant to the FTC Act and the Restore Online Shoppers’ Confidence Act (“ROSCA”), the latter of which requires disclosure of all material terms, a consumer’s informed consent, and a simple mechanism to stop recurring charges when marketing negative option services.
In a recent case, Trimble Inc. v. PerDiemCo LLC, No. 2019-2164 (May 12, 2021), the Federal Circuit found that, sometimes, threatening a patent infringement action, or entering extensive patent license negotiations prior to filing suit, with a company having a presence in a particular state could subject you to jurisdiction in that state, even if you are located elsewhere.
The CPSC most commonly works with manufacturers, sellers, or those in the distribution chain to prompt them to issue warnings or recall notices to consumers. Recently, however, the CPSC has taken the far more unusual step of independently issuing its own warnings to consumers about dangerous products in three circumstances involving treadmills, youth ATVs, and bed rails.
The Second Circuit just affirmed the dismissal of a data breach class action predicated on an alleged increased risk of identity theft on Article III standing grounds. McMorris v. Carlos Lopez & Assocs., LLC, No. 19-4310, 2021 WL 1603808 (2d Cir. Apr. 26, 2021). Notably, the district court that dismissed the action raised the issue of standing sua sponte in advance of a scheduled class settlement fairness hearing.
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