Hunton Retail Law Resource

In 1973, Congress amended the FTC Act by adding §13(b), giving the Federal Trade Commission (“FTC”) equitable powers to remediate any violation of any law under its purview.  Using that power, the FTC has sought equitable monetary relief, including restitution and disgorgement. The lower courts routinely authorized such relief and Congress seemingly acknowledged the FTC’s power when it reauthorized the FTC Act. Despite those headwinds, today the Supreme Court unanimously held in a highly-anticipated case, AMG Capital Management, LLC v. FTC, that the FTC cannot seek or obtain equitable monetary relief pursuant to §13(b).

The Consumer Product Safety Commission (CPSC) has proposed a Direct Final Rule implementing the new federal upholstered furniture flammability standard.  The Direct Final Rule, published by the CPSC on April 9, 2021, would codify California’s TB 117-2013 flammability standard as mandated by Congress, but with the following significant clarifications:

The Fifth Circuit recently issued an opinion concluding that the CPSC violated the APA when it issued a final rule in 2017 limiting phthalate content in children’s products. The Consumer Product Safety Improvement Act of 2008 (CPSIA) bans children’s toys and child care articles containing more than 0.1 percent of several phthalate chemicals because of concerns that ingestion can have harmful health effects on children. Phthalates are used to make soft and pliable plastics, such as vinyl. The CPSIA also directed the agency to promulgate a final rule regarding phthalates. In 2017, the CPSC issued a final rule expanding the list of phthalates covered by the ban.

In a February 3, 2021 decision, the US Court of Appeals for the Seventh Circuit determined that the Uniformed Services Employment and Reemployment Rights Act of 1994 (“USERRA”) may require employers to provide employees with short-term paid military leave. Specifically, if an employer provides short-term paid leave for other comparable purposes such as sick time, jury duty, or bereavement, then the employer may need to do the same for military leave.

Environmental, social and corporate governance (ESG) – like climate change and environmental justice – has been a hot topic of discussion in the early days of the Biden administration. Illustrating the interconnectedness of the trending issues, climate change and environmental justice are pillars of ESG.

As California continues to advance its reopening efforts, the state’s retailers are grappling with rapid changes to the law surrounding their operations and the management of their workforce during the COVID-19 pandemic.  One area that has seen frequent change is the sick leave landscape in California.  While the last statewide California sick leave law (applying to businesses with 500+ employees) expired on December 31, 2020, the state has now created a new sick leave entitlement that will create new challenges for retailers in the Golden State.

A new bill in the California Assembly has the potential to alter substantially the existing legal framework of products liability for online retailers. Assembly Bill No. 1182 (“AB 1182”), which was introduced on February 18, 2021, would impose strict products liability on online retailers who (1) communicate offers of sale and (2) facilitate payment between a third-party seller and a purchaser, even if the online retailer never takes physical possession of the product.

The CPSC recently announced its first civil penalty of 2021.  Cybex International, Inc. (Cybex) agreed to pay $7.95 million after the workout equipment manufacturer allegedly failed to immediately report to the CPSC the defects in two of its products.

Gennex Media LLC, a customizable product online marketplace, and its sole officer and shareholder Akil Kurji, have agreed to an FTC consent decree resolving allegations the company falsely claimed its Brandnex novelty products were “Made in USA,” “USA MADE,” and “Manufactured Right Here in America!” when, in many instances, they were wholly imported from China. Gennex heavily promoted its products’ domestic origin on social media, declaring they “support USA jobs.” In a unanimous decision, Gennex and its principal were ordered to pay $146,249.24 and were required to cease making claims that its customizable promotional products, including wristbands, lanyards, temporary tattoos, and buttons, are made in America.

Signed into law on December 27, 2020, the Trademark Modernization Act of 2020 (TMA) provides amendments to existing federal trademark law that will assist US retailers and other businesses with branding decisions. Congress passed the TMA as part of the COVID-19 relief and government-funding bill.