Hunton Retail Law Resource

A consumer advisory issued on June 1, 2020 by the United States Environmental Protection Agency (EPA) clarifies which hard-surface disinfectant products may legally make claims regarding expected efficacy against the COVID-19 virus. The advisory, titled “What You Need to Know Regarding Products Making Claims to Kill the Coronavirus Causing COVID-19,” also warns retailers of potential enforcement actions if they sell non-compliant products.

The COVID-19 pandemic has driven a large shift toward online retail transactions. In April of 2020, nonstore sales, mostly conducted through e-commerce, increased by nearly 30 percent while overall retail sales in the US are down 16 percent year over year, according to the Department of Commerce. The recent flood of e-commerce has left unprepared retailers struggling to fulfill orders, as they currently lack the requisite warehouse space and other supply chain capabilities. At the same time, other retailers have been forced into bankruptcy as a result of COVID-related closures. The changing needs of retailers who are adopting e-commerce strategies and the market exits of others are altering the industry’s real estate footprint.

COVID-19 has had an unprecedented effect on the retail industry across the United States, as many retailers grapple with government mandates that either require closure or impose stringent restrictions on being open, employment and supply chain disruptions, and an overall decline in consumer demand as market conditions remain volatile and unemployment rates continue to rise. The devastating consequences of the coronavirus began to come into focus at the same time many companies were preparing to issue quarterly or annual results and convene investor calls.

A consumer recently filed a products liability lawsuit against Keurig regarding its mini plus brewing system—a coffee maker that Keurig recalled at the end of 2014. Keurig recalled the brewing system after receiving about 200 consumer reports, including 90 reports of burn-related injuries, regarding the brewing system’s pressurized water overheating and spraying out of the machine. The lawsuit alleges that Keurig waited too long to recall the brewing system and therefore failed to warn consumers of the product’s defects. This lawsuit serves as a reminder to manufacturers, distributors and retailers that actions or inactions prior to issuing a recall may be subject to scrutiny and litigation.

The National Advertising Division (NAD) has recommended that Factor Nutrition Labs, LLC, discontinue its claim that its Focus Factor brain health supplement is “America’s #1 Clinically Studied and Patented Brain Health Formula.” NAD’s decision follows a challenge by Quincy BioScience, Inc. (Quincy), the maker of Prevagen brain health dietary supplement.

The COVID-19 pandemic has wreaked havoc on retailers in an already battered industry. Commencing in mid-March, governors from a majority of states issued executive orders requiring nonessential businesses to close to combat the spread of COVID-19. Retailers who rely on foot traffic to support their businesses felt a swift and severe impact. Retailers who recently had filed bankruptcy under chapter 11 had their reorganization efforts disrupted in unprecedented fashion.

On May 6, 2020, the United States Supreme Court held oral argument in William P. Barr, et al. v. American Association of Political Consultants, et al., No. 19-631 (Nov. 14, 2019). In Barr, the Court was asked to consider the constitutionality of the government debt collection exemption to the Telephone Consumer Protection Act (TCPA). Under that exemption, calls placed to collect a debt owed to or guaranteed by the United States government are not subject to the TCPA’s autodialing restrictions. The questions before the Court were (1) is the government debt collection exemption unconstitutional under the First Amendment and (2) if so, whether the constitutionality can be addressed by simply severing that exemption from the statute or whether the entire statute should be invalidated. Based on the tone of the oral argument, the tide may be changing for the TCPA.

Responding to a challenge from Align Technology, Inc. (Align), maker of Invisalign, the National Advertising Division (NAD) recommended that SmileDirectClub (SDC) modify certain of its comparative advertising claims, while finding that others were sufficiently substantiated.

Many recent government orders require “nonessential” businesses to close due to COVID-19, resulting in massive financial losses for many retail businesses. The orders also change how “essential” retailers do business. For instance, Miami-Dade County’s mayor issued an executive order requiring people who visit or work at, among other places, grocery stores, restaurants and pharmacies to use face coverings. Los Angeles County issued a similar order. These orders may result in businesses’ turning away noncompliant customers, which will cause further financial harm. Regardless of the jurisdictions where your retail business is located, it is likely that there is a governmental order affecting its operations. Your business is likely sustaining or will sustain substantial losses as a result, and incur additional expenses to comply with evolving requirements and guidelines and in resuming operations as soon as possible.

Importers that have suffered “significant financial hardship” due to COVID-19 may qualify for a 90-day pay extension for certain tariffs. On April 19, 2020, following calls for trade liberalization to ease economic pressures, the Trump administration issued an executive order, along with a temporary final rule by the US Department of Homeland Security’s Customs and Border Protection (CBP), which postpones the time to deposit certain duties, taxes and fees. However, the 90-day pay extension is limited in scope and certain goods are not eligible for the extension.