Hunton Retail Law Resource

In late May 2017, the American Law Institute met to approve the Proposed Final Draft of the first ever Restatement of the Law, Liability Insurance—the culmination of over seven years of work on this project. Not surprisingly, many of the issues discussed in the Restatement have been hotly contested by insurers. The proposed Restatement is important for retail industry insureds because courts around the country may look to this new Restatement in ruling on common insurance coverage disputes arising out of product liability actions, recalls and environmental contamination. For example, some of the most hotly debated sections of the proposed Restatement include, (1) policy interpretation principles, such as when a term is deemed ambiguous; (2) the standard for determining the insurer’s duty to defend; (3) the insurer’s duty to make reasonable settlement decisions; and (4) the allocation of liability in long-tail environmental claims.

In a video roundtable series, Hunton & Williams LLP partners Lisa J. Sotto and Steven M. Haas and special counsel Allen C. Goolsby, along with Stroz Friedberg’s co-president Eric M. Friedberg and Lee Pacchia of Mimesis Law, discuss the special consideration that should be given to privacy and cybersecurity risks in corporate transactions.

Many retailers today face an increasing risk related to product recalls, which can result in extensive losses and a variety of liability claims. For example, a major supplier of meats was recently forced to recall more than seven million pounds of its product after customers found bone fragments and pieces of cartilage in their hot dogs and sausages. The large scope of this recall, and the associated challenges, is by no means unique to this company. Specialized insurance policies should provide protection to minimize most recall losses and exposure from liability claims. However, insurers often seek to rescind recall policies by asking courts to void the policies from their inception, meaning that the polices would not provide any coverage for any pending or future claims. A large number of these recall claims are being brought under New York law.

On July 26, 2017, an amusement ride named “Fire Ball” at the Ohio State Fair broke apart, killing one passenger and injuring seven others. This deadly incident may trigger a CPSC investigation into the matter.

Prior to 1981, the CPSC exercised jurisdiction over all amusement rides. But after several high-profile cases challenged the CPSC’s jurisdiction over amusement rides with mixed results, an amusement parks trade group successfully lobbied Congress to exempt stationary amusement rides from the CPSC’s jurisdiction. In 1981, Congress passed the Consumer Product Safety Amendments, which amended the definition of “consumer product” to explicitly exempt stationary amusement rides.

Retail developers continue to experiment with new concept designs for creating a shopping environment that will bring consumers back to brick and mortar. Along this pursuit to deliver a more attractive retail experience, developers of open-air shopping centers have started lobbying for relaxed open-container ordinances that would enable patrons to explore their retail districts with an alcoholic drink in tow. 

Recently, the United States Court of Appeals for the Second Circuit affirmed the district court’s finding in Reyes v. Lincoln Automotive Financial Services that a customer could not revoke prior express consent for purposes of the Telephone Consumer Protection Act ("TCPA") if that consent was provided as consideration in a binding contract. In a ruling that departs from two other circuit decisions, Gager v. Dell Fin. Servs., LLC, 727 F.3d 265 (3d Cir. 2013) and Osorio v. State Farm Bank F.S.B., 746 F.3d 1242 (11th Cir. 2014), the Second Circuit held that bargained-for written ...

Recently, it was reported that the UK Financial Conduct Authority will discontinue the London interbank offered rate ("LIBOR"), at the end of 2021. LIBOR is an interest rate index used in calculating floating or adjustable rates on trillions of dollars in loans, bonds, derivatives and other financial contracts. What happens under derivatives transaction documents when LIBOR is discontinued?

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This past week, several consumer actions made headlines that affect the retail industry.

First Circuit Dismisses Deceptive Advertising Claims against Two Large Retailers

The First Circuit Court of Appeals has held that consumers who brought nearly identical deceptive pricing cases against two large retailers failed to prove that they had been injured. One suit alleged that one company falsely advertised “compare at” prices on sales tags; the other suit alleged that the other company deceptively set lower prices for its exclusive and private-label products and advertised them as discounted. In both cases, the plaintiffs alleged that the mere purchase of the item itself constituted injury. The First Circuit rejected this argument, observing that the consumers (1) had not alleged that the items were poorly made, (2) had received the benefits of their bargains, and (3) that a false sense of a product’s value does not constitute injury.  

As reported on Hunton's Privacy and Information Security Law blog, on July 21, 2017, New Jersey Governor Chris Christie signed a bill that places new restrictions on the collection and use of personal information by retail establishments for certain purposes. The statute, which is called the Personal Information and Privacy Protection Act, permits retail establishments in New Jersey to scan a person’s driver’s license or other state-issued identification card only for the following eight purposes:

San Francisco is the latest jurisdiction to pass a law that prohibits employers from inquiring about prior salary history during hiring. New York City, Boston, Philadelphia, Pittsburgh and New Orleans already have similar laws, and in a concerning trend for employers, 26 states are currently considering such legislation.

The San Francisco city ordinance went into effect on July 1, 2017, and restricts employers from (1) considering an applicant’s salary history in determining whether to make an offer of employment or the amount of salary to offer; (2) inquiring about salary history; (3) retaliating against an applicant that declines to provide salary history; and (4) releasing a current or former employee’s salary history to a prospective employer without written authorization. Notably, the restrictions in the San Francisco ordinance, like similar laws in New York City and New Orleans, prohibit an employer from conducting a search of publicly available records to obtain salary history information.