Hunton Retail Law Resource

Last month, the U.S. Court of Appeals for the D.C. Circuit heard oral argument in ACA International v. FCC, the appeal of the Federal Communication Commission’s (“FCC's”) July 2015 declaratory order interpreting the Telephone Consumer Protection Act (“TCPA”). Although scheduled to last 40 minutes, oral argument before the three-judge panel lasted almost three hours. The nature of the judges’ questioning suggests that the D.C. Circuit may soon clarify the TCPA’s restrictions on automated telephone dialing, a result many affected businesses throughout the country would welcome.

DOJ Merger Investigation Opened a Whole Can of Worms

Retailers and consumers may have been paying out the gills for canned tuna. The Wal-Mart family of stores has alleged a price fixing scheme for canned tuna in Arkansas federal court. Wal-Mart’s complaint casts a wide net, alleging that Bumble Bee Foods, StarKist, Del Monte Foods (former owners of StarKist) and Tri-Union Seafoods (owners of Chicken of the Sea) engaged in large-scale price fixing in violation of Section 1 of the Sherman Act. The defendants allegedly hatched the scheme between 2008 and 2010 and canned it in July of 2015.

October was filled with frights as malfunctioning electronics took center stage. With personal panic devices failing to operate and diving computers posing drowning risks, manufacturers should keep in mind that life-threatening hazards dramatically increase their potential liability.

This past week, several consumer actions made headlines:

Hyundai and Kia Set State Attorneys General Investigations for $42.1 Million

Hyundai Motor Co. and Kia Motor Corp. have agreed to pay $42.1 million to settle claims by the Attorneys General of 33 states and the District of Columbia that the companies misrepresented mileage and fuel economy ratings for certain vehicles. Hyundai issued a statement regarding the settlement, noting that it contains no admission of any wrongdoing. The companies previously paid $100 million to settle claims that they had misrepresented emissions to the U.S. Environmental Protection Agency, and $225 million to a consumer class for overstating the fuel efficiency of their vehicles.

Traditional shopping malls across the country are facing a decreasing amount of customers, declining profits, and, in certain cases, overall viability. Though numerous specialty malls continue to be quite profitable, many regional shopping malls are not as fortunate. Online retailers dominate an ever increasing share of the retail market, and the retailers that have traditionally made up mall tenants may no longer see the value in as many, or any, brick and mortar stores. Due in large part to the convenience and success of online retailers, American consumers generally spend less time shopping at brick and mortar stores, opting instead to shop from their computers or other media devices. In response, and out of necessity, major department stores have dramatically consolidated their number of locations over the past few years. Regional malls anchored by troubled department stores such as Sears and Macy’s are perhaps faring the worst. 

This past week, the FTC and DOJ issued an 11-page guidance document (the “Guidance”) aimed at protecting employees against anticompetitive conduct with respect to naked wage-fixing and agreements, in which companies agree on salary or other terms of compensation, and anti-poaching agreements, in which companies agree not to recruit each other’s employees. The Guidance for human resource (“HR”) professionals and hiring managers relates to both hiring and compensation decisions.

The following consumer protection actions made headlines this week:

Epson to Make Advertising Modifications Following NAD Recommendations

Epson America Inc. has agreed to make some modifications to its advertising after a challenge from HP. The NAD recommended Epson discontinue its “loaded and ready” claim as it may confuse consumers into thinking its EcoTank printers are pre-filled with ink and ready to print immediately. The NAD reviewed numerous other Epson claims, including: (1) EcoTank printers offer “an unbeatable combination of convenience and value”; (2) EcoTank printers will “save [consumers] a small fortune on ink”; and (3) implied claims that EcoTank printers provide environmental benefits versus other printers. While the NAD found that the EcoTank printer can save a consumer money in the long run, it recommended that Epson discontinue its “small fortune” claim. The NAD also found that Epson provided support for its implied comparative environmental claims.

As reported in the Hunton Insurance Recovery blog, a federal judge in Alabama ruled Tuesday that a grocer could not rely on its legacy business insurance policies – including an “electronic data” coverage extension – to protect against third-party claims after customer data was compromised by a point-of-sale cyber attack. The decision in Camp’s Grocery, Inc. v. State Farm Fire and Casualty Company is another reminder to retail policyholders to ensure that their cybersecurity programs include both adequate cybersecurity safeguards and appropriate first-party and third-party cyber/crime insurance coverages. Failure to maintain either may jeopardize coverage for resulting cyber losses.

On October 19, 2016, Chemence, Inc., the manufacturer of products such as Hammer Tite, Krylex Glues and Kwik Fix, agreed to resolve an FTC challenge of the company’s “Made in USA” and “Proudly Made in USA” claims. The settlement  requires Chemence to pay $220,000 and substantiate any future “Made in USA” claims.

On October 11, 2016, the SEC announced its enforcement results for the fiscal year which ended on September 30, 2016. A total of 868 enforcement actions were filed, which set a new record for the most actions in a single year. The SEC filed 61 more actions in 2016 than in 2015, representing a year-over-year increase of almost 7.6 percent. The actions resulted in total disgorgements and penalties of over $4 billion, down slightly from last year’s $4.19 billion.