Hunton Retail Law Resource

As reported on the Hunton Insurance Recovery Blog, data breach claims involving customer data can present an ever-increasing risk for many retailers and other companies. A recent case further supports efforts to recover the costs associated with such claims. Specifically, a panel of the Fourth Circuit confirmed that general liability policies can afford coverage for cyber-related liabilities, and ruled that an insurer had to pay attorneys’ fees to defend the policyholder in class action litigation in Travelers Indemnity Company v. Portal Healthcare Solutions, No. 14-1944. Syed Ahmad, a partner in the Hunton & Williams LLP insurance practice, was quoted in a Law360 article concerning the importance of this decision.

We previously reported on the United States Supreme Court’s decision in Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016), wherein a 6-3 majority held that “an unaccepted settlement offer or offer of judgment does not moot a plaintiff’s case.” As part of its decision, however, the Supreme Court expressly left open one critical question: whether a defendant can moot a case by tendering—as opposed to simply offering—complete relief to the plaintiff. The Ninth Circuit has now weighed in on that issue and has answered that question in the negative.

We previously reported on the U.S. Food and Drug Administration’s (“FDA’s”) request for public comment concerning the use of the term “natural” on food labels, and we noted that businesses should consider seeking a stay of any pending lawsuits challenging their use of the term “natural” on food labels under the primary jurisdiction doctrine. The Ninth Circuit, home of the infamous “Food Court,” has now invoked that doctrine and has ordered the stay of a pending “natural” mislabeling class action in Kane v. Chobani, LLC, No. 14-15670.

On April 14, 2016, after four years of drafting and negotiations, the long awaited EU General Data Protection Regulation (“GDPR”) has been adopted at the EU level. Following the EU Parliament’s Committee on Civil Liberties, Justice and Home Affairs’ vote earlier this week and the EU Parliament in plenary session, the GDPR is now officially EU law and will directly apply in all EU countries, replacing EU and national data protection legislation.

On April 12, 2016, the Federal Trade Commission announced a package of four settlements and one lawsuit against the marketers of sunscreen, body lotion and hair care products. Each of these matters was brought in the FTC’s administrative forum and allege a single count: that the products could not be considered all natural because each product contained at least one synthetic ingredient.

As we previously reported, the Prop 65 statute prohibits businesses from exposing people in California to any of the over 800 listed chemicals without first providing a “clear and reasonable” warning. Currently, California’s Office of Environmental Health Hazard Assessment is working to repeal existing Prop 65 warning regulations and adopt new requirements. However, the proposed regulations contain several problematic provisions regarding the content and method of transmission for required warnings. Retailers need to be aware of proposed provisions which clearly apportion responsibility for providing warnings throughout the chain of commerce. Though purportedly aimed at reducing retailers’ Prop 65 warning burden, if implemented as written, the provisions will actually increase retailers’ risks and allow manufacturers to insulate themselves from liability at retailers’ expense.

Team helps companies devise legal strategies to enhance security and mitigate threat risk.

On April 4, 2016, Hunton & Williams LLP announced the formation of a Cyber and Physical Security Task Force to assist companies in minimizing the risks and consequences of a serious security incident. The task force is being led by global privacy and cybersecurity head Lisa Sotto, cybersecurity partner Paul Tiao, and energy partner Kevin Jones, and includes lawyers from a wide range of practice groups within the firm.

This past week, the following regulatory and consumer actions made headlines:

FDA Scratches Out Shionogi’s Misleading Labeling on its Children’s Head Lice Lotion

On April 1, 2016, the Food & Drug Administration (“FDA”) hit Shionogi & Co. Ltd. with a warning letter stating that it had mislabeled its Ulesifa children’s head lice lotion because the labeling failed to inform patients that it should not be used on children under six months old and that it does not eliminate lice eggs. The labeling was in Shionogi & Co.’s recently issued customer co-pay assistance voucher that offered patients discounts to bring their co-pays down to $10. The FDA acknowledged that the voucher’s fine print stated it was only indicated for children over six months of age, but the FDA said that was not enough to avoid mislabeling violations. The agency requested that Shionogi & Co. cease the mislabeling immediately and submit a written response within two weeks.

On April 4, 2016, the Commodity Futures Trading Commission (“CFTC”) announced a $10 million whistleblower bounty, its largest to date.

Similar to a program administered by the Securities and Exchange Commission (“SEC”), CFTC whistleblowers are eligible for an award worth 10 to 30 percent of an enforcement penalty if they bring original information to the CFTC which leads to an enforcement action that nets more than $1 million in sanctions.

On April 6, 2016, the Federal Trade Commission formally welcomed the updated Recommendation on Consumer Protection in E-commerce (the “Recommendation”) issued by the Organization for Economic Cooperation and Development (“OECD”) on March 24, 2016, endorsing the Recommendation’s broadened scope and increased consumer protections that “are designed to strengthen consumers’ trust in the expanding electronic marketplace.”