Key Takeaways

  1. In 2023, the Department of Energy is likely to increase enforcement of its energy and water conservation standards.
  2. The penalties associated with violating energy and water conservation standards can exceed $500 per violation and result in multi-million-dollar penalties.
  3. Manufacturers and importers of appliances and other consumer and industrial products can mitigate enforcement risk by refamiliarizing themselves with the energy and water efficiency regime and conducting internal compliance audits.

As the Biden Administration enters its third year, now with a party split in Congress, it seems likely that the Administration will redouble its focus on executive branch regulatory tools that can be used to achieve energy-related policy objectives, including with respect to energy efficiency and reducing carbon emissions. For manufacturers and importers of appliances and certain other consumer, lighting, plumbing and commercial and industrial products, that means the potential for additional scrutiny of their products’ compliance with the Department of Energy’s (DOE) conservation standards for energy and water efficiency. It also likely means a commensurate increase in DOE enforcement activity for non-compliance with the applicable efficiency standards or the associated test procedures required to demonstrate compliance, as well as registration and labeling requirements. Given the magnitude of the penalties associated with violating efficiency standards, currently $503 per violation, which can quickly run into multiple millions of dollars across noncompliant units, manufacturers and importers should consider refamiliarizing themselves with DOE’s conservation standards regime.

Continue Reading Appliance Manufacturers and Importers Should Prepare for Increased DOE Enforcement Activity in 2023

The FTC started the new year with a proposed new rule that would ban employers from imposing non-competes on their workers. It also announced increases to civil penalties connected to various federal provisions. These stories after the jump.

Continue Reading FTC Updates (Jan 2 – 13, 2023)

The second half of 2022 proceeded much like the first, with manufacturers busy navigating recalls and related litigation, although not necessarily in that order.

Philips CPAP/ BiPAP Machines Still Under Fire

Philips is still battling an onslaught of cases stemming from a June 2021 recall of CPAP and BiPAP breathing machines, including a consolidated consumer class action, In re Philips Recalled CPAP, Bi-Level PAP, & Mechanical Ventilator Products Liability Litigation, No. 2:21-mc-01230 (W.D. Pa.), MDL No. 3014, and a medical device supplier suitBaird Respiratory Therapy, Inc. v. Philips, 2:22-cv-00886 (E.D. Pa.). Since early 2021, there have been reports of over 260 deaths and thousands of health problems associated with the degrading polyurethane foam found in these devices, which was used inside millions of CPAP and BiPAP machines for over a decade. Philips claims that it has produced over 3.95 million repair kits and replacement devices to date and continues to research potential health risks to users from its machines. Despite these efforts, its legal troubles will continue into 2023, with even more consumer-facing lawsuits, including Braverman v. Koninklijke Philips N.V., No. 2:22-cv-7927, which was first filed at the end of December 2022 in the U.S. District Court for the Eastern District of New York and is one of the first CPAP/BiPAP suits to allege the inhalation of the toxic foam particles caused mouth and tongue cancer.

Continue Reading Recall Litigation Report: Year in Review (2022)

The FTC has not been quiet during the holidays.  The agency is primarily tied up with its litigation against Meta, but it has also taken action in other industries, including finance and health products.  These stories and more after the jump.

Continue Reading FTC Updates (December 19 – December 30, 2022)

The Federal Trade Commission (“FTC” or “Commission”) recently announced that it has adjusted the maximum civil penalty dollar amounts for violations of 16 provisions that the Commission enforces. The increase is required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, and is intended to account for inflation. The act directs agencies to implement annual inflation adjustments based on a prescribed formula. Given the uptick in FTC enforcement actions, companies are likely to begin feeling the impact of the increased penalties in the coming year.

As our readers likely recall, the Supreme Court’s 2021 ruling in AMG Capital Management LLC v. Federal Trade Commission removed a powerful tool that the FTC had previously relied on to pursue monetary relief in federal court. The Supreme Court unanimously held that the Federal Trade Commission cannot obtain equitable monetary relief, such as disgorgement or restitution, when it pursues district court litigation directly under Section 13(b) of the Federal Trade Commission Act (“FTC Act” or “Act”). Rather, to obtain such relief, the FTC must first follow its administrative adjudication procedures under Section 5 of the Act.

Continue Reading How Much Could Violating a FTC Rule Cost You? $50,120 Per Violation?

Yesterday, the Federal Trade Commission proposed a sweeping new rule that would ban employers from including non-compete terms in employment agreements with virtually all of their workers – from janitors to senior executives. Describing such agreements as an “exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses,” the FTC’s rule deems non-compete agreements to be an “unfair method of competition” under Section 5 of the FTC Act, without regard for any business justifications or reasonableness. Potential rulemaking against non-compete clauses has been percolating for some time and has support from the White House, but the breadth of the proposed rule is nonetheless surprising.

The FTC’s push for this rule under its Section 5 authority surely will spark legal—including constitutional—challenges that could delay implementation of any final rule for months, if not years. Companies need not immediately start rescinding or avoiding reasonably tailored non-compete agreements with employees, but should take note that the FTC is not likely to sit on the sidelines and wait for a final rule to come into effect before taking further action against some employers based on the scope of their non-compete agreements.  The proposed rulemaking and the FTC’s recent enforcement actions  targeting specific companies’ use of non-compete provisions as violations of Section 5 reflect the FTC’s and DOJ’s aggressive approach to antitrust enforcement in the labor markets – including the FTC’s desire to bring enforcement actions in this area even before any final rule goes into effect.

Continue Reading FTC Proposes Rule to Categorically Ban Non-Compete Agreements

The FTC kicked off the holiday season analyzing data on fraudulent online shopping, cryptocurrency, and employment advertisements that are popular on social media. The Commission also announced updates to the Eyeglass Rule while also announcing the public comment period for potential updates to the Green Guides. These stories and more after the jump.

Continue Reading FTC Updates (December 5 – December 16, 2022)

Summary: In a recent “Law.com” article titled “Too Big to Succeed: Lessons from the Ye / Adidas Brand Partnership,” Crowell attorneys discuss the unraveling of Ye (Kanye) West’s brand partnerships; particularly with Adidas. In the article, they explore Ye’s partnership deal, how the deal was likely terminated, and what brands need to know to manage their celebrity partnerships.

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Companies faced with a potential product recall are often concerned with possible adverse publicity and increased litigation risk. But a quick and comprehensive recall can be the very tool that stops a lawsuit in its tracks. In a recent Law360 article titled, “Quick and Comprehensive Recall Moots Claims and Proves an Effective Tool in Defeating Class Action,” Crowell attorneys Rachel Raphael and Lily Hsu discuss a recent example, where Fiat Chrysler Automobiles (FCA) conducted a recall to repair allegedly defective vehicles and reimburse consumers, and the U.S. District Court for the Eastern District of Michigan granted FCA’s motion to dismiss a putative nationwide class action based on the prudential mootness doctrine.

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The Federal Trade Commission (“FTC”) announced it is seeking public comment on potentially updating, expanding, and/or altering the Guides for the Use of Environmental Marketing Claims, known as the Green Guides (16 CFR pt 260).  Yesterday, December 14, 2022, the FTC held an open Commission meeting where the Commissioners voted 4-0 to approve the publication of a Federal Register notice announcing a public comment period.  The notice is expected to be published in mid-January.  Once the notice is published in the Federal Register, comments will be due within sixty days.   

The FTC’s Green Guides are designed to help advertisers avoid making environmental claims that may mislead consumers.  77 Fed. Reg. 62122 (Oct. 11, 2012).  The Green Guides discourage unqualified environmental benefit claims, nothing that they are difficult, if not impossible, to substantiate.  The Green Guides were first issued in 1992 and last updated in 2012.  An update to the Green Guides has been expected and desired by many as the Green Guides help businesses to make accurate environmental marketing claims and, if followed, help businesses ward off allegations of deceptive advertising claims.

Continue Reading FTC Seeks Public Comments on the Green Guides