Retail & Consumer Products Law Observer

Retail & Consumer Products Law Observer

Legal Insight for the Retail and Consumer Products Industry

CPSC Hears Rare Oral Argument in Zen Magnets Recall Litigation

Posted in Advertising & Product Risk Management, Product Liability & Torts

On June 7, the U.S. Consumer Product Safety Commission provided administrative law followers a fascinating case study. For the first time in two decades, the CPSC’s five Commissioners heard an appeal put on by CPSC staff in administrative litigation. In its appeal, the staff seeks to overturn an administrative law judge’s opinion finding that Zen Magnets’ controversial high powered, small rare earth magnets (SREMs) are not defective and are not a substantial product hazard when sold with appropriate warnings. Novel already, what made this argument all the more interesting was an additional wrinkle:  four of the five Commissioners who heard the appeal had voted previously to approve a final safety standard that has the practical effect of banning such magnets outright.

Continue Reading

Join Us: ABA Food & Supplements 7th Annual Workshop

Posted in Advertising & Product Risk Management, Events, Product Liability & Torts

2017 continues to be the year of the Food Safety Modernization Act, as the U.S. Food and Drug Administration, having completed its roll-out of the major rules implementing this land-mark food safety legislation, moves in earnest with inspections to check on compliance.

© iStock

To help manufacturers prepare for this and other issues confronting the food industry, on Tuesday, June 13th, the American Bar Association Food & Supplements Subcommittee is hosting a Workshop in Hershey, Pennsylvania. One topic of discussion will be FSMA inspection preparedness as a panel of industry representatives will talk about what they’re seeing from the latest FDA inspections, and what manufacturers should expect when agency investigators come knocking this summer and fall.

In addition to talking about how to prepare for an FDA inspection, the panel plans to examine what FDA has said about its expectations during its first round of visits focused on FSMA compliance. It will also talk about how manufacturers can have their FSMA documents in order for investigator review, and how to prepare for the flurry of environmental samples FDA is likely to take. Crowell & Moring partner John Fuson will be presenting as part of the panel. Additionally, Laura Cordova will be speaking on a panel regarding ethical issues in parallel criminal and civil proceedings. Michelle Gillette is one of the program organizers for the workshop.

For more information, visit the ABA website.

Trolls and Tall Tales: How to Protect Your Company’s Online Reputation

Posted in Advertising & Product Risk Management

© Thinkstock

In today’s social media and internet focused world, tracking online reviews and commentary from consumers is essential for product manufacturers and retailers. Savvy online participation can provide companies with important quality feedback and bolster customer relations when consumer concerns are handled quickly and sensitively. But even companies are not immune to cyber trolls. What happens when an online comment or review contains false information about your product or brand, or accuses your company of offering poor customer service or selling defective goods? And, as is commonly the case, how can the truth of the matter be verified if the comment is posted anonymously? Here are some suggestions to follow as you work through the issue:

  1. Step One: Arm yourself with information by reviewing the basic elements of defamation law.
  2. Step Two: Assess whether action is necessary.  Sometimes ignoring the issue can be the right answer.
  3. Step Three: Take informal action, such as responding to blog comments on your own with your side of the story or requesting a retraction from the author or website host.
  4. Step Four: Assess goals and risks of litigation or formal action. 
  5. Step Five: If necessary, strategically draft a defamation complaint to initiate litigation.
  6. Step Six: Stand your ground and litigate aggressively through discovery challenges and other potential obstacles.

For more details, see the full article:  Six Steps to Protecting Your Reputation Online

Long Live the King (Bio)

Posted in Advertising & Product Risk Management

Ninth Circuit Follows King Bio Decision in Confirming Private Plaintiffs May Not Challenge “Lack of Substantiation” Under California Law

To view the full version of this article, visit the latest version of our Recent Happenings in Advertising & Product Risk Management newsletter.

When it comes to prosecuting false advertising, what is the appropriate division of labor between government authorities acting on behalf of the public, on the one hand, and members of the public themselves?

Most states have answered this question by enacting consumer protection laws that allow private plaintiffs to step into the shoes of government prosecutors to challenge allegedly false advertising. These private enforcement mechanisms supplement the roles played not only by state agencies and prosecutors but also by the Federal Trade Commission and Food and Drug Administration at the federal level. At the same time, most of these states have reserved exclusively to government actors the power to demand that advertisers produce evidentiary support, or “substantiation,” for their advertising claims—especially when they are not definitively “false,” but rather relate to new technologies undergoing testing, or to areas of scientific controversy.

© Thinkstock

Even in California—which has an especially robust statutory scheme allowing consumer “attorneys general” to bring suit for false advertising—courts have long held that the state legislature deliberately entrusted the power to demand substantiation only to “prosecuting authorities,” not private plaintiffs. As one California Court of Appeal explained in the seminal decision in National Council Against Health Fraud v. King Bio Pharmaceuticals, the policy rationale is that this division of labor is “the least burdensome method of obtaining substantiation for advertising claims” and limits “undue harassment of advertisers.” Yet that has not stopped the plaintiffs’ bar from filing suit after suit—often class actions—alleging that companies lack sufficient scientific support for their advertising claims.

For more, see the full article.

The Devil is in the Details: Recordkeeping a Central Focus in FSMA Inspections

Posted in Advertising & Product Risk Management, Product Liability & Torts

© iStock

The Food Safety Modernization Act, which was signed into law by President Obama on January 4, 2011, promised sweeping reform of food safety practices from farm to fork, and shifted FDA’s regulatory posture from reacting to food contamination to proactively preventing it. While the Trump administration has vowed to eliminate two regulations for every new regulation, at this year’s Food and Drug Law Institute’s Annual meeting, Dr. Susan Mayne, the Director of FDA’s Center for Food Safety and Applied Nutrition, made clear that FSMA is the law of the land and FDA fully intends to continue its implementation and enforcement of it.

Continue Reading

New Private Right of Action in Canada for False or Misleading Electronic Advertising

Posted in Advertising & Product Risk Management

This alert has been prepared in collaboration with Canada’s Fasken Martineau law firm. Mr. Di Domenico is a partner and regional chair of the firm’s Antitrust/Competition & Marketing Group in Toronto. Chris Cole is Co-Chair of Crowell’s Advertising & Product Risk Management Group in Washington, D.C.

In less than three months, Canada will introduce a private right of action arising from false or misleading representations made in electronic messages. These provisions target false or misleading advertisements in, for example, email and social media and arguably capture website advertising based on the law’s broad definition of “electronic message.” Government-initiated enforcement of these provisions has already taken place through Canada’s Competition Bureau since 2014, which has led to Consent Agreements against Avis, Budget (following a contested application), Amazon, Hertz, and Dollar Thrifty. Even more concerning, the law applies statutory penalties to each violation. The closest United States analog to such a law would be the Telephone Consumer Protection Act, which carries penalties for violation of up to $1500 per violation.

Continue Reading

CPSC Withdraws Material Misrepresentation Claim against Michaels Stores in Shattered Vases Case

Posted in Advertising & Product Risk Management

MichaelsEarlier this month, the Consumer Product Safety Commission in tandem with the Department of Justice withdrew its “material misrepresentation” claim in its ongoing lawsuit against arts and crafts retailer Michaels Stores. The Government had alleged, inter alia, that Michaels made a material misrepresentation to the agency in its Section 15(b) Report for certain glass vases that shattered during normal handling. The Government’s withdrawal of this claim raises interesting questions as to what constitutes a “material misrepresentation” – in this case to the CPSC – and why the claim was withdrawn.

Continue Reading

CPSC Announces Second Civil Penalty Of Year

Posted in Advertising & Product Risk Management, Product Liability & Torts

CPSC Reaches Civil Penalty Agreement with Viking Range and Middleby Corporation; Firms to Pay $4.65 Million to Resolve Late Reporting Allegations Over Defective Gas Ranges

StoveThe U.S. Consumer Product Safety Commission (CPSC) has announced a civil penalty settlement with Viking Range, LLC of Greenwood, Mississippi and its parent company, The Middleby Corporation of Elgin, Illinois. The companies have agreed to pay a civil penalty of $4.65 million to resolve charges that they knowingly failed to immediately report allegedly defective gas ranges to the Commission under Section 15(b) of the Consumer Product Safety Act (CPSA). This civil penalty, the second of 2017, follows the Commission’s $5.8 million civil penalty levied against Keurig Green Mountain in February. Both penalties underscore that the Commission’s general approach to civil penalties, and desire to increase the amount of penalties imposed for violations, will not change overnight with new agency leadership. Indeed, the Acting Chairman actually voted against the settlement agreement, proposing instead an amendment to reduce the amount of the civil penalty to $2 million.

Continue Reading

Webinar Recap: Safety Agencies in Transition

Posted in Events

iStock_000005544549_FullOn March 30, 2017, Crowell & Moring’s Advertising & Product Risk Management Group hosted a webinar in which we discussed likely changes on the horizon at the Food & Drug Administration, Consumer Product Safety Commission, and the National Highway Traffic Safety Administration. We also discussed the relationship between these agencies and the Department of Justice, particularly with respect to enforcement trends.

The roundtable addressed what the regulated community can expect under the Trump Administration at the FDA, CPSC, and NHTSA. Our team engaged in a lively discussion highlighting where the agencies stand now in terms of appointments and leadership, and forecasting where policy might shift. Specifically, the panel focused on where, and how, the Trump Administration might affect current agency priorities including topical discussions of emerging products such as autonomous cars, and emerging issues including lithium ion batteries, as well as hacking concerns on interconnected products.

Please click here to access an on-demand recording of the webinar (note: you must complete the registration form for access).

Key Topics:

  • Taking stock: Where are we now? What happens before new officials at the FDA, NHTSA, CPSC and DOJ are nominated and confirmed?
  • Where and how will the Trump administration affect current agency priorities?
  • Can autonomous vehicle technology and interconnected products thrive in the next four years? Any advantages or hurdles?
  • Will we continue to see aggressive enforcement agendas at the agencies and how will the DOJ respond? How litigious will these agencies be in the coming months and years?
  • What is the future of safety policy and rulemaking? Can these agencies met the EO requiring the repeal of two rules for every one promulgated? And what impact will the federal hiring freeze have on safety programs?

Cheryl A. Falvey, Scott Winkelman, John Fuson, Dan Campbell, Lauren Bell, Rebecca Chaney, and Matthew Cohen conducted this webinar.

What Does The Future Hold For NHTSA?

Posted in Advertising & Product Risk Management, Events

Cars on highwayMore than two months after President Donald Trump’s inauguration, the automotive industry continues to face substantial uncertainty regarding the direction and priorities of the National Highway Traffic Safety Administration (NHTSA) over the next few years. For now, we can only guess.  The new Transportation Secretary, Elaine Chao, was confirmed January 31.  She takes over a NHTSA that had been working hard to keep up with emerging technologies – while acting increasingly muscular in its fines and other punishments under the prior administration.

For some safety agencies, it is much easier to read the tea leaves under the new administration. For example, at the Consumer Product Safety Commission, for example, we know that there is a new Republican Acting Chair (Ann Marie Buerkle), and that the five commissioners will remain 3-2 in favor of Democrats until at least October 2017 when Democratic Commissioner Marietta Robinson’s term on the Commission expires.  See prior article here.  And, following Acting Chair Buerkle’s public remarks last month at the annual conference of the International Consumer Product Health and Safety Organization (ICPHSO), we know that her top three priorities include: (1) collaborating with all product safety stakeholders; (2) taking a balanced and reasonable approach to regulation; and (3) expanding product safety education and awareness for consumers.  See prior article here.

Continue Reading