The Learned Concierge - July 2024, Vol. 10
The Learned Concierge
Welcome to your monthly legal insights on the trends impacting the Retail, Hospitality, and Food & Beverage Industries.
View previous issues and sign up to receive future newsletters by email here.
Clark Hill News
Clark Hill Combines with Colorado Firm LaszloLaw in Expansion of National Food, Beverage & Hospitality Practice
International law firm Clark Hill PLC announced today that it has combined with Boulder, Colorado based LaszloLaw, a corporate and commercial transactional and litigation firm with a focus on the food, beverage, and hospitality industries. Click here to learn more.
ADA Public Accommodations
What You Need to Know About ADA Website Accessibility Lawsuits
Michael Laszlo authored an article, “What You Need To Know About ADA Website Accessibility Lawsuits.”
In ADA website accessibility lawsuits, Plaintiffs claim that a company has failed to maintain a website in a manner that is accessible to blind or visually impaired people is a violation of the ADA. Plaintiffs in ADA website accessibility lawsuits seek injunctions requiring companies to comply with Web Content Accessibility Guidelines (WCAG) 2.0 attorney fees and costs, and where available, money damages.
Bankruptcy
Bankrupt Essential Retail Chain Shuts Down More Stores
Major retailers with drugstore operations have been reducing the amount of their locations since the Covid-19 pandemic subsided in an effort to streamline operations, eliminate underperforming stores or leases that don’t make sense and to cut severe retail left losses.
Retail chains that file Chapter 11 bankruptcy often close stores and reject leases at locations that are underperforming or don’t make economic sense to continue operating. If the retailer can’t renegotiate a lease that has objectionable terms, they will often reject it in bankruptcy and shut down the store. In a Chapter 7 bankruptcy liquidation, all leases are usually rejected or sold and stores closed. To learn more, click here.
Cybersecurity & Privacy
Apple Announces Firmware Update for AirPods to Prevent Potential Eavesdropping
Apple released a new firmware update for its AirPods to prevent unauthorized access which could include eavesdropping. Apple has said that the vulnerability could allow unauthorized actors to spoof your previously paired devices—giving unauthorized actors access to your headphones. This vulnerability highlights both the need to monitor updates for all devices as well as a need-to-know what sort of devices are being used in connection with your business. Electronic, wireless, and smart devices can make business activities convenient, but that convenience can come with significant risks and businesses need to understand and appreciate those risks.
LockBit Publishes Data Taken from Federal Reserve Hack
On June 25, the ransomware group LockBit, published data it had taken from its recent hack of the U.S. Federal Reserve. The group claimed to have taken thirty-three (33) terabytes of banking information as part of the incident. The data appeared to be related to U.S. bank, Evolve Bank and Trust—who was recently targeted by the Federal Reserve for engaging in unsafe and unsound banking practices. In negotiations with the Federal Reserve to try to prevent a disclosure, LockBit responded to what it perceived as unacceptable ransom offers with the statement, “You better hire another negotiator within 48 hours, and fire this clinical idiot who values Americans’ bank secrecy at $50,000.” Originally thought to be a hoax, LockBit’s publishing confirms that it did hack the Federal Reserve. LockBit was believed to be behind roughly 48% of all ransomware attacks in 2023. The incident highlights the needs for all businesses to pay attention to and prioritize their cybersecurity—because if the U.S. Federal Reserve can be hacked, your business can as well.
From Song Beverly to CIPA: Wave of Privacy Litigation in California Targets IP Addresses
Myriah Jaworski, Chirag Patel and Nicolas Dolce authored an article, “From Song Beverly to CIPA: Wave of Privacy Litigation in California Targets IP Addresses.”
An Internet Protocol (IP) address is a unique identifier assigned to a device that is connected to a computer network. In the internet ecosystem, the IP allows a network host to communicate with a network participant and route that participant to different destinations (i.e., websites).
California’s state privacy act, the California Consumer Privacy Act, as amended by the California Privacy Rights Act (CCPA/CPRA), does not take a position on whether an IP address, standing alone, is personally identifiable information (PII). Rather, FAQs to the CCPA/CPRA regulations make clear that the PII analysis is contextual and based on whether the IP address can be linked to a consumer or household. In some use cases, an IP address may be associated with a home, location, email address, or payment information. In other contexts, such as for fraud detection of website traffic, an IP address may not be linked to any other data elements. Courts, too, have struggled with whether IP addresses are PII, often coming to different conclusions depending on the factual circumstances surrounding the collection and use.
ESG & Sustainability
National Strategy to Reduce Food Loss and Waste and Recycle Organics Announced
The U.S. Food and Drug Administration (FDA), the U.S. Department of Agriculture (USDA) and the U.S. Environmental Protection Agency (EPA) announced the “National Strategy for Reducing Food Loss and Waste and Recycling Organics” as part of President Biden’s whole-of-government approach to tackle climate change, feed people, address environmental justice and promote a circular economy.
The strategy released today provides goals that the U.S. government partners along with retailers and consumers can work toward to help further prevent the loss and waste of food, increase recycling of food and other organic materials to support a more circular economy, reduce greenhouse gas (GHG) emissions, save households and businesses money, and build cleaner, healthier communities. To learn more, click here.
Food & Beverage
FTC Preparing Lawsuit Over Alcohol Pricing
The Federal Trade Commission is preparing to file a lawsuit against the largest U.S. alcohol distributor, Southern Glazer’s Wine and Spirits, over practices related to how it prices and sells wine and liquor around the country, according to four people with knowledge of the matter.
The case would represent yet another move by the Biden administration to rein in dominant companies in all sectors of the economy, as it tries to demonstrate it is fighting to bring costs down for the average consumer. To learn more, click here.
Fairtrade Calls on European Union to Simplify Rules for The Benefit of Producers
Fairtrade International supports the objectives of the EU Organic Regulation to strengthen the organic integrity of production, however full compliance with the regulation in its current form will have a negative impact on Fairtrade certified organic producers and traders in Africa, Asia, and Latin America. To learn more, click here.
Vietnam Plans to Raise Special Consumption Tax on Alcoholic Drinks to 100% by 2030
Vietnam’s Finance Ministry has proposed to hike a special consumption tax on alcoholic drinks to 100 per cent by 2030, the ministry said, a move that may further hurt the country’s beverage industry. To learn more, click here.
The Future of Plant-Based Meats
Two in three Americans have tasted plant-based meat substitutes. But how much do consumers rely on labels to tell them that their “meats” are actually plant-based?
The Federal Food, Drug, and Cosmetic Act—a federal law prohibiting food product manufacturers from misleading consumers about a product’s contents—regulates animal meat products. Under the Act, a food label is considered misleading if the labeled product does not meet U.S. Food Drug Administration standards for the food it claims to contain.
Animal meat producers claim that the use of words such as “meat,” “burger,” and “hotdog” on labels for plant-based alternatives deceives consumers. To reduce consumer confusion, 15 states have implemented Truth-in-Labeling laws, which restrict the use of such words on labels of plant-based products. To learn more, click here.
Could Updated Alcohol Warning Labels in Ireland Start a Trend?
There has been debate for years on the health advantages of moderate alcohol and the health damage it could cause. Now some countries are proposing a warning label on alcohol.
Like the warning label on cigarettes and despite opposition from the alcohol industry globally, Ireland will soon be the first country to warn drinkers of the links between cancer and any alcohol consumption on the drinks’ labels. This will begin in May 2026; bottles of alcohol will be required to state on the label that “There is a direct link between alcohol and fatal cancers.” To learn more, click here.
Healthcare
What Retailers Might Do Next On Health Care
Major retailers are abandoning or scaling back their ambitions to become health care providers — but don’t look for them to pull out of the market entirely.
Why it matters: Retailers hoping to grab a bigger piece of the $4.5 trillion health care market are likely to lean into their core strengths: consumer products, alongside some health services that do not require major investments, experts said.
The Big Picture: Even for giants like Walmart and Walgreens, the economic realities of primary care proved challenging, with its low reimbursement, growing labor and supply costs, and other workforce challenges. To learn more, click here.
International Trade
New Trade Case on Imports of Certain Low-Speed Personal Transportation Vehicles from the People’s Republic of China
The International Trade team authored an article, “New Trade Case on Imports of Certain Low-Speed Personal Transportation Vehicles from the People’s Republic of China.”
New U.S. antidumping (“AD”) and countervailing duty (“CVD”) petitions were filed on June 20 by the American Personal Transportation Vehicle Manufacturers Coalition (the “Coalition” or “Petitioner”) against U.S. imports of certain low-speed personal transportation vehicles (“CLSPTV”) from China.
The merchandise covered by these petitions consists of CLSPTVs, which are open-air vehicles that can transport one or more passengers relatively short distances at low speeds. CLSPTVs can be used in a variety of settings, including, but not limited to golf courses, hotels and resorts, or roads. CLSPTVs covered by the scope are typically referred to and used as golf carts or golf cars, low-speed vehicles, personal transportation vehicles, and light utility vehicles.
New Trade Case on Imports of Vanillin from China
The International Trade Team authored an article, “New Trade Case on Imports of Vanillin From China.”
New U.S. antidumping (“AD”) duty and countervailing duty petitions were filed on June 5 by Solvay USA, LLC (“Solvay” or “Petitioner”) against imports of vanillin from China.
The subject merchandise, vanillin, is the main flavor component in vanilla beans and is responsible for its typical vanilla taste. It is an organic compound, both naturally occurring and synthetically produced. It is used in flavorings, foods, perfumes, and pharmaceuticals. Please see the scope section in article for a full description of the proposed subject merchandise.
Senators Look to Revive Trade Preference Program with Eye on China
Members of Congress are looking to revive trade preferences for developing nations after the U.S.’s flagship program expired in 2020, warning that foreign adversaries including China have filled the void left behind by American businesses.
The Generalized System of Preferences (GSP) applied to some 119 countries or territories, giving duty-free access to U.S. markets for manufacturers abroad, and sending cheaper goods to U.S. businesses and consumers. To learn more, click here.
Labor & Employment
Supreme Court Issues Employer-Friendly Decision Regarding the Standard to Apply to Requests for Section 10(j) Injunctive Relief Under the NLRA
Lauren Smith authored an article, “Supreme Court Issues Employer-Friendly Decision Regarding the Standard to Apply to Requests for Section 10(j) Injunctive Relief Under the NLRA.”
On June 13, the United States Supreme Court issued its long-awaited ruling in Starbucks Corp. v. McKinney. In Starbucks, the Supreme Court clarified that the traditional four-factor test courts apply to requests for injunctive relief under Winter v. Natural Resources Defense Council, Inc. 555 U.S. 7 (2008) is the appropriate standard for analyzing requests for injunctive relief under Section 10(j) of the National Labor Relations Act (“NLRA”). The decision rejected the more deferential two-factor test that had been used in other circuits, including the Sixth, Fifth and Tenth Circuits. However, the Fourth, Seventh, Eighth, and Ninth Circuits consistently applied the traditional four-factor test. The Supreme Court’s decision in Starbucks resolved this decades-long circuit split in favor of the four-factor test.
Litigation
California Court of Appeals Rejects “Constructive Termination” as a Viable Theory of Contractual Recovery
Michael Laszlo authored an article, “California Court of Appeals Rejects “Constructive Termination” as a Viable Theory of Contractual Recovery.”
Here’s an interesting case from the California Court of Appeals dealing with a unique issue that can arise in beverage distribution contracts – can a supplier “constructively terminate” a distribution agreement through its conduct? The California Court of Appeals said “no,” and held that the general rule under California common law is that a party may not seek contractual recovery on the basis of constructive termination.
Industry Trends
Two Major Retailers May Face Consequences for “Woke” Policies
In the world of retail, some companies have inadvertently dipped their toes in political conflict or taken stances on social issues in an effort to improve their business or remain on the good side of their consumers. However, when some of those efforts go south and instead garner backlash from the general public, it can end up draining a businesses’ pockets significantly.
Recently, there has been an increase in activist investors sounding off against companies “going woke” due to fears of it resulting in financial loss. For more details, click here.
How AI Is Revolutionizing Retail: Exclusive Insights From An Industry Expert
Retail is undergoing a transformative period, thanks to the widespread deployment of AI. This technological shift has not only brought significant returns, but has elevated personalized customer interactions, optimized supply chain management, and streamlined operational processes. The outcome? Enhanced efficiency, reduced costs, and a surge in customer satisfaction. These impressive business results underscore the potential of AI in retail, making it one of the most exciting sectors to embrace this technology. Click here to learn valuable insights into the retail industry’s fascination with AI.
7 Retail Industry Predictions for 2024
This annual predictions process — collecting tons of information from various sources to arrive at projections for how the retail industry is likely to fare in the year ahead — could be upended if artificial intelligence keeps improving.
Prognosticators could use OpenAI to determine how shoppers intend to shift their spending, which categories are a sure winner and whether adding square footage is a wise move. Some might argue that AI is already capable of that. It’s already being used for demand forecasting and customer sentiment analysis.
Yet, when it comes to making industry-wide predictions, AI remains an outlier. When the data set comprises global policies, cultural swings, demographic shifts and various industries, a human touch is needed.
Looking ahead to 2024, the geopolitical challenges on the horizon are profound. Here at home, economic headwinds persist thanks to uneven inflation and still-elevated interest rates. And our nation is facing what is likely to be a watershed moment in politics with the presidential election next November. To learn more, click here.
As Gen Z Changes The Way We Shop, Here’s What Retail Could Look Like in 10 Years
Generation Z, the first truly digital-native cohort, is rewriting the rules of engagement in the retail sector with their preferences and behaviors. Born into a world where the internet, smartphones, and social media are ubiquitous, zoomers’ influence is shifting the retail paradigm from predominantly in-store interactions to a complex, integrated model that blends online and offline experiences seamlessly.
Gen Z is reshaping not only the technologies that retailers invest in but also how these technologies enhance the shopping experience. Zoomers’ preference for digital interactions is best illustrated with social commerce and mobile-first shopping experiences, which have become pivotal in the current retail environment. To learn more, click here.
This publication is intended for general informational purposes only and does not constitute legal advice or a solicitation to provide legal services. The information in this publication is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. Readers should not act upon this information without seeking professional legal counsel. The views and opinions expressed herein represent those of the individual author only and are not necessarily the views of Clark Hill PLC. Although we attempt to ensure that postings on our website are complete, accurate, and up to date, we assume no responsibility for their completeness, accuracy, or timeliness.