We’ve all seen the COVID-19 fall-out in the past few weeks—indeed, we’ve all lived the fall-out.  But the promotions, events, and hospitality industry has been particularly hard-hit by the recent restrictions on public gatherings and travel. From Coachella to SXSW to the Olympics, events around the globe have been cancelled, rescheduled, or postponed —sometimes indefinitely—due to the pandemic.  These postponements and cancellations have put companies sponsoring promotions such as sweepstakes and contests, events, and ad campaigns linked to these postponed events in a difficult position.  How do companies protect themselves from potential liability associated with the postponement or cancellation of a sponsored event?  Can one change the terms and conditions of sweepstakes associated with an event to when the event is postponed or cancelled?  Those of us familiar with contract law understand how important a well-drafted Force Majeure clause can be in this situation.  But one doesn’t always have a well-drafted Force Majeure clause when dealing with a new pandemic.  And, as is often the case, sweepstakes and prize promotions rules (and related documents) are a form of contract, but they are a type of agreement that is regulated a bit differently from a standard commercial contract between sophisticated business entities that have negotiated in good faith.  Let’s unpack that.

Continue Reading Coronavirus Cancellations: How Do They Affect My Promotion?

Everyone thinks that when the federal government shuts down, nothing happens in Washington. Not true. Last week, following in the footsteps of other states, the District of Columbia passed a new law regulating automatic renewal offers. The law affects all companies that sell goods or services pursuant to a contract that automatically renews at the end of a definite term. Although the law mirrors other states’ laws in some respects, it creates much stricter requirements in others.

First, similar to other states’ requirements, the law requires advertisers who sell goods or services on an automatic renewal basis to clearly and conspicuously disclose the automatic renewal provision and cancellation procedure in the contract.

Continue Reading New Automatic Renewal Law Takes Effect in D.C.

Signed into law on December 20, 2018, the 2018 Farm Bill may present a tremendous opportunity for banks and payments companies to provide banking, processing, and other services to the hemp industry. We expect a variety of companies to move swiftly in developing, marketing, and selling products (including CBD oil) that, until yesterday, were controlled substances. This means that banks and payment processors should be prepared for a flood of inquiries from the industry about opening bank, merchant processing, and other financial accounts.

While the Farm Bill “legalizes” hemp, there remain a number of open questions that financial institutions should consider before they start serving the industry. This article provides a brief overview of the Farm Bill’s impact on the legal status of hemp, highlights some of the open questions, and provides suggested best practices for banks and processors seeking to work with the hemp industry.

Continue Reading New Farm Bill Cracks Open Door to Processing for Legalized Hemp and CBD Oil

Tug McGraw
Photo by slgckgc [CC BY 2.0] via flickr

Folks tend to stay at the Federal Trade Commission’s (“FTC”) Bureau of Consumer Protection for a long time.  One notable example is Steve Baker, who just ended a 27-plus-year run as the Director of the Midwest Regional Office in Chicago (“MWRO”).  Prior to that Steve was an attorney advisor to Daniel Oliver.  Under Steve’s leadership, the MWRO was a zealous enforcer of consumer protection laws, especially in the telemarketing and Internet marketing areas.  Steve also worked tirelessly to build ties between the FTC and state and local law enforcement entities.  On a personal note, Steve was generous with his time and experience with me when I was trying to learn how to be a regional director.  Todd Kossow now leads the MWRO.

Also moving on from the FTC is Rob Kaye, who had been serving as the Bureau of Consumer Protection’s first Director of Litigation.  Rob moves to the Department of Education (“DOE”) as the Chief Enforcement Officer for Federal Student Aid.  Rob’s arrival at DOE probably signals that DOE will likely continue to be actively involved in policing alleged deception in the student aid arena.  Liz Tucci succeeds Rob.
Continue Reading Comings and Goings at the FTC and an Interesting Supreme Court Opinion on Asset Freezes

CA Office of Environmental Health Hazard Assessment proposes both an emergency regulation to allow temporary use of a standard point-of-sale warning message for BPA exposures from canned and bottled foods and beverages, and a Proposition 65 Maximum Allowable Dose Level for BPA

On March 17, 2016, the California Office of Environmental Health Hazard Assessment (OEHHA) issued a proposal to promulgate an emergency regulation to allow temporary use of a standard point-of-sale warning message for bisphenol A (BPA) exposures from canned and bottled foods and beverages. By way of background, on May 11, 2015, BPA was added to the Proposition 65 (Prop 65) list of chemicals known to cause cancer and reproductive toxicity; the chemical was listed as a reproductive toxicant.
Continue Reading CA Agency Proposes Emergency Bisphenol A (BPA) Exposure Warning Regulation, Maximum Allowable Dose Level for BPA

Up in Smoke
Image by: Daniel Hartwig [CC BY 2.0] via Flickr

The Ninth Circuit handed the FTC a big win last week, affirming an $18 million award against Charles Gugliuzza, the former president and CEO of Commerce Planet.  In its opinion, the Ninth Circuit affirmed the broad scope of equitable monetary remedies available to the FTC, especially in the Ninth Circuit.  In doing so, the court rejected a host of arguments raised by Gugliuzza to the order against him including that imposing joint and several liability was a legal, not an equitable, remedy beyond the power of the court in an action brought by the FTC pursuant to Section 13(b).  For those of you seeking a refresher on source and contours of the FTC’s ability to seek equitable monetary relief under Section 13 (b) see here.

The FTC sued Commerce Planet, Gugliuzza, and several other individuals for deceptively marketing a web-based money making opportunity including allegations that the defendants failed to properly disclose that the offer included a negative option renewal.  The company and the other defendants settled at the time the complaint was filed.  Gugliuzza decided to fight the case.
Continue Reading Argument That FTC Lacks Ability To Impose Joint And Several Liability Goes Up In Smoke

On Tuesday, March 1, 2016, a panel of judges in the New York Appellate Division, First Department, held that New York Attorney General (AG) Eric Schneiderman’s suit against Donald Trump and the Trump Entrepreneur Initiative LLC (TEI) can move forward.  The court’s decision marks a turning point in the case and resolves ambiguity regarding the contours of the AG’s authority and the statute of limitations for certain causes of action brought by the AG.  The decision is important, one could even say huge.

In August 2013, the AG brought a special proceeding against Trump individually and TEI, formerly known as Trump University LLC.  The action stemmed from a letter sent by the New York State Department of Education in 2005, informing Trump University that it was violating the state’s education law by using the word “University” without a proper charter.  Trump University allegedly did not formally change its name to TEI until May 2010, and ceased operations later that year.

Continue Reading New York Attorney General’s Case Against Trump University Goes Forward

Given the increasingly national scope of commerce, consumer products companies find it difficult to deal with issues regulated at the state level, particularly if states adopt differing and sometimes conflicting solutions to a common problem.  As a result, industry often turns to the federal government for help in creating a common federal solution.  The FTC’s Green Guides were originally born out of concern for conflicting state regulation of claims such as recyclables, while today manufacturers are concerned about efforts by states such as Vermont to regulate GMOs in food products.  Recently industry participants utilizing microbeads also appeared to have successfully supplanted numerous state regulations for a uniform federal regulation. [Microbeads, by the way, are plastic microspheres that are commonly used in personal care products.  Because they are so small they tend to end up back into the ecosystem, raising concerns about pollution.]

The Microbead-Free Waters Act of 2015, imposes a ban on manufacturing products with the beads as of July 1, 2017, followed by product-specific distribution bans in 2018 and 2019. Additionally, as industry participants had hoped, the Act also preempts state laws but the statute’s specific wording cracks the door to the enforcement of earlier-in-time state and local microbead restrictions.

The Act addresses microbeads according to the following schedule:
Continue Reading Crying for Federal Micromanagement — Complying with Conflicting Federal, State and Local Microbead Laws has Personal Care Products Companies in Need of Relief

By V4711 (Own work) [CC BY-SA 3.0], via Wikimedia Commons
By V4711 (Own work) [CC BY-SA 3.0], via Wikimedia Commons

On February 1, 2016, the Federal Trade Commission (FTC) filed an action against Chemence, Inc., an Ohio-based manufacturer, advertiser, and distributor of cyanoacrylate glues (often referred to as “superglues”). In its complaint, filed in the United States District Court for the Northern District of Ohio, the FTC alleges that Chemence is deceiving consumers by claiming that all, or virtually all, of its glue products are American-made. Chemence’s glue products, which include Kwik Frame, Kwik Fix, and Krylex, purport to be “Made in the USA” or “proudly made in the USA.” According to the FTC, these claims are unqualified, and thus deceptive, since a “significant proportion”—approximately 55%—of the chemical components in Chemence’s glues are attributable to imported chemicals essential to the way the glues function.

The FTC also claims that Chemence provided the “means and instrumentalities” for others to deceive consumers through its unqualified Made in USA claims by providing deceptive promotional materials to retailers for use in marketing the glues. The complaint asks the court to issue an order permanently prohibiting Chemence from making deceptive Made in USA claims and seeks other relief, including monetary relief and rescission or reformation of contracts.

Continue Reading Working Toward a Cohesive Approach to “Made in USA” Claims

In a hotly anticipated decision, the Supreme Court yesterday refrained from permitting defendants to end class action cases by offering to make named plaintiffs whole by paying their damages before plaintiffs move for class certification.

In Campbell-Ewald Co. v. Gomez, 577 U.S. ___ (2016), Jose Gomez alleged that Campbell-Ewald violated the Telephone Consumer Protection Act (TCPA) by sending him unsolicited advertisements by text message.  Campbell-Ewald was contracted by the United States Navy to orchestrate a recruiting campaign, which included text message marketing to potential recruits who had “opted in” to receiving marketing solicitations.  Gomez, who had not “opted in,” received at least one such text message.  Relying on the statutory damages available under the TCPA, Gomez pursued damages and injunctive relief on his own behalf and as part of a class action.

Continue Reading Court Rules Settlement Offers Can’t Kill Class Actions