Retail Mass Tort Trends GCs Should Know

By Jonathan R. Tung, Esq. on May 31, 2016 | Last updated on March 21, 2019

If no one has said it to you yet, then we should step in to do that honor: retail is getting killed, and we all know that online-retail's rise and brick-and-mortar retail's coincidental decline is no coincidence at all. And the fight for consumer retail dollars is finding its way into the courtroom.

But not all the time. General counsel and other in-house lawyers should take the time to get familiar with mass tort class action trends that have been afflicting the industry. The short verdict? Business is tougher than ever.

Made in the USA

"Made in the USA" can be a misleading term. Recently, J Brand had to settle a major class action suit over its jeans which carried the label "Made in California, USA" when a portion of its components were actually sourced from foreign parts. Under California law, all components must be entirely made within the USA in order for a consumer product to be lawfully labeled as being made in the USA. This is in contrast to federal law which allows "negligible" components to be made outside of USA.

Perpetual "Sales" Aren't Sales at All

If you have a young teen in the house, or work in the retail-law sector, you may already be somewhat familiar with the Justice's agreement to settle allegations that the retail fashion company engaged in deceptive advertising when it marked its items "40 percent off" when the price was the retail's actual price for the item -- discount free. The total settlement fee was $50.8 million.

This points to the general rule that retailers must be careful of so called "forever sales" tactics which could land the company in hot water. Such suits are based on the idea that sales prices that never end aren't really sale prices at all, and such practices really amount to a form of false advertising. Under California's consumer protection laws, new and novel theories have been tested.

ADA Accessibility Suits Against Websites

ADA lawsuits are no longer exclusively for brick-and-mortar stores -- ADA suits can also apply to websites. The seminal conflict in this issue appears to be the lawsuit brought in California against Target Corporation in which the plaintiffs alleged that Target's website was not properly accessible to the blind. Target moved to dismiss, but the court denied the motion finding a "nexus" between the use of the website and an actual Target store (a theory that would probably hold less water today, but still). The number for this groundbreaking settlement was $6 million.

What to do?

General Counsel should proactively take steps to ensure that their client's pricing techniques are kosher in the views of federal and state laws. A good resource for federal views on deceptive consumer pricing can be found at the FTC as GC can compare circumstances of sale and even "comparison shop" for competitor prices. Keep in mind, however, that states very often have much more stringent consumer protection laws than federal law. Here again, California takes the crown. See the J Brand settlement above for a recent example.

In the case of "Made in the USA," GC must understand the ultimate source of every component -- especially if the client is doing business in California. The Golden State's laws are particularly onerous given today's highly globalized world.

Finally, GC should at least make their websites minimally ADA compliant by testing it with a screen reader or another non-proprietary tool. Alternatives include hiring an expert which will look good before a judge. Of course, the whole point is to avoid the judge entirely, so make sure you perform due diligence.

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