The Recall Roundup is a monthly survey of regulatory activity affecting the manufacture, distribution, and sale of consumer products. Subject matter may include the latest product recalls, federal agency major developments, and proposed or new federal rules. The blog’s goal is to provide an overview, rather than a comprehensive report on every development that could potentially affect businesses or consumers. Nothing herein constitutes legal advice. If you have questions or comments about the blog, please reach out to the authors.
Today, the FTC announced it had sent “Notices of Penalty Offense” to over 700 businesses, including top consumer products companies, large retailers, tech platforms, media and gaming companies, and ad agencies, warning them against engaging in deceptive and unfair practices when it comes to using endorsements and testimonials in ads.
On September 22, 2021, the Division of Corporation Finance (Division) of the Securities and Exchange Commission (SEC) issued a sample comment letter to highlight its increased focus on climate change-related disclosures or the absence of such disclosures in issuer filings under the Securities Act and the Exchange Act. This sample comment letter follows a recent increase in climate-related comments the Division has issued during the disclosure review process, and many of the sample comments appear to be derived from actual comment letters issued in 2021. The sample is consistent with the SEC’s 2010 Guidance Regarding Disclosure Related to Climate Change, which does not mandate specific, line item climate change-related disclosures, but instead takes a principles-based approach.
In a dramatic recent announcement, EPA suggested that if companies import, manufacture, or process a finished good for commercial sale, and that product is not a pesticide, not a firearm, not a tobacco product, and not a food, food additive, drug, cosmetic, or device, they will need to know all chemicals contained in those products. We explain more about this below.
In an underreported amendment to the Bankruptcy Code, the Small Business Reorganization Act amended §547(b) of the Code to add an explicit requirement for the bankruptcy trustee or debtor in possession to conduct “reasonable due diligence” before filing a preference action. The apparent goal of this amendment to the Bankruptcy Code is to reduce the number of frivolous preference lawsuits pursued by trustees. In view of these new explicit due diligence requirements, creditors should reconsider their initial response strategy by impressing upon trustees the risk of filing a preference lawsuit before reviewing available documents and other evidence that may readily reveal viable defenses for potential defendants.
On September 15, 2021, a divided Ninth Circuit panel in Chamber of Commerce v. Bonta, Case No. 20-15291, upheld Assembly Bill 51 (“AB 51”), a bill that would prohibit employers from requiring employees to execute arbitration agreements as a condition of their employment. The Ninth Circuit’s ruling reversed in part the District Court’s ruling that AB 51 is preempted by the Federal Arbitration Act (“FAA”).
Multi-level marketing has touched us all – whether it be purchasing beauty products, essential oils, or health supplements from a friend through social media, or receiving an invitation to join a team of seemingly successful people working their “side hustle.” But multi-level marketing is now getting some additional multi-level attention, both in the media and in the court room.
On August 6, 2021, the Securities and Exchange Commission (SEC) approved new Nasdaq rules (Rules 5605(f) and Rule 5606) aimed at advancing diversity among board members of Nasdaq-listed companies and increasing disclosure of diversity statistics. Nasdaq’s new rules underscore the increasing attention in recent years in addressing environmental, social and governance (ESG) issues at the board level and creating new compliance obligations for Nasdaq-listed companies.
The CPSC’s nine-year saga over magnet sets has finally concluded. Magnet sets are clusters of small, separable, magnetic balls that a consumer can rearrange into countless shapes. In 2012, a distributor refused to voluntarily recall the magnet sets, forcing the CPSC to file an administrative complaint alleging that the magnet sets were defective and presented a substantial ingestion hazard to young children. In 2017, the CPSC concluded that the magnet sets posed a substantial product hazard that cannot be mitigated by package warnings and ordered the distributor to recall the magnet sets. The distributor sued in federal court to block the CPSC’s order. After multiple appeals, the Tenth Circuit Court of Appeals ultimately agreed with the CPSC. Thus, this month the CPSC issued a rare mandatory recall of 10 million magnet sets. The recall noted that two children who had ingested the magnets from the magnet sets required surgery to remove them and a 19-month-old child died after ingesting similar high-powered magnets. The CPSC also issued a warning to consumers about the dangers of high-powered magnets, noting that from 2009 to 2018, there was an estimated 4,500 cases of children from 11 months old to 16 years old who were treated in US hospitals for ingestion of high-powered magnets.
This year, like last, the National Oceanic and Atmospheric Administration predicts an extremely active hurricane season. As we write this alert, the Gulf Coast, Mid-Atlantic, New York, and New England regions are just now realizing the devastation Ida has left in her path. Now is the time to ensure your insurance program is hurricane-ready. As reported in the client alert linked below, our insurance coverage team provides critical steps that you should take now to ensure that you protect your assets and maximize recovery in the unfortunate event of a hurricane claim.