While there were already a number of high profile retail bankruptcies in 2019, current economic conditions and pandemic-related market challenges have exacerbated an already difficult retail environment, which has led to a significant increase in bankruptcies in 2020. Year to date, more than 30 major retail and restaurant chains have filed for bankruptcy, which is more than in all of 2019. Furthermore, 2020 is on track to have the highest number of retail bankruptcies in 10 years. Although the Q4 holiday season often provides the strongest quarterly financial performance for many retailers, which may slow the pace of bankruptcy filings, projected holiday sales numbers may be uncertain this year, and additional bankruptcies are still likely to follow by year end.

Continue Reading With Retail Bankruptcies on the Rise, Opportunities for Distressed M&A Increase

Your product development team spent years designing a product, working out every design detail until it is just right. Your company spent significant time and money marketing the product, shoring up a great reputation for the product and the company that stands behind it. Then, a copycat comes along with a knockoff and starts selling a product that looks eerily similar—or even identical—to yours. When your customers search online for your long-developed and lauded product, the knockoff appears, and at a fraction of the price. You are certainly surprised, and likely dismayed.

Continue Reading Protecting Your Products Using Design Patents in the Era of Copycats

On September 4, 2020, the United States Environmental Protection Agency (EPA) released the final scoping documents for the next 20 chemicals it has designated as “high priority” for risk evaluation under the Toxic Substances Control Act (TSCA). If EPA’s risk evaluation process identifies an “unreasonable risk” associated with any use of a chemical, TSCA requires the agency to regulate the risk. That means manufacturers, distributors, and retailers alike may soon be grappling with new regulations and increased litigation risk as EPA moves forward with its analyses and public scrutiny of these chemicals intensifies.

Continue Reading EPA Releases Final Risk Evaluation Scope Documents for Next 20 High Priority Chemicals

Even in a pandemic, some things do not change.  This month’s Recall Roundup finds the CPSC focusing on dangers that have been front and center for some time.  Specifically, the CPSC continues to focus its regulatory efforts on protecting consumers from product defects in all-terrain vehicles (ATV) and other recreational off-highway vehicles such as snowmobiles, golf carts, and utility vehicles.  The CPSC recently issued a warning to consumers about the risks associated with such products, especially as more consumers look for outdoor activities during the pandemic.  The warning cites to the CPSC’s Annual ATV Report of 2018, which identified almost 82,000 ATV-related injuries that required hospital treatment.  Nearly one-fourth of these injuries were sustained by children under 16 years old, the highest fraction of any age group.  There were also 264 ATV-related deaths in 2018, though this number is expected to rise as reporting is ongoing.  So far, the CPSC has issued 15 recalls for recreational off-highway vehicles in 2020.  In 2019, that figure was 20 recalls.

Continue Reading Recall Roundup: August

On July 22, 2020 Leaflink, a B2B cannabis marketplace, closed a $250 million senior secured credit facility with an undisclosed private lender. In the press release, Leaflink described the deal as “one of the largest debt financing deals completed in cannabis to date and…an important milestone for the industry.” When most people think of cannabis industry financing for retailers or operators, rather than debt financing, they think of sale-leasebacks with a cannabis real estate investment trust (REIT). Leaflink intends to use the money to provide supply chain financing options to its retailer clients through its new platform Leaflink Financial. This blog post gives a brief overview on why sale-leasebacks are ubiquitous and why debt financing is on the rise. Continue Reading Reading the Leaves: Financing Trends in the Cannabis Industry

Earlier this year, The Retail Equation, a loss prevention service provider, and Sephora were hit with a class action lawsuit in which the plaintiff claimed Sephora improperly shared consumer data with The Retail Equation without consumers’ knowledge or consent. The plaintiff claimed The Retail Equation did so to generate risk scores that allegedly were “used as a pretext to advise Sephora that attempted product returns and exchanges are fraudulent and abusive.” Continue Reading Multiple Retailers Sued Under CCPA for Sharing Data Used to Identify Fraudulent Returns

On August 3, 2020, the United States District Court for the Southern District of New York struck down portions of the DOL’s Final Rule regarding who qualifies for COVID-19 emergency paid sick leave under the Emergency Paid Sick Leave Act (“EPSLA”) and the Emergency Family and Medical Leave Expansion Act (“EFMLEA”), collectively referred to as the Families First Coronavirus Response Act (“FFCRA”).

Continue Reading Federal Court Strikes Down Portions of Department of Labor’s Final Rule on COVID-19 Leave, Expands Coverage

On August 6, 2020, President Trump signed executive orders imposing new economic sanctions under the International Emergency Economic Powers Act (50 U.S.C. § 1701 et seq.) and the National Emergencies Act (50 U.S.C. § 1601 et seq.) against TikTok, a video-sharing mobile application, and WeChat, a messaging, social media and mobile payments application. The orders potentially affect tens of millions of U.S. users of these applications and billions of users worldwide.

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With the prevalent spread of COVID-19, hand sanitizers have become this spring and summer’s “fidget spinners,” cycling through the process from market shortage to glut in short order.  With such a rush to meet the drastic spike in demand, product missteps seem inevitable.  Although the Recall Roundup generally focuses on recalls under CPSC jurisdiction, the numerous FDA recalls involving hand sanitizers merits mention here.  Since June 27, 2020, there have been 15 recalls noted on the FDA’s “Recalls, Market Withdrawals, & Safety Alerts” website.  Retailers looking to meet market demand should keep an eye on this FDA web site relative to the hand sanitizers they may have stocked for sale.

Continue Reading Recall Roundup: July

On July 23, 2020, U.S. Congresswoman Jan Schakowsky introduced H.R.7756 to require online marketplaces to verify and disclose to consumers certain information regarding high-volume third-party sellers of consumer products. The goal of the bill is to combat the sale of stolen, counterfeit, and dangerous consumer products by requiring transparency of third-party sellers on online retail marketplaces.

Continue Reading Online Marketplaces May Be Required to Verify and Disclose Seller Information