Last month, the solar eclipse captivated the United States and many consumers flocked to purchase solar eclipse glasses to safely observe the astronomical phenomenon. We previously reported how NASA issued a safety alert advising consumers on the proper eye protection they should seek. Now, some consumers have filed a class action lawsuit against a major online retailer for allegedly selling “unfit, extremely dangerous, and/or defective” solar eclipse glasses. As a result, the consumers allege “varying degrees of eye injury ranging from temporary discomfort to permanent blindness.”

Continue Reading Recall Roundup: September

Retailers are increasingly relying on drones to further automate delivery systems and inventory management, among many other uses. The Federal Aviation Administration recently predicted that nearly 4 million drones will be operating in the U.S. by the year 2021.

Hunton & Williams Insurance Coverage attorneys Syed Ahmad and Geoffrey Fehling, with co-author Robert Hopson of Lockton Companies, recently published an article in Unmanned Aerial Online providing an overview of available insurance coverage for commercial drones and several coverage issues to consider when buying insurance for drone operations.

Read the full article.

August was a busy month in the world of recalls. First, the end of August ushered in a hefty $5.7 million civil penalty against a major retailer in the United States. The retailer was allegedly selling and distributing recalled products and has agreed, in addition to the civil penalty, to maintain a compliance program and a system of internal controls and procedures. The CPSC voted 4 to 1 to accept the settlement, with Acting Chairman Buerkle voting to accept a lower civil penalty. Continue Reading Recall Roundup: August

Liability insurance policies generally have an exclusion barring coverage for claims brought by the insured’s own employees. These exclusions usually do not bar coverage, however, when claims are brought by an employee of one insured against another insured. This scenario occurs frequently, especially for companies in the retail industry, who are usually one of multiple insureds under a single policy and are susceptible to being sued by another insured’s employees. Continue Reading Insurance Coverage for Employee Claims

In late May 2017, the American Law Institute met to approve the Proposed Final Draft of the first ever Restatement of the Law, Liability Insurance—the culmination of over seven years of work on this project. Not surprisingly, many of the issues discussed in the Restatement have been hotly contested by insurers. The proposed Restatement is important for retail industry insureds because courts around the country may look to this new Restatement in ruling on common insurance coverage disputes arising out of product liability actions, recalls and environmental contamination. For example, some of the most hotly debated sections of the proposed Restatement include, (1) policy interpretation principles, such as when a term is deemed ambiguous; (2) the standard for determining the insurer’s duty to defend; (3) the insurer’s duty to make reasonable settlement decisions; and (4) the allocation of liability in long-tail environmental claims. Continue Reading The Restatement of the Law, Liability Insurance and Impact on Retail Insureds

Many retailers today face an increasing risk related to product recalls, which can result in extensive losses and a variety of liability claims. For example, a major supplier of meats was recently forced to recall more than seven million pounds of its product after customers found bone fragments and pieces of cartilage in their hot dogs and sausages. The large scope of this recall, and the associated challenges, is by no means unique to this company. Specialized insurance policies should provide protection to minimize most recall losses and exposure from liability claims. However, insurers often seek to rescind recall policies by asking courts to void the policies from their inception, meaning that the polices would not provide any coverage for any pending or future claims. A large number of these recall claims are being brought under New York law. Continue Reading Steps to Avoid Rescission of Recall Insurance Policies

On July 26, 2017, an amusement ride named “Fire Ball” at the Ohio State Fair broke apart, killing one passenger and injuring seven others. This deadly incident may trigger a CPSC investigation into the matter.

Prior to 1981, the CPSC exercised jurisdiction over all amusement rides. But after several high-profile cases challenged the CPSC’s jurisdiction over amusement rides with mixed results, an amusement parks trade group successfully lobbied Congress to exempt stationary amusement rides from the CPSC’s jurisdiction. In 1981, Congress passed the Consumer Product Safety Amendments, which amended the definition of “consumer product” to explicitly exempt stationary amusement rides.

Continue Reading Recall Roundup: July

June commenced with another massive civil penalty. A manufacturer agreed to pay a $5.2 million civil penalty and maintain a compliance program for allegedly failing to immediately report defective floorboards in recreational off-highway vehicles. In a three-year period, the manufacturer received over 400 reports of floorboards cracking or breaking in one vehicle model and over 150 similar reports in two other models. Once the manufacturer filed its report, it allegedly underreported the number of floorboard incidents associated with one model and failed to identify altogether the floorboard incidents associated with the two other models. These omissions, according to CPSC staff, constituted a material misrepresentation. The CPSC accepted the settlement by a 4-to-1 vote. Continue Reading Recall Roundup: June

Private equity investors face unique challenges when procuring or renewing their liability insurance programs. For example, investors typically must complete lengthy applications or sign warranty and representation letters from their prospective insurers that inquire into knowledge by any potential insured as to any acts or omissions that could potentially give rise to a claim. These overly broad, and often vague, inquiries are problematic for private equity investors who would theoretically have to interview every employee, manager or director at every subsidiary, fund and portfolio company (if insureds) to discern whether any person has knowledge of such an act or omission. Hunton insurance coverage attorneys Syed S. Ahmad and Andrea DeField recently authored an article in Bloomberg Law Securities Regulation & Law Report in which they address this issue and others as part of their Top 5 Coverage Issues Private Equity Investors Should Consider.

Recently, HoneyBaked Foods, Inc., Wornick Foods and Foster Farms have been in the news because of different kinds of contamination claims. Syed Ahmad and Matthew McLellan, attorneys on Hunton & Williams LLP’s Insurance Coverage Counseling and Litigation team, authored an article entitled A Primer On Insurance Coverage for Food Contamination Losses, which provides an overview of insurance protection for food contamination issues that retailers, wholesalers and manufacturers may encounter. The article describes the insurance coverage available under traditional insurance policies, as well insurance protection designed specifically to cover contamination events experienced by food and beverage retailers. Through discussion of recent, high-profile contamination events and product recalls, the article provides insight on the type of losses that may be covered and the necessary proof of loss, as well as some of the pitfalls and limitations on coverage that retailers and other types of policyholders may face.

Read the full article in Food Logistics Magazine.