Fashion Sustainability and Social Accountability Act Proposed in New York

Happy New Year (are we still saying that?) from the Global Supply Chain Law Blog!  In our ever-evolving society, the fashion industry has taken new heights.  And with those heights, the industry is on pace to account for more than a quarter of the world’s carbon budget, according to the New Standard Institute.   Indeed, the group indicates that apparel and footwear are responsible for roughly 4-8.6% of global greenhouse gas emissions.  You may be wondering, “but how?”  Well after that sweater you bought last year (or even last month!) goes out of style, you may donate it.   According to CBS, some of those donations go overseas to Ghana, for example, to be sold.  The unsold clothes, however, end up as landfills creating an environmental nightmare.

As a result and in an effort to create more regulation, New York is taking action with respect to the environmental nightmare. Earlier this year, the New York legislator proposed a bill—the Fashion sustainability and social accountability act, which would amend the general business law, requiring fashion retail sellers and manufacturers to disclose environmental and social due diligence and policies.

Specifically, every fashion retail seller and fashion manufacturer doing business in the State of New York and having annual global gross revenues that exceed $100 million dollars must disclose its:

  1. environmental and social due diligence[1] policies,
  2. processes and outcomes, including significant real or potential negative environmental and social impacts, and
  3. targets for impact reductions, implementation, improvement and compliance on an annual basis.

The required disclosures would include supply chain mapping of at least 50% of suppliers (which the retail seller or manufacturer could choose) by volume across all tiers of production, a sustainability report, independently verified greenhouse gas reporting, volume of production displaced with recycled materials, and median wages of workers of suppliers compared with local minimum wage, to name a few.

All disclosures must be posted on the retail or manufacturer’s website within a year of enactment.  Enforcement of the bill would fall to the state’s attorney general, who would publish a report listing the fashion retail sellers and manufactures who are out of compliance with the act. Public shaming would not be the only punishment, however.  Retailers and manufacturers who fail to comply may be fined up to 2% of annual revenues of $450 million or more.  The money from the fines will be deposited into a community benefit fund, which will be used for environmental benefit projects that directly and verifiably benefit environmental justice communities.

In short, if the Fashion sustainability and social accountability act is enacted into law, fashion retailers and manufactures will be held accountable for environmental and social impacts stemming from their supply chain and production of apparel and shoes.  According to Vogue, “proponents say the bill will make history” as it could “shift how the fashion industry operates globally.” Thus, stay tuned as we will be tracking the legislation closely and will provide real time updates!

[1] “Due diligence” shall mean the process companies should carry  out to  identify,  prevent, mitigate and account or how they address actual and potential adverse impacts in  their  own  operations,  their  supply chain  and other Business relationships, as recommended in the Organisation for Economic Co-operation and Development Guidelines  for  Multinational  Enterprises,  the  Organisation  for Economic  Co-Operation and Development Due Diligence Guidance for Responsible Business Conduct  and United Nations Guiding Principles for Business and Human Rights.

© Copyright 2022 Squire Patton Boggs (US) LLP
For more articles on sustainability, visit the NLR Environmental, Energy & Resources type of law page.

Legal Considerations for Ready-to-Drink Cocktails

The ready-to-drink cocktail or “RTD” category has exploded in recent years, and it’s occupied by more than merely craft distillers familiar with a carefully made cocktail. Brewers, distillers and even vintners have joined in, capitalizing on consumers’ desires for pre-made, no-fuss beverages. The most unexpected development to emerge with RTDs, however, is the legal complexity surrounding these products—something the industry is only beginning to understand.

Many of these legal issues stem from the fact that the legal regulatory landscape in most states has not caught up with the rapidly evolving alcohol industry. That leaves ready-to-drink cocktails, much like hard seltzers, as not having a specific class or type in certain states. Suppliers looking to enter the space have plentiful options when creating a new product, subject to what licenses the manufacturer holds and what those licenses allow them to produce.

Ready-to-drink cocktails can be spirits, malt, sugar, cider or wine-based. The base of the RTD product, nonetheless, is the key federal factor. It is also an important factor in most states when determining how the product will be treated from a legal perspective in the following areas:

  • Licensing needed to manufacture, distribute and sell the product;
  • Applicable franchise law (Do beer franchise laws apply to low-proof spirits?);
  • Available channels of distribution (Can you sell this product in grocery or convenience store?);
  • Excise tax rate charged to the manufacturer (Does state law have a lower excise tax rate for low ABV products?);
  • Labeling and advertising considerations (Is your product a modified traditional product?); and
  • Trade practice considerations/promotions (Do spirits laws apply?).

Industry members dabbling in a sphere that is relatively new to the market, state regulators and legislatures should be mindful of the patchwork of emerging regulations. Like hard seltzer, ready-to-drink cocktails are not a clearly defined category under existing alcohol law. Meanwhile, states are working quickly to legislate in this domain. New Jersey is considering a reduced alcoholic beverage tax rate on low-ABV liquors to align with the beer tax rate (NJ SB 701), Vermont is considering legislation to define “low alcohol spirits beverage” and treat it as a “vinous beverage” (VT HB 590) and the Washington State Senate has a bill pending that would establish a tax on low-proof beverages (WA SB 5049).

From franchise issues to excise tax, the issues discussed here are only a glimpse of the nuanced and complicated legal landscape that governs the distribution of RTDs and alcoholic beverages across all categories.

Article By Nichole D. Shustack and Isabelle R. Cunningham of McDermott Will & Emery

For more food and beverage legal news, click here to visit the National Law Review.

© 2022 McDermott Will & Emery

USCIS Issues New Policy Guidance for O-1B Visas

United States Citizenship and Immigration Services (“USCIS”) recently issued policy guidance to clarify how to determine the appropriate visa classification for persons of extraordinary ability in the arts. Given the massive changes in the entertainment industry in the past year, including the increasing popularity of internet and streaming services, this guidance provides essential insight for those seeking to understand the nuances of O-1B nonimmigrant visas and determine which visa applies to their unique circumstances.

O-1 Visa Program for Individuals with Extraordinary Ability or Achievement

The O-1 nonimmigrant visa program provides nonimmigrant visas for individuals who possess extraordinary ability in the sciences, arts, education, business, or athletics, or who have demonstrated extraordinary achievement in the motion picture or television industry and been recognized nationally or internationally for those achievements.

The O-1 nonimmigrant visa program is broken down into the following classifications:

  • O-1A: Individuals with an extraordinary ability in the sciences, education, business, or athletics (not including the arts, motion pictures or television industry);
  • O-1B (Arts): Individuals with an extraordinary ability in the arts;
  • O-1B (MPTV): Individuals with extraordinary achievement in the motion picture or television industry.

Generally, to qualify for an O-1 visa, a beneficiary must demonstrate “sustained national or international acclaim” in their respective field. To prove this, applicants must provide evidence of their credentials, including national or international awards or prizes, membership in professional organizations in their respective field, published articles in notable trade publications, high salary for their services, as well as other relevant evidence of exceptional expertise.

Under the O-1B category, as noted above, individuals in the entertainment industry can demonstrate either extraordinary ability in the arts or extraordinary achievement in the motion picture and television industry. With the recent shifts in the entertainment industry, including the prevalence of household names from YouTube, TikTok, Instagram, etc., it has become increasingly common for applicants to possess qualities that fall under both the O-1B (Arts) and the O-1B (MPTV) categories.

Determining the Relevant Standard for Artists with Some Connection to MPTV

The USCIS Policy Manual acknowledges the difficulties associated with petitions that have elements of both O-1B (Arts) and O-1B (MPTV) classifications. According to the newly issued guidance, inclusion in the motion picture or television industry is not limited to whether artistic content will air on television or movie screens, noting that “USCIS considers streaming movies, web series, commercials, and other programs with formats that correspond to more traditional motion picture and television productions to generally fall within the MPTV industry’s purview.” Indeed, USCIS gives weight to whether an individual”s work aligns with industry organizations such as the Academy of Television Arts and Sciences.

However, under USCIS guidance, not all television stars are considered equal for the purpose of visa qualification. For instance, reality television poses an interesting problem because many of the “stars” are non-actors involved in a competition of some sort that takes place on television. According to USCIS, contestants on reality television programs fall outside of the MPTV industry, but judges, hosts, and those employed by the production company generally fall within industry parameters.

Video blogging, a staple of the increasingly popular YouTube and TikTok platforms, poses similar questions. However, USCIS makes clear that static web content, like video blogs, generally falls outside the O-1B (MPTV) classification and is more appropriate for O-1B (Arts) petitions. USCIS notes that if an artist’s work or appearance on an MPTV production is incidental to their non-MPTV work as an artist, the MPTV classification may not be appropriate.

Guidance for O-1B Visas

The newly-issued guidance provides some clarification of the nuances that distinguish O-1B (Arts) beneficiaries from O-1B (MPTV) beneficiaries. Potential beneficiaries and practitioners can continue to consult the USCIS Policy Manual for up-to-date guidance in this quickly changing industry.

Article By Raymond G. Lahoud of Norris McLaughlin P.A.

For more immigration legal news, visit the National Law Review.

©2022 Norris McLaughlin P.A., All Rights Reserved

At-Home COVID-19 Testing Options and Alternatives

In fulfillment of President Biden’s promise to make at-home COVID tests more available for all of us, two significant action steps have now occurred:

  1. Every U.S. household has access to free at-home COVID-19 tests. As of January 18, 2022, any individual with a residence in the United States may request up to four (4) at-home COVID test kits.  There is no cost to register or for the kits themselves.
  1. At-home COVID-19 testing is available at no cost without a prescription under an employer’s group health plan. On January 10, 2022, the Department of Labor (DOL) released updated guidance and an FAQ that, as of January 15, 2022, now extends an employer’s obligation to cover all types of COVID-19 tests, between those performed or prescribed by a physician or other health care provider,  and for in-home COVID-19 tests provided without a doctor’s order.

Key Points:

All group health plans and insurance carriers must now cover the cost of at-home COVID-19 test kits, passing none of that cost to employees or individuals covered under the plan, and without requiring a medical diagnosis or prescription from a health care provider.

  • The plan or insurer need not provide this coverage to employees not covered under the employer’s plan.
  • For these purposes, the coverage can be provided through an employer’s medical plan, pharmacy benefit plan/PBM, or both. Employers should discuss the options and costs for administering this arrangement under their particular plan with their brokers and consultants or insurance carriers.
  • The guidance allows a plan or insurer to meet this coverage obligation in one of two ways:
    • The plan can work with its insurance carrier or third-party claims administrator (TPA) to create “direct contract” arrangements with retailers (e.g., Walmart, RiteAid, Walgreens, etc.) and other insurance network providers to provide COVID tests to covered individuals at no cost to the individual at the counter; costs are negotiated and paid between the plan/insurer/TPA with the retail service provider directly.
    • Individuals can also purchase COVID tests through any other resource and submit the receipt for reimbursement through the plan or insurer’s established process, either through the insurance carrier, TPA or PBM. The maximum amount to be paid in reimbursement is the lesser of: (a) the actual cost of the COVID test; or (b) $12 per test (note: if the COVID kit comes with two tests, the cost to be reimbursed would be per test or a maximum of $24).  The plan or insurer does not have to reimburse for COVID tests purchased before January 15, 2022.
    • Suppose a plan or issuer is unwilling or unable to satisfy the above criteria in providing the opportunity to receive COVID testing coverage under either of the above criteria. In that case, the plan or issuer must still provide reimbursement of at-home COVID tests without the above cost limitations.
  • The plan or insurer can limit the total number of COVID tests to 8 per person per month (or 4 kits if the kit includes two tests). A separate limit applies for each covered family member (e.g., a family of 4 could receive up to 32 tests per month (or 16 kits, if it includes two tests each).  There is no annual maximum limit.
  • An individual need not provide proof of medical need, but the plan can require the individual to attest that they are purchasing only for personal use (not for resale).
  • Employers are encouraged to communicate to all covered individuals about the alternatives available and processes for seeking reimbursement of purchased tests.
  • The obligations for coverage of at-home COVID tests remain in effect for at least the remainder of the Public Health Emergency period, which has now been extended to at least April 15, 2022.
  • COVID testing and other related costs provided at a health care provider or other health care facility as part of a medical assessment must still be covered 100 percent by the plan or issuer without being subject to the test or cost limits that apply for over-the-counter COVID tests, under previous guidance under the CARES Act, and the First Families Coronavirus Response Act (FFCRA).

Employer sponsors of group health plans are likely to have received at least some information from their TPA, insurance carrier, or other brokers and consultants about the steps to be taken related to the guidance provided under the most recent DOL FAQ.

Jackson Lewis P.C. © 2022

Article By Brian M. Johnston of  Jackson Lewis P.C.

For more articles on at home COVID-19 testing, visit the NLR Coronavirus News section.

Why Lawyers Should Never Pay for Awards or Honors and Never List Those on Their Web Site

I’m honored/humbled/excited/thrilled to announce that I’ve been nominated for a “lawyer of distinction” award but there’s just one problem, I’m not a lawyer!

And this is exactly why I have an issue with so many of these lawyer “awards.” They’re scams.

My PSA to all lawyers – I promise that you DO NOT need these spammy fake pay-to-play awards.

They actually undermine your credibility.

If a client sees them on your website or on your LinkedIn profile they’re going to question your credentials.

Much to the chagrin of many legal marketing professionals, these organizations reach out directly to lawyers which creates confusion and also hope on the part of the lawyers who are excited for being recognized, and then it’s up to us to break the unpleasant news that these are actually scams, which is always fun for us /p>

There are plenty of reputable awards in the legal industry that involve references, research and submissions with your client work, so focus on those, if you must.

And those awards don’t ask you for a dime.

A pay-to-play award is one where the defining characteristic of who gets “honored” is paying to be listed, not actual skills or expertise.

Real awards honor exceptional lawyers without caring whether they pay or not.

I can give you 10,000 things on which you should spend your money when it comes to marketing and business development that are better value versus these spammy awards.

So lawyers, please don’t pay for a profile for these bogus awards, use their badges on your website or pay for a plaque, especially if you know it is a scam, or if you have a nagging suspicion.

Also you don’t need a plaque anymore because you’re probably not really going into the office that much and even if you were in the office isn’t it a little much to have a bunch of plaques about yourself hanging on the wall? I always thought that was weird when I walked into a partner’s office and it was all about them…

Put these phony award solicitations where they belong – in your spam folder or right in the trash.

And if you’re unsure whether an award has merit, reach out to your marketing person, reach out to me or reach out to Igor Ilyinsky who put together a running list of the spammy awards to watch out for.

Just know that you don’t need one of these awards to validate how good you are at what you do. And you certainly don’t have to pay anyone to tell you that.

These awards are going to bring you new clients. What will is superior client service, referrals and strategic marketing and business development.

It was nice to have that Esq next to my name for a second though

Copyright © 2022, Stefanie M. Marrone. All Rights Reserved.

Article By Stefanie M. Marrone of  Stefanie Marrone Consulting

For more articles on legal marketing, visit the NLR Law Office Management section.

A Very Simple Proposal to Tweak the FLSA to Benefit Both Employees and Employers

A number of years ago, I received a kind note around the holidays from my opposing counsel in a wage-hour class action, thanking me and my firm for being their “partners” in addressing employment issues.

Maybe the word he used wasn’t “partners,” but it was something close to it.

At first, I must admit that I thought he was joking.

Then I realized that this attorney, for whom I have great respect, got it.

He got that employers are not looking to violate employment laws, and that the attorneys who represent them are not trying to help their clients violate the laws.

He got that the opposite is true – employers are trying to comply with the laws, and their attorneys are trying to help them do so.  No employer is hoping to get sued.  Not one.  And lawyers advising employers on how to violate the laws will soon be looking for new clients.  Or a malpractice attorney.

The general public may not understand this notion, and, unfortunately, many employees and plaintiffs’ lawyers may not, either.

The desire of employers and their counsel to comply with the law plays out thousands of times every day, to the great benefit not just of employers, but of employees.

All management-side employment lawyers worth their salt have stories about how they worked with their clients to prevent a manager from terminating an employee’s employment, or cutting an employee’s pay, or implementing a problematic policy, by explaining the law and the potential repercussions.  Some lawyers have hundreds of these stories.

“You should give the employee another chance,” is an expression that may as well be on a tape recording, it’s used that often.  “Document the problem, sit down with the employee to explain how they need to do things differently, and give the employee another chance.”  “If you make that change, you’re walking right into a class action that you will have difficulty defending.”

Often – usually – employers will understand and follow their counsel’s advice once distanced from the heat of the moment.

They’re looking to do the right thing, to treat their employees fairly.  And, yes, to comply with the law.

It’s an approach that works in virtually every context except perhaps one – the Fair Labor Standards Act (FLSA).

The FLSA actually works to dissuade employers from working with employees to correct many wage issues.

Why is that?

Because, unlike other employment laws, the FLSA generally doesn’t permit employers and employees to resolve wage disputes, short of the very litigation or agency complaint that neither employers nor employees really want.

The FLSA generally forbids the very amicable resolutions that would benefit both employers and employees.

And perhaps it’s time to change that.

In a perfect workplace, if employees have issues, whatever they might be, they would speak with their managers or with human resources and resolve their disputes amicably.

And, for the most part, the law not only permits them to do so, but encourages them to do so.

If employees believe they have been harassed, they can take their concerns to their employer and let their employer investigate and take corrective action, if appropriate.

If employees believe they have been discriminated against, they can share their concerns with their employer and resolve their disputes.

And if part of the resolution is a payment of some sum that the employer and employee agree to be fair, they can enter into a settlement agreement whereby those claims are resolved.  That is, the employee can accept some agreed-upon sum of money and sign a release.  And the employee can review the settlement agreement with his or her attorney beforehand in deciding whether the terms are fair.  If not, the employee won’t sign it.

But these very same employees who are able to amicably resolve virtually any dispute with their employers generally are not allowed to do so with FLSA claims.

If employees believe they were not paid for all time they worked, they cannot simply speak with their managers or human resources personnel to resolve the issue, get the problem fixed, and move on.  No, generally speaking, the only way they can resolve the issue is to file a lawsuit or a complaint with the Department of Labor (DOL).

If employees believe their overtime pay was miscalculated, the only way they and their employers can resolve the claim is by suing or going to the DOL.

If employees believe that they have been misclassified as exempt, they can’t resolve the issue with their manager or human resources personnel.  No, they have to sue or file a DOL complaint.

And if employers identify an issue – an error on someone’s paycheck, or a concern that an employee might have been misclassified – the best they can do is to correct the issue and pay the employee, then sit back and hope that the employee doesn’t turn around and sue about the very issue the employer wanted to resolve, but couldn’t.

It’s a system that is built to increase litigation, often unnecessarily, at the expense of amicable resolutions of issues that may arise.

There is no good reason that employees can be trusted to resolve other employment disputes without litigation or an agency complaint, but can’t be trusted to do so with regard to wage claims.

None.

There is no good reason why employees can be allowed to amicably resolve a race or sex discrimination concern, for instance, but the same employees can’t be allowed to resolve a wage claim – not even as part of the resolution of the race or sex discrimination concern.

None.

The argument that an employee wouldn’t understand the nuances of the FLSA flies about as far as a turkey.  The FLSA is no more nuanced than Title VII or the Americans with Disabilities Act, and employees are allowed to resolve those claims outside of litigation or an agency complaint.

And don’t forget that employees could always have an attorney review a proposed FLSA settlement before they ever enter into it.  If it wasn’t fair, the attorney would surely tell the employee that and try to negotiate better terms, right?

Ultimately, it’s the employees’ decision.  If they don’t like the terms of a proposed resolution of FLSA claims, they can always file suit or a DOL claim then.

If you assume that employers and employees would like to have the opportunity to try to resolve their FLSA disputes prior to litigation or a DOL claim, then it is time to amend the FLSA to give them to right to do so.

And the blueprint for what legislation could look like is easy to find – it’s right in the Age Discrimination in Employment Act (ADEA).  Or, more specifically, it’s right in the Older Workers Benefits Protection Act (OWBPA) amendments to the ADEA.

For reasons that remain somewhat mystifying, releases of age discrimination claims under the ADEA require specific terms that releases of other types of federal discrimination claims do not.  Among other things, such releases must specifically reference the ADEA, they must advise employees that they have the right to consult with an attorney, they must provide the employee with 21 days to consider the release (or 45 days under some circumstances), and they must provide the employees with 7 days to revoke an agreement after signing.

There is no reason that the FLSA couldn’t be amended to permit private settlements along the same lines – with a requirement that the release specifically reference the FLSA, that it advise employees that they have the right to consult with an attorney (or the DOL), that they have 21 days to consider the release, and that they may revoke the release within 7 days.

Don’t like the settlement proposed by your employer?  Don’t sign it.

Don’t understand it?  Talk with a lawyer or the DOL.

Need time to think about it?  You’ve got plenty of time.

Have second thoughts after signing the agreement?  Revoke it.

If such bells and whistles are sufficient to protect older workers who wish to settle age discrimination claims, they should be sufficient to protect all employees who wish to resolve FLSA claims.

Employees would benefit from a system that would encourage employers to address wage issues – and, not incidentally, by which they might not have to share 30-40% of their settlement with lawyers.

Employers would benefit from a system that would help them address those issues while avoiding litigation – saving on paying attorney’s fees to attorneys like me.

The courts and the DOL wouldn’t be clogged with claims that cry out for resolution.

The only people who wouldn’t benefit from this proposed amendment would be the lawyers.

And if you’re worried about us lawyers, you should call a doctor.

©2022 Epstein Becker & Green, P.C. All rights reserved.
For more articles on employment laws, visit the NLR Labor & Employment section.

WEBSITE LAYOUT PASSES MUSTER: Court Enforces Cruise Line’s TCPA and Arbitration Disclosures Over Objection

Those of you who attended Lead Generation World heard me discuss the big trend from back in 2020 in which Courts were refusing to enforce online disclosures owing to perceived problems with website layout.

Things like “below the button” disclosures and distracting visual elements were often described as defeating a manifestation of assent to disclosure terms in that unfortunate line of cases.

Well, 2022 has brought a couple of cases that have determined website disclosures to be just fine. Yesterday I reported on a big win by Efinancial, and today we have a nice victory by a cruise ship company.

In Barney v. Grand Caribbean Cruises, Inc., CASE NO. 21-CV-61560-RAR, 2022 U.S. Dist. LEXIS 8263 (S.D. Fl. January 17, 2022) the Defendant moved to enforce an arbitration provision on its website arguing that the Plaintiff had agreed to the terms and conditions by submitting a sweepstakes entry form.

Predictably, the Plaintiff argued that the disclosures were not enforceable because the website layout was insufficient–specifically that the font was too small and the terms excessively lengthy.

The Court was not impressed.

Noting that the disclosure was plainly readable and above the button–and it required a check box–the Court simply refused to heed the Plaintiff’s argument that he didn’t know he was agreeing to consent and arbitration. Here’s the analysis:

First, in terms of placement, the Website does not tuck away its statement regarding the Terms & Conditions in an obscure corner of the page where a user is unlikely to encounter it. Rather, the statement is located directly between the contact information fields and the “Submit Entry” button. The user is required to check the box indicating assent to the Terms & Conditions before any information is submitted. Id. ¶ 14. Thus, it is impossible that a user would miss seeing the statement regarding the Terms & Conditions or—at the very least—the checkbox indicating assent to them. Second, rather than merely informing the user that the Terms & Conditions exist, the statement directs the user to the precise location where the Terms & Conditions can be accessed—namely, at the “bottom of the page.” Finally, and most significantly, the user is required to check an acknowledgement box to accept the Terms & Conditions before any information is submitted through the Website—an affirmative act indicating [*14] assent. The checkbox accompanies the statement, which specifically includes language indicating that the user “agree[s] to the Privacy Policy and Terms & Conditions.” Thus, there is an explicit textual notice that checking the box will act as a manifestation of an intent to be bound. A reasonable user confronting a statement that “I consent to receive e-mail, SMS/Text messages, and calls about offers and deals from an automatic dialing system and/or pre-recorded voice technology” and “confirm that I am over age 25 [and] agree to the Privacy Policy and Terms & Conditions that are hyperlinked at the bottom of the page” would understand that he or she is assenting to the linked terms, including those pertaining to mandatory arbitration. And the record shows that Plaintiff indeed checked the box before clicking “Submit Entry.” Connolly Decl. ¶ 20. Plaintiff’s objections to the design of the Website hold no water. Plaintiff assails the statement regarding the Website’s Terms & Conditions as “lengthy” with “extremely small font that blends into the background.” Resp. at 9. But as seen in the screenshot of the Website on the day of Plaintiff’s visit, the statement’s text is clearly legible [*15] and not overly long. Indeed, it is roughly the same size and color as the text indicating the fields for “First Name,” “Last Name,” “Email,” and “Phone Number.” Plaintiff also objects to the placement of the link to the Terms & Conditions at the bottom of the page. Id. at 10. But, as discussed supra, that is precisely where the statement directed the user to view them.

As you can see the Court found the layout to be perfectly appropriate and was particularly moved by the presence of the opt in check box. Although many cases have recently enforced disclosures WITHOUT checkboxes, they do remain favored by the Courts.

I think Barney represents a case of a pretty clearly enforceable provision. The above-the-button text coupled with the radial button and the clear articulation of the terms being accepted made this an easy case for the court.

I will note that the TCPA consent is connected to the terms and conditions lingo–I don’t love that since the TCPA disclosure should be “separately signed”. But the agreement by the consumer that they are over 25 is a nice touch–helps to protect against claims that minors are supplying consent illegally.

© Copyright 2022 Squire Patton Boggs (US) LLP
For more articles about TCPA litigation, visit the NLR Litigation section.

SDNY Allows Skechers to Walk Away from Trademark Claims

After Skechers began selling open-back women’s shoes under the name “Commute Time” in August 2018, Easy Spirit, owner of the mark TRAVELTIME for similar shoes, sued Skechers in April 2019 for trademark and trade dress infringement under the Lanham Act and New York law.  In January 2021, the U.S. District Court for the Southern District of New York granted summary judgment on the trade dress claims for Skechers, and the remaining trademark infringement claims—trademark infringement under 15 U.S.C. § 1114(a), false designation of origin under 15 U.S.C. § 1125(a), and common law trademark infringement under New York state law, proceeded to trial.  Following a twelve-day bench trial, the district court dismissed the trademark infringement claims, finding no likelihood of confusion existed between the marks.

As the opinion recounted, to succeed on a claim for trademark infringement under 15 U.S.C. § 1114(a), Easy Spirit needed to prove the validity of its mark (which Skechers did not contest) and a likelihood of confusion between the marks.  Analyzing likelihood of confusion, the court assessed the eight factors used by the Second Circuit:  (1) strength of the prior owner’s mark; (2) similarity between the marks; (3) competitive proximity of the products; (4) likelihood that the prior user will bridge the gap; (5) actual confusion; (6) defendant’s good faith; (7) quality of the defendant’s product; and (8) buyer sophistication.

First, in analyzing the strength of Easy Spirit’s TRAVELTIME mark, the court examined its inherent distinctiveness and acquired distinctiveness in the marketplace.  Regarding inherent distinctiveness, the court found that TRAVELTIME was “modestly” inherently distinctive because it was plainly suggestive.  In other words, the mark required some imagination for a purchaser to “go from ‘travel time’ to the idea of movement, then to what one might need when moving, and finally to the product, an open-back comfort shoe.”

As to acquired distinctiveness, which the court explained referred to the recognition that the mark earned in the marketplace as a designator of Easy Spirit’s goods, the opinion analyzed six factors used by the Second Circuit:  (1) advertising expenditures; (2) consumer studies linking the mark to a source; (3) unsolicited media coverage of the product; (4) sales success; (5) attempts to plagiarize the mark; and (6) length and exclusivity of the mark’s use.

Here, the court noted that Easy Spirit did not provide advertising expenditures or other evidence showing how many consumers its TRAVELTIME-specific advertising reached, as opposed to Easy Spirit advertising generally.  Regarding unsolicited media coverage, the court stated that Easy Spirit presented only one piece of evidence from before 2018, so it was unclear if the mark acquired secondary meaning before Skechers started selling its Commute Time shoe that year.

The sales success factor favored Easy Spirit however, as the court cited evidence that the TRAVELTIME shoe became the number-one-selling shoe in U.S. department stores in 2016 and amassed $26.3 million in sales between July 2017 and March 2019.  The court also determined that length and exclusivity moderately weighed in Easy Spirit’s favor because whole Easy Spirit had sold TRAVELTIME shoes continuously since 2004, other shoe companies routinely used marks containing the words “time” or “travel”—including Easy Spirit for its other products.

Thus, the court concluded that Easy Spirit had not provided strong evidence that TRAVELTIME acquired secondary meaning before Skechers began using the Commute Time mark, and accordingly the strength of the mark factor weighed “only moderately” in favor of a likelihood of confusion.

Second, the court held that the marks were not similar based on their overall impression on consumers.  It found several differences in their appearance, including that:  (1) TRAVELTIME is one word while Commute Time is two; (2) TRAVELTIME generally appears in all capital letters but Commute Time does not; and (3) TRAVELTIME is written on one line yet Commute Time generally appears on separate lines.  The court also found that TRAVELTIME appeared on a minimalist beige box with simple orange lettering alone, while Commute Time appeared on a jewel-toned patterned box with various shapes, accents, and other Skechers marks.  And the opinion noted that “travel” and “commute” neither sounded the same nor were synonymous.

Third, the court found no evidence of actual confusion.  It pointed out that Easy Spirit did not submit any consumer survey showing confusion, and while Easy Spirit did not need to, the absence of a survey was evidence actual confusion could not be shown.  The opinion also emphasized Skechers’ survey showing 0% confusion, which Easy Spirit failed to adequately rebut or discredit.  Specifically, the court rejected Easy Spirit’s concern as to the universe of participants, that the survey showed participants the parties’ websites and not those of third-party retailers, and incentives given to participants.  It held that the survey properly targeted consumers beyond women 55-years-and-older because prospective customers should be counted, any marketplace could be replicated given the parties sold their shows on multiple platforms, and incentives are commonly accepted for surveys.

Fourth, the court examined whether Skechers acted in bad faith or with an intent to deceive consumers about the source of its product.  It determined that evidence showing Skechers based some measurements of its shoe on TRAVELTIME but included several aesthetic and functional differences demonstrated an intent to compete rather to deceive.  The court noted that companies in the shoe industry commonly incorporate features of other products in order to compete.

Fifth, the court determined that the customer sophistication factor also weighed in Skechers’ favor.  As neither party presented direct evidence of consumer sophistication, the court stated it could rely solely on indirect indications of sophistication, such as nature of the products or their price.  The court rejected Easy Spirit’s argument that because its customers were older women they were not sophisticated consumers of women’s shoes, finding it borderline “offensive” and contrary to common sense.  It also found the price points of the shoes sufficiently high to indicate thoughtful purchases.

Finally, while Skechers did not contest that the proximity of the goods factor weighed in favor of a likelihood of confusion, the court independently found this factor weighed in Easy Spirit’s favor because the Commute Time shoe was sold to the same class of purchasers, thorough the same marketing channels, and for approximately the same price as the TRAVELTIME shoe.  It did not assess the remaining two factors—bridging the gap and disparity of goods—because the parties agreed they did not apply.

In closing, the court held that no likelihood of confusion existed given the absence of any direct evidence that customers were actually confused or survey evidence of actual confusion.  Accordingly, it dismissed the federal trademark infringement claim.  And because the federal false designation of origin and common law trademark infringement claims also required a likelihood of confusion, the court dismissed those remaining claims too.

The case is Easy Spirit, LLC v. Skechers U.S.A., Inc., No. 19-cv-3299 (JSR), _ F. Supp. 3d _, 2021 WL 5312647 (S.D.N.Y. Nov. 16, 2021).

© 2022 Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
For more articles about trademarks, visit the NLR Intellectual Property Law section.

Friendly Reminder: New Limitations on Non-Competes in Oregon Are Now in Effect

Employers, take note: certain amendments strengthening Oregon’s existing statutory restrictions on non-compete agreements, went into effect on January 1, 2022 – as previewed in our previous blog post.  Coupled with existing limitations in ORS 653.295, the newly-effective amendments mean that a non-compete entered into with an Oregon employee after January 1, 2022 will be “void” ab initio if:

  • The non-compete period extends longer than 12 months;

  • It applies to employees earning less than $100,533.00 in 2021 dollars adjusted for inflation;

  • It was not provided in writing to a new employee at least two weeks before the employee’s first day;

  • The employer did not provide the employee with a copy of the signed non-compete agreement within 30 days following the employee’s termination;

  • The employee is not engaged in administrative, executive, or professional work, performing predominantly intellectual, managerial, or creative tasks; further, the employee must exercise discretion and independent judgment; and be paid on a salary basis;

  • The employee does not have access to either trade secrets or sensitive confidential business or professional information; or

  • The employee is employed as an on-air talent in broadcasting.

Employers of Oregon employees should take steps to ensure they do not run afoul of the above conditions.  If unsure on these points, or about the reasonableness of non-competition restrictions more generally, employers should seek legal assistance.

©2022 Epstein Becker & Green, P.C. All rights reserved.
For more about employer requirements, visit the NLR Labor & Employment section.

Supreme Court to Address Role of “Prejudice” in Evaluating Waiver of Arbitrability

One of the best ways for companies facing media and privacy risk to protect themselves from expensive class action litigation is by including an arbitration provision in the applicable terms and conditions. While it’s not always clear at the outset of litigation whether the plaintiff agreed to the terms, companies often have to invoke arbitration quickly out of fear that they will be found to have waived arbitration. But in its coming term, the U.S. Supreme Court is now poised to address the critical point of whether prejudice to the plaintiff is a necessary element for a finding of waiver.

The Court agreed to decide whether prejudice is a required element in determining whether the right to arbitrate has been waived when it granted a Petition for Writ of Certiorari in Robyn Morgan v. Sundance, Inc. (No. 21-328). The case reached the Supreme Court after the Eighth Circuit found that Sundance, Inc., a company that owns over 150 Taco Bell franchises nationwide, did not waive its right to arbitrate the plaintiff’s claims, despite waiting almost eight months after the filing of her Complaint to move to compel arbitration.

There is, at a present, a circuit split on the question of whether prejudice plays a role in the waiver analysis. Nine out of the twelve federal circuit courts—the First, Second, Third, Fourth, Fifth, Sixth, Eighth, Ninth, and Eleventh Circuits—have explicitly found that prejudice is a required element to establish a waiver of the right to arbitrate. But the remaining three circuit courts—the Seventh, Tenth, and D.C. Circuits—have held that prejudice is not a required element.

In this case, the plaintiff, on behalf of herself and a proposed putative class, filed suit against Sundance on September 25, 2018 in the U.S. Southern District of Iowa, alleging that it had failed to pay employees for overtime hours worked in violation of the Fair Labor Standards Act. Because an action containing nearly identical allegations had been pending in the Eastern District of Michigan for nearly two years, Sundance first filed a motion to dismiss or stay the claims under Fed. R. Civ. P. 12(b)(3), which the District Court ultimately denied.

Thereafter, Sundance, plaintiff, and the plaintiffs in the Eastern District of Michigan action voluntarily attended mediation in an attempt to achieve a global resolution of the claims asserted against Sundance. Plaintiff’s claims were not resolved at the mediation, and three weeks later (nearly eight months after the case had been filed), Sundance moved to compel arbitration.

The motion to compel arbitration was filed before the parties attended an initial scheduling conference with the District Court and before the parties had engaged in any discovery. Nonetheless, the District Court denied the motion, finding that Sundance had waived its right to arbitration because it acted inconsistently with its right by invoking the “litigation machinery,” which prejudiced plaintiff.

The U.S. Court of Appeals for the Eighth Circuit reversed on appeal, finding that—in light of the totality of the circumstances—plaintiff had not been prejudiced by Sundance’s eight-month delay because, during that time, the parties were briefing the quasi-jurisdictional issue raised in the motion to dismiss or stay and then waiting on the District Court’s ruling on same, rather than litigating the merits of the claim.

Plaintiff sought review by the Supreme Court, asking it to answer the following question: “Does the arbitration specific requirement that the proponent of a contractual waiver defense prove prejudice violate this Court’s instruction [in , 563 U.S. 333, 339 (2011)] that lower courts must ‘place arbitration agreements on an equal footing with other contracts?’”

In response, Sundance argued that despite the apparent split, the Seventh, Tenth, and D.C. Circuits nonetheless consider prejudice in determining if the right to arbitrate has been waived. Per Sundance, “[a]t bottom, all of the Circuits are looking at the totality of the circumstances, as they should, in assessing waiver, and all are considering the existence of prejudice, whether as a mandatory or non-mandatory factor, as part of the assessment, based upon highly overlapping facts.”

Only time will tell whether the Supreme Court agrees, but we will continue to track and report on this case.

© 2022 Vedder Price

Article By Bryan Clark and Julia L. Koechley of  Vedder Price

For more articles on the Supreme Court, visit the NLR Litigation / Trial Practice section.

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