Google Fined $57 Million in First Major Enforcement of GDPR Against a US-based Company

On January 21, 2019, Google was fined nearly $57 million (approximately 50 million euros) by France’s Data Protection Authority, CNIL, for an alleged violation of the General Data Protection Regulation (GDPR).[1] CNIL found Google violated the GDPR based on a lack of transparency, inadequate information, and lack of valid consent regarding ad personalization. This fine is the largest imposed under the GDPR since it went into effect in May 2018 and the first to be imposed on a U.S.-based company.

CNIL began investigating Google’s practices based on complaints received from two GDPR consumer privacy rights organizations alleging Google did not have a valid legal basis to process the personal data of the users of its services, particularly for Google’s personalized advertisement purposes. The first of the complaints was filed on May 25, 2018, the effective date of the GDPR.

Following its investigation, CNIL found the general structure of the information required to be disclosed by Google relating to its processing of users’ information was “excessively disseminated across several documents.” CNIL stated the relevant information pertaining to privacy rights was only available after several steps, which sometimes required up to five or six actions. Moreover, CNIL indicated users were not able to fully understand the extent of the processing operations carried out by Google because the operations were described in a “too generic and vague manner.” Additionally, the regulator determined information regarding the retention period was not provided for some data collected by Google.

Google’s process for obtaining user consent to data collection for advertisement personalization was also alleged to be problematic under the GDPR. CNIL stated Google users’ consent was not considered to be sufficiently informed due to the information on processing operations for advertisement being spread across several documents. The consent obtained by Google was not deemed to be specific to any individual Google service, and CNIL determined it was impossible for the user to be aware of the extent of the data processed and combined.

Finally, CNIL determined the user consent captured by Google was not “specific” or “unambiguous” as these terms are defined by the GDPR. By way of example, CNIL noted that Google’s users were asked to click the boxes «I agree to Google’s Terms of Service» and «I agree to the processing of my information as described above and further explained in the Privacy Policy» in order to create the account. As a result, the user was required to give consent, in full, for all processing operations purposes carried out by Google based on this consent, rather than for distinct purposes, as required under the GDPR. Additionally, the CNIL commented Google’s checkbox used to capture user consent relating to ad personalization was “pre-clicked.” The GDPR requires consent to be “unambiguous,” with clear affirmative action from the user, which according to the CNIL, required clicking an unclicked box.

This fine may be appealed by Google, which indicated it remained committed to meeting the “high standards of transparency and control” expected by its users and to complying with the consent requirements of the GDPR. Google indicated it would study the decision to determine next steps. Given Google is the first U.S.-based company against whom a DPA has attempted GDPR enforcement, in combination with the size of the fine imposed, it will be interesting to watch how Google responds.

The GDPR enforcement action against Google should be seen as a message to all U.S.-based organizations that collect the data of citizens of the European Union. Companies should review their privacy policies, practices, and end-user agreements to ensure they are compliant with the consent requirements of the GDPR.

© 2019 Dinsmore & Shohl LLP. All rights reserved.
This post was written by Matthew S. Arend and Jared M. Bruce of Dinsmore & Shohl LLP.

Sixth Circuit Compels Arbitration in Putative Class Action between Shell Oil and Ohio Landowners

Plaintiff entered into a lease agreement with Defendants (Shell Oil entities) governing extraction of oil and gas from his five-acre property located in Guernsey County, Ohio. The agreement provided a signing bonus to Plaintiff of $5,000 per acre, contingent upon Shell’s timely verification that he possessed good title to the property. The lease also contained a broad arbitration clause providing that any dispute under the lease was to be resolved by binding arbitration. Plaintiff brought suit, individually and on behalf of other landowners having similar contracts with Shell, for breach of contract after Shell allegedly failed to pay the signing bonus. The District Court for the Southern District of Ohio subsequently denied Shell’s motion to compel arbitration, and Shell appealed.

The Sixth Circuit reversed and remanded, compelling arbitration and a directing the district court to decide whether the lease allowed for class-wide arbitration. The panel found that the district court failed to address the threshold issue of who decides arbitrability and further reasoned that Plaintiff did not attack the enforceability of the “specific arbitration clause” but rather “argued that much of the contract, which happens to include the arbitration clause, is unenforceable.” In so finding, the panel determined that the arbitration clause was triggered at signing, leading to the applicability of the severability doctrine and the determination that an arbitrator must consider the issue first. As to the class-wide arbitration question, the Panel reasoned that because the parties did not identify a provision in the contract that clearly and unmistakably gave the arbitrator the power to decide the matter, and in light of “the importance of this issue to the case, given that the class could include hundreds of Ohio landowners,” that question would be for the district court to decide upon remand. In a dissenting opinion, Judge Moore opined that the district court was the proper body to decide whether the dispute should be arbitrated in light of the lease agreement’s two distinct triggering events – the signing of the agreement and the payment of the bonus. As such, Judge Moore opined that only after payment of the bonus would the arbitration clause apply.

Rogers v. Swepi LP, No. 18-3229 (6th Cir. Dec. 10, 2018).

 

©2011-2019 Carlton Fields Jorden Burt, P.A.
Read more about Oil and Gas lease agreements on the National Law Review’s Energy and Environment Page.

New Jersey Announces Minimum Wage Increase

Governor Murphy, Senate President Sweeney and Assembly Speaker Coughlin have just announced their plan to increase New Jersey’s minimum wage to $15 per hour. Currently, minimum wage in New Jersey is $8.85 per hour.

Under the proposed plan, minimum wage would increase to $10/hour on July 1, 2019. Minimum wage would then increase by a dollar per year as follows:

  • 1/1/2020 – $11
  • 1/1/2021 – $12
  • 1/1/2022 – $13
  • 1/1/2023 – $14
  • 1/1/2024 – $15

Note that this increase will be delayed for some workers. Seasonal workers and employees at businesses with five or few workers won’t be eligible for the $15 minimum wage until 1/1/26. Agricultural workers will also be subject to different rules. More details on the plan will certainly follow in the coming weeks.

 

© 2019 Giordano, Halleran & Ciesla, P.C. All Rights Reserved
Read more news on minimum wage increases on the National Law Review’s Employment Law Page.

There’s a New Sheriff in Town: The Food and Drug Administration’s Move to Regulate CBD

Hemp has wide commercial application and appeal with a viable market for nearly every part of the plant, from the seeds, to the roots, to the flower.

And with the passage of the Agriculture Improvement Act of 2018 (the “AIA”), the American hemp industry is poised for exponential growth.  Cannabidiol or “CBD” represents one of the fastest growing – and, perhaps, the most controversial and commercially profitable – segments of the hemp industry today.

There is no shortage of claims about CBD’s helpful properties, with commonplace industry acceptance that the cannabinoid can be used to, among other things, alleviate inflammation and anxiety.  CBD has been, and it continues to be, incorporated into a wide variety of consumer products, including lozenges, honey, and even an FDA-approved prescription medicine.  But, as the legal and regulatory landscape surrounding hemp and CBD continues to develop, there remains uncertainty – at least for now – about the legality of using hemp-derived CBD to produce food, cosmetic, and dietary supplement products.

For nearly 50 years, the Drug Enforcement Agency (“DEA”) was primarily responsible for law enforcement efforts relating to hemp and its derivatives, including CBD.  The DEA’s enforcement authority was derived from hemp’s classification as “marihuana” and CBD’s classification as a Schedule I substance under the Controlled Substances Act of 1972 (“CSA”).  That changed on December 20, 2018, when President Trump signed the AIA into law.  Among other things, the AIA broadened the definition of “hemp” on the Federal level, and it stripped both hemp and hemp-derived CBD from the CSA itself.  As a result, the DEA is no longer the primary enforcement agency with respect to hemp and hemp-derived CBD.

On the same day that President Trump signed the AIA into law, the Food and Drug Administration (“FDA”) released a press release on the matter.  The FDA statement is not binding or controlling, but it does forecast the FDA’s clear intention to take an active role in regulation and enforcement for hemp and CBD products going forward.

By issuing that press release, the FDA has publicly stated that:

  • It will continue to enforce the law (including the Federal Food, Drug, and Cosmetic Act, or “FD&C Act”) in an effort to protect patients, the public, and to promote the agency’s overall public health role.
  • Products containing cannabis or cannabis-derived compounds (like CBD) will be subject to the same authorities and requirements as other non-cannabis FDA regulated products.
  • Hemp or hemp-derived CBD products that are “marketed with a claim of therapeutic benefit, or with any other disease claim” must be approved by the FDA before being introduced to interstate commerce.
  • Hemp or hemp-derived CBD products marketed “for use in the diagnosis, cure, mitigation, treatment, or prevention of diseases” are considered drugs and must be approved by the FDA before they are marketed for sale in the U.S.
  • It is “unlawful under the FD&C Act to introduce food containing added CBD or THC into interstate commerce, or to market CBD or THC products as, or in, dietary supplements, regardless of whether the substances are hemp-derived.”

The FDA has the authority to introduce regulation that would allow the use of CBD in foods and dietary supplements, but that has not happened yet, and it remains to be seen whether (or when) that will happen.

For now, questions remain.  Will CBD ultimately be regulated entirely as a drug?  Will it be treated as an additive not subject to FDA approval?  Or perhaps the specific application of CBD to a product will drive how it is treated?  We do not yet know the answers to these questions.  But we do know, for now, that the FDA sits in the regulatory driver’s seat for the CBD industry moving forward.

 

© 2019 Ward and Smith, P.A.. All Rights Reserved.
This post was written by Tyler J. Russell and Allen N. Trask, III of Ward and Smith PA.

What’s the Lowdown on the Shutdown?

The partial government shutdown continues. The shutdown has captured the attention of Washington politicians and the media, not to mention the hundreds of thousands of federal employees who are currently furloughed or working without pay.

For employers, the shutdown has some important implications. While the Department of Labor (DOL) and the National Labor Relations Board (NLRB) are fully funded through October 2019, the Equal Employment Opportunity Commission (EEOC) is not.

As a result of the lack of funding, the EEOC is closed until further notice.

WHAT DOES THAT MEAN FOR EMPLOYERS? A FEW THINGS:

  • The EEOC will not begin processing new employment discrimination cases until it reopens.
    However, the EEOC has been clear that the shutdown will not extend the statute of limitations for employees to file charges (300 days for Wisconsin employees). Employees who are close to the filing deadline are being encouraged to file charges by mail while the EEOC’s online portal remains closed to the public. Presumably, charges postmarked within the statute of limitations will be considered timely; however, this extra step may discourage some employees from filing claims.
  • Deadlines assigned to employers cannot be ignored on account of the shutdown.
    For example, a notice of charge dated December 21, 2018 with a position statement due date of January 21, 2019 cannot be ignored. Just as employees remain subject to the statute of limitations for their claims, so too are employers required to continue to meet their deadlines. If an extension is required, you should contact legal counsel as soon as possible. Generally, EEOC staff will not be able to respond to communications.
  • Pending EEOC charges will be suspended during the shutdown.
    This includes claims currently under investigation and those in the EEOC’s mediation program. Likewise, all EEOC litigation will be suspended except in cases where a continuance has not been granted.
  • The government shutdown does not affect state law discrimination claims.
    The Wisconsin Equal Rights Division (ERD) continues to accept discrimination claims, including those normally cross-filed with the EEOC. Employers must continue to respond to communications from the ERD.

Past experience suggests that if and when the EEOC reopens for business, there will be a significant backlog of cases to sort through. Employers should therefore expect the EEOC’s actions and communications to lag in 2019 as the agency works to get caught up on processing, investigating, and resolving cases.

 

Copyright © 2019 Godfrey & Kahn S.C.
This post was written by M. Scott LeBlanc of Godfrey & Kahn S.C.

Read more labor and employment news on the National Law Review’s labor and employment type of law page.

The Effects Of The SEC Shutdown On The Capital Markets

Although EDGAR continues to accept filings, the government shutdown has now eclipsed its 28th day and the SEC continues to operate with limited staff which is having a crippling effect on the ability of many companies to raise money in the public markets. This is particularly due to the fact that the SEC is unable to perform many of the critical functions during the lapse in appropriations, including the review of new or pending registration statements and/or the declaration of effectiveness of any registration statements.

Although Section 8(a) of the Securities Act of 1933, as amended, creates an avenue whereby a registration statement will automatically become effective 20 calendar days after the filing of the latest pre-effective amendment that does not include “delaying amendment” language, many companies seeking to raise money in the public markets, including through an initial public offering, are reluctant to use this route for the following reasons. First, any pre-effective amendment which removes the “delaying amendment” language must include all information required by the form including pricing information relating to the securities being sold as Rule 430A is not available in the absence of a delaying amendment. This means that companies must commit to pricing terms at least 20 days in advance of the offering which may be difficult due to the volatility in the markets. In the event pricing terms change, companies must file another pre-effective amendment which restarts the 20-day waiting period. Second, companies run the risk that the SEC may, among other things, issue a stop order. Finally, companies may run into issues with FINRA, Nasdaq or the NYSE as these organizations may not agree to list securities on such exchanges without the SEC confirming that they have reviewed and cleared such filing and affirmatively declared the registration statement effective. These risks, among others, associated with using Section 8(a) as a means by which a registration statement can become effective after the 20-day waiting period, seem to outweigh the benefits of pursuing this alternative despite the fact that many companies with a December 31st year end will soon be required to file audited financial statements for the year ended December 31, 2018 pursuant to Rule 3-12 of Regulation S-X which will further delay the process resulting in an increase in both cost and time related to the offering.

Although companies seeking to raise money in the public markets, including through initial public offerings or shelf registration statements, may be reluctant to rely upon Section 8(a), some companies have already chosen to remove the “delaying amendment” language. For example, some companies which appear to have cleared all comments from the SEC prior to the partial government shutdown have elected to remove the “delaying amendment” and proceed with their offerings after the 20-day waiting period. In addition, other companies conducting rights offerings, such as Trans-Lux Corporation and Roadrunner Transportation Systems, Inc., are also relying on Section 8(a) as a means of raising money. Finally, some special purpose acquisition companies (“SPACs”), including Andina Acquisition Corp. III, Gores Metropoulous, Inc., Pivotal Acquisition Corp. and Wealthbridge Acquisition Limited, are among the issuers that are using Section 8(a) as a way to procced with their offerings during this partial government shutdown since SPACs, in particular, are not sensitive to price volatility in the markets because they have no operations.

Companies and underwriters that may be considering filing a pre-effective amendment to a registration statement to take advantage of Section 8(a) of the Securities Act should discuss the effects of removing the “delaying amendment” language with securities counsel before proceeding down such path.

 

Copyright © 2019, Sheppard Mullin Richter & Hampton LLP.
Read more legal news on the Government Shutdown at the National Law Review.

Colorado Supreme Court Vindicates the Colorado Oil and Gas Commission: Recent Ruling In Favor of the Oil and Gas Industry

In an important victory for Colorado’s oil and gas industry, the Colorado Supreme Court unanimously supported the decision of the Colorado Oil and Gas Conservation Commission (the “Commission”) to decline a rulemaking sought by environmental activists that could have eliminated new oil and gas drilling. The Commission, which has regulatory authority under the Colorado Oil and Gas Conservation Act, declined to act on a proposed rule that would have required oil and gas developers to prove that every future oil and gas development project, individually and cumulatively with other projects, had zero impact on the environment and public health, and would not contribute to climate change.

The Background

The Colorado Oil and Gas Conservation Commission v. Martinez case began in 2013 when environmental activists requested the Commission implement a rule that would have prohibited it from issuing any permits for the drilling of oil and gas wells “unless the best available science demonstrates, and an independent, third-party organization confirms, that drilling can occur in a manner that does not cumulatively, with other actions, impair Colorado’s atmosphere, water, wildlife, and land resources, does not adversely impact human health, and does not contribute to climate change.”

After holding extensive hearings on the proposed rule, the Commission ultimately declined to consider it given that the state statutes under which the Commission regulates oil and gas development require it to balance certain considerations with other factors, including the responsible development of Colorado’s oil and gas resources. The Commission was also addressing the activists’ concerns in conjunction with the Colorado Department of Public Health and Environment.

While a Colorado district court affirmed the Commission’s decision, a panel of the Colorado Court of Appeals reversed the district court’s order in a split decision based on Commission’s construction of the Colorado Oil and Gas Conservation Act.

The Decision

On January 14, 2019, the Colorado Supreme Court announced its decision in Colorado Oil and Gas Conservation Commission v. Martinez, 2019 CO 3, unanimously reversing the decision of the Court of Appeals, thereby affirming the Commission’s rejection of the proposed rule. The Supreme Court relied primarily on the language of the Colorado Oil and Gas Conservation Act, C.R.S. §34-60-101 et seq., which directs the Commission to foster the development of oil and gas resources, protecting and enforcing the rights of owners and producers, and in doing so, to prevent and mitigate significant adverse environmental impacts to the extent necessary to protect public health, safety, and welfare – but only after taking into consideration cost-effectiveness and technical feasibility.

In addition, the Supreme Court found support in the Colorado Oil and Gas Conservation Act’s statutory and legislative history. The Act’s statutory history was initially entirely pro-development and later evolved to include environmental considerations. The Court also considered the Act’s legislative history, particularly how sponsors of the latest amendments that added environmental factors to the Commission’s balancing explained the amendments were not intended to halt all oil and gas production – which the proposed rule would have likely done.

What it means for your business

The proposed rule in Martinez, if adopted and implemented, might have caused a complete shut-down of Colorado’s oil and gas industry. The Supreme Court’s affirmance of the Commission’s rejection of this proposed rulemaking establishes that Colorado’s courts will not presume to direct agencies to implement such potentially significant regulatory proposals, but will defer to the political process to make any such changes to the state’s regulatory landscape.

 

© Polsinelli PC, Polsinelli LLP in California
This post was written by Bennett L. Cohen, Ghislaine G. Torres Bruner Philip W. Bledsoe and Megan Rose Garnett of Polsinelli PC.
Read more oil and gas news on our Energy and Environment type of law page.

Second Circuit Upholds District Court’s Choice of Equitable Remedies Under ERISA and Its Decision to Award Prejudgment Interest at the Federal Prime Rate

The Second Circuit Court of Appeals recently issued an opinion in Frommert v. Conkright, affirming a district court decision regarding appropriate equitable remedies under ERISA and the amount of prejudgment interest to be applied. The Second Circuit’s views on each of these issues should be of interest to plan fiduciaries as well as practitioners.

This litigation has a long history, dating back to 1999, and has generated many court opinions along the way, from the district court level all the way up to the U.S. Supreme Court. Indeed, this is the Second Circuit’s fourth decision in this case. (Readers are likely familiar with this case from the 2010 Supreme Court decision, which addressed the standard of review and held that an honest mistake does not strip a plan administrator of the deference otherwise granted to it to construe plan terms.)

By means of background, the litigation was initiated by Xerox employees who had left the company in the 1980s, received distributions of the retirement benefits they had earned up to that point, and who were subsequently rehired by Xerox. In addition to the issues concerning interpretation of the Plan and related documents, the primary focus of the case was how to account for the employees’ past distributions when calculating their current benefits so as to avoid a “double payment” windfall.

In 2016, the District Court for the Western District of New York issued two decisions that led to the instant appeal. After having been previously directed by the Second Circuit to fashion, in its discretion, an equitable remedy providing appropriate retirement benefits to the rehired employees (referred to as the “New Benefits”), the District Court chose the equitable remedy of reformation and held that the New Benefits should be calculated as if the plaintiffs were newly hired upon their return to Xerox, without any reduction of the benefits to account for prior distributions or any credit for prior years of service. In a second decision later that year, the District Court determined that the plaintiffs were entitled to prejudgment interest at the federal prime rate.

The plaintiffs appealed both decisions. As to the remedy, the plaintiffs argued that the “new hire” remedy fashioned by the District Court was inadequate, and the court should have chosen a calculation of New Benefits that was more favorable to them using either surcharge or estoppel. The Second Circuit was not persuaded. In affirming the District Court’s decision, the Second Circuit noted that each of the equitable approaches considered for calculating the New Benefits were imperfect and even the new hire approach had its flaws. Nevertheless, it found that the District Court did not abuse its discretion in selecting this method. The Second Circuit pointed out that the new hire approach accounted for the time value of money and better balanced the competing interests of the Plan Administrator and the plaintiffs. Having determined there was no abuse of discretion by the District Court, the Second Circuit found it unnecessary to address whether relief would alternatively have been proper pursuant to different equitable remedies such as surcharge or estoppel.

The plaintiffs also argued that the District Court was affirmatively required to interpret the Plan, which might have yielded a higher benefits award. Again, the Second Circuit was not persuaded, finding that this argument ran afoul of one of its prior decisions in the case finding that the District Court need not engage in plan interpretation if it determined an appropriate equitable remedy existed. Citing to Cigna v. Amara, the Second Circuit reaffirmed that district courts generally may avoid interpreting a pension plan and instead fashion equitable remedies for ERISA violations where the plan is “significantly incomplete” and misleads employees, and reformation is among the equitable remedies available.

As to the issue of prejudgment interest, the plaintiffs sought the New York statutory interest rate of nine percent, whereas the Plan Administrator proposed the federal post-judgment interest rate of 0.66 percent. The District Court rejected the state statutory interest rate as too high and the federal rate as too low. It awarded prejudgment interest at the federal prime rate of 3.5 percent, explaining that it struck an appropriate balance and fairly compensated the plaintiffs. Noting that the District Court enjoyed broad discretion as to whether to grant prejudgment interest in the first place and to select a rate, the Second Circuit upheld the decision, finding that the District Court had carefully considered all the relevant factors and thoroughly explained its reasoning for using the federal prime rate.

 

Copyright © 2019 Robinson & Cole LLP. All rights reserved.
This post was written by Jean E. Tomasco of Robinson & Cole LLP.

EPA Sued to Issue Pending Methylene Chloride Prohibition Rule in Final

On January 14, 2019, in the U.S. District Court for the District of Vermont, the Vermont Public Interest Group; Safer Chemicals, Health Families; and two individuals (plaintiffs) followed up on their earlier notice of intent to sue and filed a complaint against Andrew Wheeler and the U.S. Environmental Protection Agency (EPA) to compel EPA to perform its “mandatory duty” to “address the serious and imminent threat to human health presented by paint removal products containing methylene chloride.”  Plaintiffs bring the action under Toxic Substances Control Act (TSCA) Section 20(a) which states that “any person may commence a civil action … against the Administrator to compel the Administrator to perform any act or duty under this Act which is not discretionary.”  Plaintiffs allege that EPA has not performed its mandatory duty under TSCA Sections 6(a) and 7.  TSCA Section 6(a) gives EPA the authority to regulate substances that present “an unreasonable risk of injury to health or the environment” and TSCA Section 7 gives EPA the authority to commence civil actions for seizure and/or relief of “imminent hazards.”  Plaintiffs’ argument to direct EPA to ban methylene chloride is centered on the issue of risk to human health only, however, stating that it presents “an unreasonable risk to human health” as confirmed by EPA.  Under TSCA Section 20(b)(2), plaintiffs are required to submit a notice of intent to sue 60 days prior to filing a complaint which they did on October 31, 2018.

Background

On January 19, 2017, EPA issued a proposed rule under TSCA Section 6 to prohibit the manufacture (including import), processing, and distribution in commerce of methylene chloride for consumer and most types of commercial paint and coating removal (82 Fed. Reg. 7464).  EPA also proposed to prohibit the use of methylene chloride in these commercial uses; to require manufacturers (including importers), processors, and distributors, except for retailers, of methylene chloride for any use to provide downstream notification of these prohibitions throughout the supply chain; and to require recordkeeping.  EPA relied on a risk assessment of methylene chloride published in 2014, the scope of which EPA stated included “consumer and commercial paint and coating removal.”  The proposed rule stated that in the risk assessment, EPA identified risks from inhalation exposure including “neurological effects such as cognitive impairment, sensory impairment, dizziness, incapacitation, and loss of consciousness (leading to risks of falls, concussion, and other injuries)” and, based on EPA’s analysis of worker and consumer populations’ exposures to methylene chloride in paint and coating removal, EPA proposed “a determination that methylene chloride and NMP in paint and coating removal present an unreasonable risk to human health.”  The comment period on the proposed rule was extended several times, ending in May 2017, and in September 2017 EPA held a workshop to help inform EPA’s understanding of methylene chloride use in furniture refinishing.

No further action was taken to issue the rule in final, however, until December 21, 2018, when EPA sent the final rule to the Office of Management and Budget (OMB) for review.  On the same day, EPA also sent another rule to OMB for review titled “Methylene Chloride; Commercial Paint and Coating Removal Training, Certification and Limited Access Program,” which has not previously been included in EPA’s Regulatory Agenda; very little is known about this rule.  Plaintiffs do not refer to it in the complaint but there is speculation, based on its title, that this second rule may allow for some commercial uses of methylene chloride.

Commentary

We recall the lawsuit filed by the Natural Resources Defense Counsel (NRDC) in 2018 challenging EPA’s draft New Chemicals Decision-Making Framework document as a final rule.  The current action further reflects the commitment of detractors of EPA to use the courts and every other means available to oppose the Administration’s TSCA implementation efforts.  Whether and when this court will respond is unclear.  What is clear is that the case will be closely watched, as the outcome will be an important signal to the TSCA stakeholder community regarding the utility of TSCA Section 20(a)(2) to force non-discretionary EPA actions that the Administration may be disinclined to take.

 

©2019 Bergeson & Campbell, P.C.

Federal Appellate Courts Ring In the New Year by Taking Up Website and Mobile Application Accessibility

As expected given the extreme volume of website accessibility lawsuits filed over the last few years, in the first few weeks of the new year, United States’ Circuit courts have finally begun to weigh in on the law as it pertains to the accessibility of websites and mobile applications, and the results are generally disappointing for businesses.

Background

The U.S. Department of Justice (“DOJ”) has long taken the position that Title III of the Americans with Disabilities Act (“Title III”, “ADA”) applies to both websites and mobile apps, however, its withdrawal of Advanced Notice of Proposed Rulemaking (“ANPRM”) on December 26, 2017 and its September 25, 2018 letter (which effectively passed the onus to Congress to issue legislation on website accessibility standards), have prompted an onslaught of private demand letters and lawsuits filed in both state and federal court against businesses based on the theory that their websites are inaccessible to individuals with disabilities. As those who have confronted these lawsuits may know, the current state of the law has led to businesses being subject to duplicative actions in different jurisdictions, primarily, New York, California, and Florida. Last fall, both the Ninth and Eleventh Circuit courts held oral argument on website accessibility cases, with both panels expressing similar concerns about the current uncertainty in the law and how one can achieve and confirm a sufficient level of accessibility.

The Ninth Circuit Reverses Domino’s

Yesterday, in Robles v. Domino’s Pizza, the Ninth Circuit held that Title III applies to both websites and mobile applications. This decision reversed the district court’s dismissal of a class action lawsuit which asserted that Domino’s Pizza violated the ADA and California’s Unruh Civil Rights Act (UCRA) by failing to make its website and mobile app accessible to individuals who are blind or visually impaired. While the district court’s decision in Robles was always considered an outlier, the Circuit Court’s decision is significant because the Ninth Circuit considered, and rejected, defenses which have traditionally been advanced by businesses that have litigated website accessibility matters. For example, the Court refused to accept as a matter of law/summary judgment that providing a telephone hotline is sufficient alternative method for a company to satisfy its obligations under Title III to customers who are blind or have low vision (noting it was an issue of fact that required specific and contextual supporting factual evidence). The Court also rejected the concept that imposing liability in this context violates companies’ due process rights because DOJ has failed to issue clear technical standards for compliance.

At the outset, the Ninth Circuit agreed with the district court that Domino’s is a “place of public accommodation” and accordingly, the ADA applies to its website and mobile app, thereby requiring it to provide auxiliary aids and services to make its visual materials available to individuals who are blind. Drawing upon prior district court decisions from within the Ninth Circuit, the Court focused on the “nexus” between Domino’s website and mobile app and its physical restaurants, and found that the alleged inaccessibility of the website and app unlawfully prevents customers from accessing the goods and services at Domino’s physical locations. Notably, the Ninth Circuit declined to determine whether the ADA covers websites or mobile apps whose inaccessibility does not impede access to the goods and services at a physical location, reinforcing courts in the circuit’s position more narrowly construing the ADA to apply only to websites with a nexus to a brick-and-mortar location (as opposed to the more expansive positions taken by district courts in Massachusetts, New York, and Vermont).

The Circuit Court also noted that after the plaintiff filed the lawsuit, Domino’s website and mobile app began displaying a telephone number to assist customers who are visually impaired and who use a screen reading software. The Ninth Circuit held that a company’s use of a telephone hotline presents a factual issue, and, simply having a hotline, without any discovery regarding its effectiveness, is insufficient to award summary judgment to a company and determine that it has complied with the ADA. (This underscores that proving the sufficiency of an alternative means of access to a website – short of making the website itself accessible – could prove to be a costly endeavor.)

Citing DOJ’s failure to issue technical standards and withdrawal of ANPRM, Domino’s had argued that: (i) imposing liability would violate due process because it lacks fair notice of the technical standards that it is required to abide by; and (ii) the complaint was subject to dismissal under the doctrine of primary jurisdiction pending DOJ’s resolution of the issue. The Ninth Circuit rejected both arguments. First, the court held that DOJ’s failure to issue guidance on the specific standards or regulations does not eliminate a company’s obligation to comply with the ADA and its obligation to provide “full and equal enjoyment” to individuals with disabilities. Second, the Ninth Circuit held that the district court erred by invoking the doctrine of primary jurisdiction in order to justify its dismissal of the complaint without prejudice pending DOJ’s resolution of the issue. The court found that DOJ’s withdrawal of ANPRM meant that undue delay in resolving this issue “is not just likely, but inevitable,” which required the court to weigh in.

The Robles court did not rule on whether Domino’s website and mobile app comply with the ADA, and did not provide any guidance on how a company’s website or mobile app would comply with the ADA.

The Fourth Circuit Places Minor Restrictions On Standing

Two weeks ago, in Griffin v. Department of Labor Federal Credit Union, the Fourth Circuit considered another defense that has been increasingly asserted by businesses: whether plaintiff has standing to sue. In Griffin, the court rejected the plaintiff’s standing to bring a lawsuit against a Credit Union where he was not eligible for membership, he had no plans to become eligible to be a member, and his complaint contained no allegation that he was legally permitted to use the site’s benefits. The court also held that plaintiff’s status as a tester was insufficient to create standing where he was unable to plausibly assert that returning to the website would allow him to avail himself of its services. Unfortunately, this is an exceedingly narrow holding which should do little to undercut the rampant stream of filings by serial ADA website plaintiffs, as the heightened standard for joining a credit union would not apply to most other industries/websites. Therefore, while technically a victory for businesses, this decision did not issue the significant blow to serial plaintiffs that defendants had hoped would provide a clear defense moving forward.

Looking Ahead

We next await the holding of the 11th Circuit in Winn-Dixie. Unfortunately, it does not appear that, under this administration, we should expect DOJ to promulgate website accessibility guidelines. Similarly, with the government currently shut down (and other issues likely considered more pressing to the general public upon its reopening), it is extremely unlikely that Congress will amend the ADA or promulgate new legislation clarifying these issues in the near future.

Therefore, for the time being, businesses should expect to continue to face the seemingly endless stream of serial plaintiff website accessibility demand letters and lawsuits. As we have repeatedly noted, the best way to avoid falling prey to such a suit is to achieve substantial conformance with WCAG 2.1 Levels A and AA (confirming such status by human-based code and user/assistive-technology testing). Moreover, based upon the scope of the Ninth Circuit’s decision in Domino’s, these matters may soon expand to include mobile apps as well. Therefore, to the extent businesses had, to date, treated mobile application accessibility as a best practice, they should now consider the issue with increased urgency.

 

©2019 Epstein Becker & Green, P.C. All rights reserved.

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