The National Law Forum

EEOC Sues Wal-Mart for Disability Discrimination – Equal Employment Opportunity Commission

Retailer Rescinded Accommodation, Then Fired Intellectually Disabled Employee, Federal Agency Charges

The U.S. Equal Employment Opportunity Commission (EEOC) filed a lawsuit here yesterday against Wal-Mart Stores, Inc., alleging that the giant retailer fired an intellectually disabled employee at a Rockford Walmart store after it rescinded his workplace accommodation.

“What our investigation indicated,” said John Rowe, the EEOC district director in Chicago, who managed the federal agency’s pre-suit administrative investigation, “is that Wal-Mart rescinded a long-standing practice of giving written job assignments to the employee, William Clark. That accommodation had been the key to permitting Clark to successfully perform his job during an 18 year career at Wal-Mart and to his meeting the company’s performance expectations. We determined that shortly after rescinding the accommodation, Wal-Mart began disciplining Mr. Clark for supposed performance issues, and that ultimately lead to his termination.”

The Wal-Mart where Clark was working at the time of his termination is located at 7219 Walton in Rockford, on the south side of the East State Street commercial corridor and between Interstate 90 and South Perryville Road.

The EEOC brought the suit under the Americans with Disabilities Act (ADA), which prohibits disability discrimination in employment, after first attempting to reach a pre-litigation settlement through its conciliation process. The case (EEOC v. Wal-Mart Stores, Inc., Civil Action No. 14-cv-50145) was filed in U.S. District Court for the Northern District of Illinois, Western Division on July 1, 2014. It has been assigned to U.S. District Judge Philip G. Reinhard.

John Hendrickson, regional attorney of the EEOC’s Chicago District Office, said, “The EEOC’s position in this case is that Wal-Mart just took away — with no good reason — an effective workplace accommodation of an intellectually disabled employee. That reversal fatally compromised the employee’s ability to continue doing a job he had done so well for many, many years, and ended up with him being fired.”

Hendrickson added, “It’s hard to fathom what drove Wal-Mart to this course of action, but the EEOC response will definitely not be a mystery. We intend to show that the company’s action was a particularly senseless violation of the Americans with Disabilities Act — an especially hurtful injustice — that Mr. Clark is entitled to full make whole relief and to punitive damages, and that the public interest requires strong injunctive measures to correct Wal-Mart’s practices.”

In March of this year, Wal-Mart Stores East, L.P. agreed to pay $363,419 to settle an EEOC sexual harassment and retaliation lawsuit. According to that suit, Wal-Mart violated federal law by allowing a co-worker to sexually harass an intellectually disabled employee at an Akron, Ohio Walmart store.

The EEOC’s Chicago District Office is responsible for processing charges of employment discrimination, administrative enforcement, and the conduct of agency litigation in Illinois, Wisconsin, Minnesota, Iowa and North and South Dakota, with Area Offices in Milwaukee and Minneapolis.

Hobby Lobby: The Supreme Court’s View and Its Impact

For the second time in two years the United States Supreme Court (the “Court”) hasruled against the Obama Administration with respect to elements of the Affordable Care Act (the “ACA”). In a 5-4 decision announced today in Burwell v. Hobby Lobby Stores, Inc. (“Hobby Lobby”) (f/k/a Sebelius v. Hobby Lobby Stores, Inc.), the Court ruled that the federal government, acting through Health and Human Services (“HHS”), overstepped its bounds by requiring faith-based private, for-profit employers to pay for certain forms of birth control that those employers argued contradicted their religious beliefs, in violation of the Religious Freedom Restoration Act of 1993 (“RFRA”).

In Hobby Lobby, the Court found that for-profit employers are “persons” for purposes of the RFRA. The Court, assuming that the government could show a compelling interest in its desire to provide women with access to birth control, ultimately held that the government could have met this interest in a less burdensome way.

Background

Among its many insurance mandates, the ACA requires non-grandfathered health insurance plans to cover “preventive services” at no cost to participants.

As part of its implementation of the ACA, HHS added 20 contraceptives that were required to be included as preventive services, including four that may have the effect of preventing a fertilized egg from developing.

Hobby Lobby argued that requiring the company to pay for or provide pills and procedures that they believe terminate life—so-called abortifacients—intrudes intrudes on their religious beliefs. Hobby Lobby sued HHS, asserting that requiring them to pay for or provide abortifacients violated their First Amendment rights to freedom of religion and also violated the RFRA.

The RFRA provides that the federal government “shall not substantially burden a person’s exercise of religion” unless that burden is the least restrictive means to further a compelling governmental interest. The Administration argued, however, that neither Hobby Lobby nor Conestoga or any other for-profit, faith-based employer was a person for purposes of the RFRA or the First Amendment.

The Decision

Writing for the majority, Justice Samuel Alito held that private—as opposed to publicly traded—employers could be considered “persons” for the RFRA. The Court noted that the law imposed a substantial burden on religious beliefs, requiring the owners of Hobby Lobby to engage in conduct that “seriously violates their sincere religious beliefs.”

The Court noted that for the government to prevail it needed to demonstrate a compelling state interest and that its application was the least restrictive means to achieve its goals. The Court assumed (with Justice Kennedy providing the swing vote in his concurrence) that the government does, in fact, have a compelling interest to, among other things, promote “public health” and “gender equality” by providing contraceptive coverage for women. However, the Court found that even assuming a compelling interest there were less restrictive alternatives for the government. The government could, the four-person majority noted, simply provide these benefits to all, without charge to the individuals; in his concurrence, Justice Kennedy questioned this, and noted the Court’s opinion does not decide this issue. But Kennedy and the four-person majority agreed the government could extend the accommodation it made religiously affiliated employers: they do not have to provide the benefit but their insurers or third-party administrators would without charge to either the employers or the employees.

Because there are less restrictive alternatives, the Court found that HHS had violated the RFRA as applied to these faith-based, for profit, private employers.

The Impact

The Hobby Lobby ruling has a direct impact on a relatively small number of employers—as a percentage of total employers across the country there are very few that can be considered faith-based employers.

However, the ruling is significant in that it signals an ongoing willingness by the Court to exercise its checks-and-balances power. The Court indicated it may not provide the Administration much leeway in its implementation of the ACA, when implementation impacts and is limited by other federal rights.

The ruling may also be significant for certain religious-affiliated non-profit employers who are operating under the accommodation discussed above. By identifying the accommodation as a less restrictive alternative, the Court may be signaling it believes that the exception HHS provided them suffices to meet any concerns they may have. The Court, however, noted it was not deciding this issue, and the “government-pay” approach tendered by four justices may provide a possible opening for relief for the religious-affiliated non-profit employers.

Finally, the Hobby Lobby decision should stand as a reminder that while there may be differences of opinion about specific rules and requirements under the ACA, and some of those differences may be decided against the government, the law itself is not going away. Employers need to continue to monitor new developments and implement strategies for complying with the ACA.

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Supreme Court Gives Second Win in Two Days to Caregivers Challenging Compulsory Union Dues

The United States Supreme Court acted today in another case involving a scheme to siphon millions of dollars in compulsory union dues from home caregivers assisting public aid recipients. On June 30, 2014, the Court decided Harris v. Quinn and held that the First Amendment to the United States Constitution prohibits the collection of a compulsory agency fee from rehabilitation program personal assistants who do not want to join or support the union. Today, the Court applied Harris to Schlaud v. Snyder, vacating the judgment, and remanding the case to the United States Court of Appeals for the Sixth Circuit for further consideration in light of Harris v. Quinn. As the Schlaud case continues, look for another blow to the forced-dues arrangment perpretrated by various union officials and their friends in government.

Schlaud and other plaintiffs in the case are home childcare providers in Michigan who sought class-action certification in their First Amendment challenge to the state’s compulsory deduction of union dues from subsidies paid to home childcare providers. In January 2009, the Michigan Department of Human Services (DHS) began deducting 1.15% from subsidy payments made to home childcare providers. The funds were forwarded to the union, which was a joint venture between the United Auto Workers union and the American Federation of State, County and Municipal Employees union. According to the opinion of the United States Court of Appeals for the Sixth Circuit, the union collected $2,000,019.09 in 2009 and at least $1,821,635.21 in 2010.

Schlaud and her co-plaintiffs sought the return of the compulsory union dues that were collected in violation of their First Amendment rights. The district court denied certification of the plaintiffs’ proposed class — all home childcare providers in Michigan — because it concluded a conflict of interest existed within the class: some members voted for union representation and others voted against union representation. The Sixth Circuit affirmed, and Schlaud sought review by the Supreme Court.

Attorneys at the National Right to Work Legal Defense Foundation filed and have litigated both Shlaud and Harris on behalf of personal assistants and home childcaregivers. In Harris, the Supreme Court did not reach the issue of the constitutionality generally of compelling public sector employees to pay union dues or agency fees, but it strongly signaled that the legal analysis of a 1977 Supreme Court decision, Abood v. Detroit Board of Education, which found compulsory agency-fee requirements to be constitutional, was “questionable.” The Harris opinion opens the door, cracked initially in Knox v. Service Employees, for the Court to revisit the constitutionality of compelling public employees to pay union dues or agency fees as a condition of employment.

Article By:

Timothy M. McConville

Of:

Odin, Feldman & Pittleman, P.C.

U.S. Supreme Court Gives Increased Protection to Government Employees

The Supreme Court recently ruled unanimously that government employees who testify about public corruption are protected by the First Amendment. The case, Lane v. Franks,^[1]centered on a public employee, Lane, who worked at an Alabama community college where he led the school’s program for at-risk youth.

While working for the community college, Lane discovered a state representative was on the program’s payroll, despite doing no work for the program. Lane terminated the representative’s employment, and subsequently, the representative was indicted by federal authorities on corruption-related charges. Lane testified, under subpoena, at the representative’s trial in 2008. In 2009, Lane was fired from the college. Lane sued the community college president individually and in his official capacity alleging that the official violated his First Amendment protections.

The college president argued that Lane’s sworn testimony was not protected by the First Amendment because it was based on information that he gathered from his role as a state employee, not as a private citizen. The lower courts agreed with the college president, determining that Lane acted in his official capacity when firing the state representative and had acted in the same capacity when testifying at her trial. The Supreme Court disagreed and stated that Lane testified “as a citizen on a matter of public concern.” According to Justice Sotomayor, “Truthful testimony under oath by a public employee outside the scope of his ordinary job duties is speech as a citizen for First Amendment purposes. That is so even when the testimony relates to his public employment or concerns information learned during that employment.”

The ruling means that government employees should feel more protected when stepping forward with whistleblower-type information. Both public and private employers should exercise caution when taking negative actions against an employee who has complained of or filed a charge of discrimination, or participated in some kind of investigation or proceeding, as the action could be considered retaliatory.

_{[1] No. 13-483 (2014).}

Article By:

Luke A. Wingfield

Of:

McBrayer, McGinnis, Leslie and Kirkland, PLLC

The Walls Shouldn’t Have Ears: Ruling on Eavesdropping Puts Burden of Prevention on Illinois Employers

Are your employees surreptitiously recording conversations? It’s a frightening thought. But based upon a new Illinois Supreme Court ruling, they are now free to do so. To discourage this behavior, Illinois employers should consider implementing a policy prohibiting such surreptitious recordings.

In People v. Clark, the Illinois Supreme Court ruled that the state eavesdropping statute, which had made it illegal to record conversations in Illinois without the consent of all parties, was unconstitutionally overbroad under the First Amendment. The state Supreme Court reasoned that audio and audiovisual recordings are “medias of expression commonly used for the preservation and dissemination of information and ideas and thus are included within the free speech and free press guarantee” of the First Amendment.

Consider for a moment how your employees might use secretly recorded conversations against you. An employee who has previously complained to your human resources department about another employee who made inappropriate sexist or racist comments, may now freely record all conversations with the colleague, and can use those recordings in a lawsuit against the company. Or, an employee might surreptitiously record everything said during an internal investigation of alleged wrongdoing by the company, and could then provide third parties with those recordings.

Given the removal of statutory barriers, Illinois employers are now forced to create their own systems for preventing this objectionable conduct. One such avenue would be to implement a policy prohibiting the recording of conversations absent the consent of all parties.

Under certain circumstances, employers may want to record workplace conversations. However, the employer, not each individual employee, should dictate when recording conversations is appropriate. Company policy should be unequivocal and forbid the recording of any conversations with colleagues or business conversations with third parties, regardless of where such conversations take place, without the consent of all parties to the conversation.

Note that such a policy would not prohibit an employee from using such surreptitious recordings in a lawsuit against the company, or from sharing such recordings with others, because Illinois law no longer requires the consent of all parties. But with clear guidelines in place, Illinois employers would at least have the option of taking disciplinary action against employees who violate the company’s policy. Employees generally don’t want to risk losing their jobs by violating such rules, and may therefore think twice before making secret recordings.

In response to the concerns of employers and others, the Illinois General Assembly is already considering new legislation that would limit the recording of conversations in a way that does not violate the Constitution. And while Illinois employers should monitor the progress of such prospective legislation, adoption of a company policy prohibiting the secret recording of conversations can help reduce the likelihood of such behavior in the interim.

Article By:

Robert K. Neiman

Of:

Much Shelist, P.C.

Making Use of Social Media: FDA Releases Two Draft Guidelines on the Use of Social Media Platforms by Drug and Device Manufacturers

The Food and Drug Administration (FDA) has released two long-awaited draft guidance documents for the drug and device industries revolving around the use of social media platforms by drug and device manufacturers — Internet/Social Media Platforms: Correcting Independent Third Party Misinformation About Prescription Drugs and Medical Devices (“Guidance on Correcting Third Party Misinterpretation”), and Internet/Social Media Platforms with Character Space Limitations – Presenting Risk and Benefit Information for Prescription Drugs and Medical Devices (“Guidance on Presenting Risk/Benefit Information”).

As the titles suggest, the purpose of the documents is to clarify how social media may be utilized by drug and medical device companies for the voluntary correction of misinformation provided by independent third parties, as well as for presenting promotional messaging regarding risk/benefit information of products. But while the guidelines provide helpful clarification regarding how such platforms may be utilized, they each also raise considerations that companies should take heed of before beginning to use these outlets, and should be factored into a company’s social media guidelines.

Internet/Social Media Platforms: Correcting Independent Third Party Misinformation About Prescription Drugs and Medical Devices

As an initial matter, the Guidance on Correcting Third Party Misinterpretation (“Draft Guidance #1”) establishes two points: first, Draft Guidance #1 only applies to misinformation posted to Internet-based platforms by an independent third party, therefore excluding content provided by the company itself, its employees and agents. Second, Draft Guidance #1 establishes that the exception to a company’s obligation to respond to or correct misinformation only applies to information that is “truly independent,” for example posted by an independent third party to an unaffiliated platform or a platform providing content that is not controlled by the company.

However, Draft Guidance #1 does not completely exclude company-operated sites. In stark contrast with the company’s obligation to correct content when that content is “owned, controlled, created …influenced or affirmatively adopted or endorsed by, or on behalf of, the firm,” where such corrections are obligatory and also carry advertising and labeling regulatory requirements, Draft Guidance #1 does not hold companies responsible for correcting misinformation where a company owns or operates an online platform that allows for user-generated content (chat room, etc.) over which a company does notexert control. However, Draft Guidance #1 cautions that such a site should contain an “overarching and conspicuous statement that the firm did not create or control the [user-generated content].”

If a company chooses to voluntarily respond to truly independent misinformation, Draft Guidance #1 sets parameters on the process for taking correction action, which should either be by (i) providing appropriate truthful corrective information or (ii) providing “a reputable source for correct information, such as the firm’s contact information. In either approach, in order to constitute “appropriate corrective information” a firm’s communication should denote the affiliation of the corrective post with the company, and be:

relevant and responsive to the misinformation;
limited and tailored to the misinformation;
non-promotional in nature, tone, and presentation;
accurate;
consistent with the FDA-required labeling for the product;
supported by sufficient evidence; and
posted either in conjunction with or reference the misinformation.

In acknowledgement of the vast nature of the Internet and certain forums and the reality that it may be impractical for a company to attempt to correct all misinformation about its products that may appear, Draft Guidance #1 stipulates that companies do not need to address all incorrect information that may be posted regarding a particular drug or device, even if a company elects to correct a selective portion. When addressing any misinformation, therefore, Draft Guidance #1 recommends that a company create a figurative box around the particular misinformation and portion of the forum it intends to correct, and then revise all the incorrect information within that defined boundary, which should include also correcting positive misinformation or exaggerations. Following corrective action, while Draft Guidance #1 does not hold companies responsible for monitoring the communication, it does recommend that companies keep records that include (i) the date, location, and content of the misinformation; (ii) when the wrongful information was discovered; and (iii) a description of the corrective information provided, including the date it was furnished.

Finally, Draft Guidance #1 suggests that the FDA does not intend to object if a firm voluntarily corrects misinformation and the voluntarily provided corrective information does not satisfy otherwise applicable regulatory labeling or advertising requirements, so long as the corrective information is not non-truthful, misleading, or in a manner other than recommended by Draft Guidance #1. However, companies should take heed that any corrective action that goes beyond merely providing accurate information that is specifically tailored to the misinformation it is addressing (i.e., including slogans or promotional information) must comply with applicable regulatory requirements related to labeling or advertising.

While helpful for establishing clearly both the parameters for correctly responding to misinformation as well as for clearly limiting a company’s obligation to respond to any or all misinformation posted by an independent third party, the Guidance on Correcting Third Party Misinterpretation also reminds companies to take caution when doing so to ensure that their responses are narrowly tailored enough to fall under the purview of the guidance and outside regulatory requirements. That caution includes carefully considering where misinformation clearly constitutes “truly independent” information. Companies should be mindful of the reality that “truly independent” is not a concept that is well defined, and should thus be cautious before asserting that certain misinformation may fall under the purview of Draft Guidance #1 as the FDA advances a broad interpretation of when a company is responsible for taking corrective action.

Internet/Social Media Platforms with Character Space Limitations — Presenting Risk and Benefit Information for Prescription Drugs and Medical Devices

Prepared by the Office of Prescription Drug Promotion, the second guidance issued by the FDA last week, the Guidance on Presenting Risk/Benefit Information (“Draft Guidance #2”), addresses the parameters around presenting benefits and risks information on Internet and social media platforms with character spacing limitations, such as microblogs (e.g., Twitter) and online paid search (e.g., “sponsored links” on search engines such as Google). Draft Guidance #2 clearly establishes that, as a threshold matter, the character restrictions do not eliminate the company’s responsibility to ensure its promotional messaging complies with all applicable regulations related to advertising and labeling, and cautions that such forms of media may not be appropriate for promotion of certain products, such as those with complex indications or risk profiles.

For companies that choose to make product benefit claims on character-space-limited communication sites, while each may reasonably use common abbreviations (including scientific and medical abbreviations), punctuation marks, and other symbols to comply with space constraints, Draft Guidance #2 presents a broad set of rules that must be satisfied by each communication relating to both risk and benefit information.

Benefit Information

Benefit information should be accurate, non-misleading, and reveal material facts within each individual message or tweet.
Benefit information should be included with risk information in the same message. Do not spread benefit and risk information across multiple messages or tweets.

Risk Information

Risk information should be included with benefit information in the same message. Do not spread risk and benefit information across multiple messages or tweets.
Risk information should be “comparable in scope” to the benefit information, and should, at minimum, include the most serious risks, e.g., those included in a boxed warning or known to be life-threatening, among others, associated with the product. To determine whether risk information is “comparable in scope” to the benefit information, the FDA weighs (i) whether the risk information “qualifies any representations made about the product,” and (ii) whether the risk information is presented with a “prominence and readability comparable to the benefit claims about the product.” While risk disclosures may be concise when paired with benefit information, a hyperlink to a complete, and exclusive, discussion of risks should be included and appropriately titled and not promotional in nature.
Both the proprietary and established (generic) name for the product should be included within the character-space limited communication and on each landing page associated with each hyperlink in that initial communication. Draft Guidance #2 recommends that the landing page be devoted exclusively to the communication of risk information about the product and not to the promotional home page. Such landing page should also prominently display quantitative ingredient and dosing information for prescription drugs.

In light of the restrictions set forth by Draft Guidance #2, while companies should feel comfortable taking advantage of current social media platforms including those with character restrictions, they should also ensure that the parties responsible for drafting any such posts are aware of the parameters placed on such communications. A hypothetical example provided by Draft Guidance #2 exemplifies some of the potential disadvantages of such messaging:

NoFocus (rememberine HCl) for mild to moderate memory loss-May cause seizures in patients with a seizure disorder www.nofocus.com/risk

While the message complies with each of Draft Guidance #2’s directives, the balancing of risk and benefit information in a space restricted communication may have the unintended result of highlighting risk over benefit. Additionally, from a practical standpoint, the space constraints may prevent the inclusion of all necessary information. If a company cannot conclude that “adequate” benefit and risk information (along with other required disclosure) may be communicated in the same message or tweet — particularly at 140 characters — Draft Guidance #2 recommends that the company reconsider whether the use of the particular platform is the appropriate forum for the dissemination of such messaging before making use of such forums, once again in particular for drugs with complex indications or high risk profiles.

As a general conclusion, while the Guidance on Presenting Risk/Benefit Information is self-admittedly limited in scope, and does not address “promotion via product websites, webpages on social networking platforms (e.g., [Facebook, Twitter, YouTube]), and online web banners,” it undeniably provides helpful direction for drug and device companies’ use of social media sites for promotional messaging where communications are restricted to a limited number of characters, as well as highlighting how the FDA may intend to regulate such use. Companies should pay careful attention to the restrictions while taking advantage of the opportunities these social media platforms offer, and should take care to ensure to instill clear policies that comply with Draft Guidance #2 that are available to, and understood by, individuals tasked with producing and monitoring social media content for the company.

The FDA will be accepting comments on both Draft Guidance #1 and Draft Guidance #2 until September 16, 2014.

Article By:

Cynthia J. Larose

Christine M. Wahr

Of:

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

Tips for Growing Your Fan Base on Facebook

One of the biggest challenges for anyone seeking to have a large social media following is growing your audience to a healthy level. Sometimes it almost feels like we’re back in grade school, looking for other kids to like us!

Inbound marketing firm Hubspot has a number of informative presentations on Facebook marketing, but this quick slide guide with five tips on how to grow your audience is particularly useful since it visually walks you through the steps you need to take on your Facebook page to reap the rewards from each tip:

Inbound marketing firm Hubspot has a number of informative presentations on Facebook marketing, but this quick slide guide with five tips on how to grow your audience is particularly useful since it visually walks you through the steps you need to take on your Facebook page to reap the rewards from each tip:

5 Quick Tips For Growing Your Facebook Audience from HubSpot

Article By:

Stephen Fairley

Of:

The Rainmaker Institute

New Updated FTC Care Labeling Rules: “Do’s and Don’ts”

The Federal Trade Commission (“FTC”) enforces federal labeling requirements that require manufacturers, importers, sellers and distributors of certain textile and wool clothing to accurately label their products. For example, FTC rules require that manufacturers indicate the country of origin and fiber content in their clothing. In addition, the Care Labeling Rule requires that manufacturers and importers attach “care labels” to garments and certain piece goods.

Navigating these various labeling requirements can be tricky. On May 5, 2014, the FTC amendment of the labeling rules, known as the Textile Rules, became effective.

Care labels, which can influence consumers’ purchasing decisions more than labels indicating fiber content or country of origin or manufacture, are important to carefully consider.

“Do’s” for Clothing Manufacturers and Importers:

Place all care labels permanently, securely and visibly, so that consumers can easily see or locate them prior to purchase. Ensure that labels will remain legible not just at the point of sale, but throughout the lifecycle of the product.

Include a washing or drycleaning instruction (or both) if either method is safe for the product. If a product can be neither washed nor drycleaned, the label must state “Do not wash – Do not dry clean.” A simple “dryclean” instruction is acceptable in most cases, unless “any part of the drycleaning process would harm the product.” In that case, more specificity is required (e.g., “Professionally Dryclean” or “Dryclean. No Steam.”).

Indicate whether the product is to be washed by machine or by hand. The FTC has stated that water temperature settings must be indicated if “regular use of hot water will harm the product.” Similarly, if using chlorine bleach will harm the product, whereas other bleaches will not, the label must state “Only non-chlorine bleach, when needed.” The appropriate label in the event that no bleach is safe to use is “Do not bleach.”

State how to dry the product and how to iron it, if the product requires regular ironing. Temperature settings for drying and ironing are not needed unless the “regular use of high temperature will harm the product.”

If selling a garment with multiple pieces, only one label is required if the same instructions apply to all parts of the garment, and if the garment is sold as a single unit. The label should be attached to the “major piece” of the garment. In the event that the garment is not sold as a single unit, or if the instructions differ from one part of the garment to the next, then each separate piece of the garment needs its own care label.

If the garment cannot be cleaned without damaging the garment, potential customers must be warned on the label. It is imperative that following the care labeling instructions does not ordinarily lead to product damage. Along these lines, labels must inform consumers not to engage in certain procedures that they may erroneously but reasonably assume are acceptable, given the instructions of the label. For example, if a label indicates that clothes can be washed, a reasonable consumer might infer that the product can also be safely ironed. If these understandable assumption is incorrect, the FTC has stated that the label must indicate the risks involved.

One should always have a “reasonable basis” for everything written on a care labeling instruction. If a piece of clothing indicates that it cannot safely be ironed, there must be some proof (based upon experience, industry expertise or testing) known to the manufacturer or importer that ironing the clothing would cause damage. The FTC has alternatively stated that the manufacturer or importer must have “reliable evidence” to support all warnings or instructions on product labels. Guesswork is insufficient. However, what constitutes “reliable evidence” or a “reasonable basis” does depend on the circumstances. It is incumbent on manufacturers conducting tests to ensure that the results of any tests conducted on only one portion of multi-part garments do, in fact, have applicability to the entire garment.

Importers must ensure that these labels are placed on products before they sell them in the United States. It is not necessary for the labels to be attached as the products enter the country, however. Domestic manufacturers similarly must ensure that care labels are placed on finished products prior to sale.

“Don’ts” for Clothing Manufacturers and Importers:

Certain kinds of exempt apparel, including gloves, hats, and shoes, do not require care labels. Many items are also excluded from the care labeling requirements, including handkerchiefs, belts, suspenders, neckties, or non-woven garments made for one-time use. For piece goods sold for making apparel at home, it is not necessary to include care labeling instructions for any “marked manufacturers’ remnants of up to 10 yards when the fiber content is not known and cannot be determined easily.” These items are exempted from the Care Labeling Rule.

Garments custom-made from fabrics provided by consumers, or products sold directly to institutional buyers for commercial use (e.g., uniforms sold to Office Depot for use by clerks during business hours, and not purchased directly by the clerks), do not require care labels. This also includes items that the consumer may ask to be added to the garment (e.g. lining or buttons).

Use non-standard terms on labels. The FTC recommends, but does not expressly require, that manufacturers ensure that any terms they use on labels are in accord with the definitions in the Rule’s Appendix A glossary, where applicable. For example, the term “Warm” applies to initial water temperature ranging from 87 to 111 degrees F [31 to 44 degrees C]; “Hot” is from 112 to 145 degrees F [45 to 63 degrees C]; and “Cold” is up to 86 degrees F [30 degrees C].

*Gregg Re Summer Associate contributed to this article.

Article By:

Theodore C. Max

Of:

Sheppard, Mullin, Richter & Hampton LLP

The Redskins Decision: Much Ado About (Probably) Not Much

I’ve been having fun listening to commentators – most of whom appear to know little or nothing about trademark law – expound on last week’s decision by the Trademark Trial and Appeal Board to cancel six trademark registrations for variations of the wordREDSKINS as the name of Washington, D.C.’s pro football team. One observer described it as a “landmark” decision, and several have prophesied that it marks “the beginning of the end” of the team’s controversial nickname.

The decision may turn out to have significant impact on the team politically and in terms of public relations. But legally…not so much.

Into the Time Machine

Many of the “beginning of the end” analyses treat the TTAB decision as a referendum on current public opinion about the Redskins name issue. A spokesman for the National Congress of American Indians, which supported the plaintiffs, said, “I don’t know how the team doesn’t recognize at this point that it’s not just a small group of Indians anymore. It’s more than that. People and fans and the country itself are saying, ‘Let’s just change the name.’”

Maybe they are – but the TTAB decision has nothing to do with that. As the dissenting judge (it was a 2-1 decision) wrote, “To be clear, this case is not about the controversy, currently playing out in the media, over whether the term “redskins,” as the name of Washington’s professional football team, is disparaging to Native Americans today.” The task before the TTAB was not to render a judgment on the propriety of naming a football team the Redskins. Rather, the task before the TTAB was to conduct a kind of time-machine research project: to determine, as a matter of empirical historical fact, whether the term Redskins was considered offensive by a “substantial composite” (not necessarily a majority) of the Native American population at the time when the first of the REDSKINS registrations was granted – in 1967.

In performing this task, the Board was limited to the evidence placed in the record by the parties. It didn’t do any independent research or fact-finding of its own, and it was not allowed to take “judicial notice” of any information that may have come its way by other means. This procedural limitation is crucial to understanding why the decision may be vulnerable to being overturned on appeal.

“Déjà Vu All Over Again”

It is important to bear in mind that we have passed this way before. In 1999, in a case called Harjo v. Pro Football Inc., the TTAB canceled the very same six trademark registrations for the very same reason: that the word “redskin” was considered disparaging by Native Americans at the time the registrations were granted. Pro Football appealed to the U.S. District Court for the District of Columbia, and won: the court overruled the Board’s decision, holding – bear with me, this is the important part – that the evidence concerning the disparaging nature of the term “redskin” in 1967 was insufficient. The petitioners then appealed to D.C. Circuit Court of Appeals, which affirmed the district court – without disturbing the ruling on insufficient evidence. The six registrations – which had remained intact throughout the appeal process – were thus definitively preserved.

Flash forward. The case decided last week, Blackhorse v. Pro Football, Inc., was essentially a re-run of Harjo, with different plaintiffs but with essentially the same evidence. The parties stipulated that all the testimony, expert reports, affidavits, and other documents from Harjo would be received into evidence in Blackhorse as well, and the new petitioners made a strategic decision not to add any substantial new evidence.

Same Evidence, Same Result?

This appears to have worked well in the TTAB: the same tribunal, asked to decide the same issue by examining the same evidence, came to the same conclusion.

But the same strategic decision may backfire in the appellate courts. Note what happened in Blackhorse: the petitioners went into court armed solely with a body of evidence that a higher court had already ruled was insufficient. As the dissent inBlackhorse wrote, “The consequence of petitioners’ decision to rely on the same evidence [that was] previously found insufficient to support cancellation[,] without substantial augmentation[,] is that the evidence before the Board in this case remains insufficient as well.”

Will the appellate courts agree, and overturn the Board’s decision a second time? The picture is clouded by the fact that, owing to an intervening restructuring of the federal court system, the initial appeal might be heard this time by the U.S. District Court for the District of Eastern Virginia, rather than the District of Columbia. Will the new court agree with the old? Only time will tell. But the petitioners may have a hard time persuading anycourt that a body of evidence already deemed insufficient had somehow grown in stature merely as the result of growing 15 years older.

The initial aftermath of Blackhorse, however, will be much the same as that of Harjo. The TTAB has already stayed execution of the Blackhorse decision on the assumption that Pro Football will appeal. So the six REDSKINS registrations will remain in full force and effect throughout the appeal process, which could take several years (as it did last time).

What Impact?

Let’s suppose that Pro Football’s appeal ultimately fails, and that the six registrations are, finally and definitively, canceled. What then? The fact is that the impact of such an outcome on the Washington Redskins team would likely be far less than many observers have suggested.

For starters, the team would not need to change its name. The TTAB decision does not cancel the REDSKINS trademarks, only the federal registrations for those marks. To be sure, federal registration provides important benefits. But as my trademark law students could tell you, under U.S. trademark law rights ultimately come from use of a mark in commerce, and even unregistered marks can become quite strong by virtue of long-standing and widespread use, substantial investment in advertising and promotion, and strong “name recognition” among the public. By any of those measures, REDSKINS is a very strong mark indeed, and Pro Football would not find it difficult to enforce its common-law trademark rights against infringers.

Purely as a matter of legal and economic reality, the post-cancellation world of the Washington Redskins might not look much different than the current one.

IP Rights and Censorship

All this, of course, addresses only what may happen as a result of what is done in courts of law. The court of public opinion is a different matter. Blackhorse appears to have triggered significantly stronger public reaction than Harjo, which may help bring other forces to bear on the situation.

One thing that has not changed is my conviction that deciding issues of this nature is not a job for the Trademark Office. The judges who decide cases in the TTAB are experts on trademark law. They shouldn’t be expected to be experts on the kinds of social and political issues that drive cases like this one, or even on the kind of historical research questions such cases present. Nor do they have the opportunity to submit fact issues to a jury, which might be better positioned to render a verdict about what is or is not “immoral” or “scandalous.”

The Lanham Act is the only intellectual property statute that includes a censorship provision. Why do we feel it is improper to place a government “stamp of approval” (the ® symbol) on a trademark that is “immoral” or “scandalous,” when we have no qualms about placing another such symbol (the © symbol) on copyrighted pornography or hate speech, which we do all the time?

The Redskins case raises many interesting, and important, issues. But none of them are really trademark issues. That’s why their ultimate resolution will likely have little to do with what happened in the Trademark Office last week.

Article By:

John C. Blattner

Dickinson Wright PLLC

Office of Inspector General Issues Special Fraud Alert Concerning Laboratory Payments to Referring Physicians

On June 26th, the OIG issued a Special Fraud Alert concerning laboratory payments to referring physicians. The OIG identified 2 different types of payment arrangements that may be viewed as problematic under the Anti-Kickback law: blood specimen collection, processing and packaging arrangements and registry payments.

The OIG described specimen processing arrangements as payments from laboratories to physicians for certain specified duties, which may include blood specimen collection and centrifuging, maintaining the specimens at a particular temperature, and packaging the specimens so that they are not damaged in transport. The OIG indicated that payments are typically made to referring physicians on a per-specimen or per-patient-encounter basis, and often are associated with expensive or specialized tests. The concern raised by the OIG is that since Medicare (and other third party payors) allow nominal payments in certain circumstances for specimen collection and for processing and packaging specimens for transport to a laboratory, payment by the laboratory to the physician amounts to unlawful remuneration because the physician is effectively being paid twice for the same work. The OIG also raised concerns that such payments may be made in amounts which exceed fair market value, although the OIG cautioned that such payments may be suspect if one purpose of the arrangement is to induce or reward referrals of Federal health care program business “regardless of whether the payment is fair market value for services rendered.”

The OIG identified the following characteristics specimen processing arrangements that may be suspect:

Payment exceeds fair market value for services actually rendered by the party receiving the payment.

The payment is for services for which payment is also made by a third party, such as Medicare.

Payment is made directly to the ordering physician rather than to the ordering physician’s group practice, which may bear the cost of collecting and processing the specimen.

Payment is made on a per-specimen basis for more than one specimen collected during a single patient encounter or on a per-test, per-patient, or other basis that takes into account the volume or value of referrals.

Payment is offered on the condition that the physician order either a specified volume or type of tests or test panel, especially if the panel includes duplicative tests (e.g., two or more tests performed using different methodologies that are intended to provide the same clinical information), or tests that otherwise are not reasonable and necessary or reimbursable.

Payment is made to the physician or the physician’s group practice, despite the fact that the specimen processing is actually being performed by a phlebotomist placed in the physician’s office by the laboratory or a third party.

The OIG also noted that payment arrangements can be problematic even if they are structured to carve out work performed on specimens from non-Federal health care program beneficiaries.

The OIG also raised concerns about payments for registry maintenance and observational outcomes databases. Under these arrangements, which often involve patients presenting with specific disease profiles, laboratories pay a physician for certain specified duties, including submitting patient data to be incorporated into the registry, answering patient questions about the registry, and reviewing registry reports. While the OIG found that such payments may be appropriate in certain limited circumstances, such payments may induce physicians to order medically unnecessary or duplicative tests, including duplicative tests performed for the purpose of obtaining comparative data, and to order those tests from laboratories that offer registry arrangements in lieu of other, potentially clinically superior, laboratories.

The OIG identified the following as being characteristics of potentially suspect registry arrangements:

The laboratory requires, encourages, or recommends that physicians who enter into registry arrangements to perform the tests with a stated frequency (e.g., four times per year) to be eligible to receive, or to not receive a reduction in, compensation.

The laboratory collects comparative data for the registry from, and bills for, multiple tests that may be duplicative (e.g., two or more tests performed using different methodologies that are intended to provide the same clinical information) or that otherwise are not reasonable and necessary.

Compensation paid to physicians pursuant to registry arrangements is on a per patient or other basis that takes into account the value or volume of referrals.

Compensation paid to physicians pursuant to registry arrangements is not fair market value for the physicians’ efforts in collecting and reporting patient data.

Compensation paid to physicians pursuant to registry arrangements is not supported by documentation, submitted by the physicians in a timely manner, memorializing the physicians’ efforts.

The laboratory offers registry arrangements only for tests (or disease states associated with tests) for which it has obtained patents or that it exclusively performs.

When a test is performed by multiple laboratories, the laboratory collects data only from the tests it performs.

The tests associated with the registry arrangement are presented on the offering laboratory’s requisition in a manner that makes it more difficult for the ordering physician to make an independent medical necessity decision with regard to each test for which the laboratory will bill (e.g., disease-related panels).

The OIG found that concerns also arise when a physician is selected to collect data for a registry on the basis of their prior or anticipated referrals, rather than their specialty, sub-specialty or other relevant attribute. The OIG also noted that “Even legitimate actions taken to substantiate such claims, including, for example, retaining an independent Institutional Review Board to develop study protocols and participation guidelines, will not protect a registry arrangement if one purpose of the arrangement is to induce or reward referrals.”

The laboratory market is a very competitive one. The issuance of the referenced Special Fraud Alert, as well as recent large scale investigations and criminal indictments involving laboratory and physician relationships (including the Biodiagnostic Laboratory Services LLC investigation here in New Jersey: https://tinyurl.com/cf5djfw) demonstrates that the OIG has turned an increased focus on relationships between laboratories and physicians.

Article By:

Beth Christian

Of:

Giordano, Halleran & Ciesla, P.C.

The National Law Forum

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