Consumer Goods and Retail: Protecting Brand and Managing Legal Risk

A consumer product manufacturer or retailer that becomes aware of a product defect creating a substantial product hazard must report the defect to the CPSC within twenty-four hours, and a failure to report can result in civil penalties that the CPSC has increased substantially in recent years, and consumer products law counsel advising on CPSC compliance must evaluate whether the company's product surveillance and complaint tracking systems are designed to identify reportable defects as early as possible and whether any voluntary recall program is structured to satisfy the CPSC's standards for a corrective action plan.

A consumer goods manufacturer that is sued for injuries caused by a product defect must develop a defense strategy that challenges the plaintiff's ability to prove the existence of the defect, the causal connection between the defect and the injury, and the availability of any applicable statutory or common law defenses, and product liability counsel defending a product defect claim must evaluate whether the product design satisfied the applicable industry standards and state-of-the-art defense requirements at the time the product was manufactured and whether the plaintiff's expert evidence is sufficient to establish the design or manufacturing defect alleged.

A consumer goods brand that discovers a competitor selling products that incorporate confusingly similar trademarks or trade dress must move quickly to obtain a preliminary injunction that stops the infringing sales before the brand equity damage becomes irreversible, and trademark infringement counsel advising on Lanham Act enforcement must evaluate whether the brand's trademark and trade dress registrations are sufficiently comprehensive to support the requested injunctive relief and whether the likelihood of consumer confusion between the brand's products and the competing products satisfies the legal standard for a preliminary injunction.

A retailer or consumer goods manufacturer that makes objective performance claims in its advertising must possess substantiation for those claims before the advertising runs, because the FTC can bring an enforcement action requiring the company to stop running unsubstantiated claims and to pay civil penalties if the company previously entered into a consent order, and consumer goods and retail counsel advising on advertising compliance must evaluate whether the evidence supporting each material advertising claim satisfies the competent and reliable scientific evidence standard that the FTC applies to health, safety, and efficacy claims and whether any comparative advertising claims are literally true and do not create a misleading overall impression.

An online retailer that wants to resolve consumer disputes through individual arbitration rather than class litigation must ensure that its terms of use clearly present the arbitration clause, that the consumer has adequate notice of the terms before completing a purchase, and that the arbitration clause is drafted to satisfy the FAA's requirements for a valid and enforceable agreement, and e-commerce regulations counsel advising on terms of use design must evaluate whether the website's check-out flow creates the clickwrap or browsewrap agreement necessary to bind the consumer to the terms and whether the arbitration clause's class action waiver is enforceable under applicable state law.

A consumer goods retailer that collects personal information from California residents through its website, loyalty program, or in-store data collection systems must comply with the CCPA's and CPRA's requirements for privacy notice, consumer rights response, and data sharing disclosures, and consumer data protection counsel advising on retail data privacy compliance must evaluate whether the retailer's privacy policy accurately describes all of its data collection and sharing practices and whether the retailer's data sharing with advertising technology vendors constitutes a sale or sharing of personal information that triggers CCPA opt-out requirements.

A consumer goods company that sources products from overseas manufacturers must implement a supply chain compliance program satisfying the disclosure requirements of the California Transparency in Supply Chains Act, the UK Modern Slavery Act, and any other applicable supply chain transparency legislation, and supply chain disruptions counsel advising on supply chain compliance must evaluate whether the company's supplier agreements include representations and warranties about the supplier's labor practices and whether the company's audit program is sufficiently rigorous to identify and address potential forced labor issues before they become a regulatory or reputational problem.

A retailer or consumer goods manufacturer sued in a consumer class action must evaluate whether to challenge class certification early, because a successful opposition to certification eliminates the threat of classwide liability and often leads to a favorable individual settlement or dismissal of the named plaintiff's claims, and class actions and consumer defense counsel advising on class certification strategy must evaluate whether the proposed class satisfies Rule 23's numerosity, commonality, typicality, and adequacy requirements and whether the plaintiffs can satisfy Rule 23(b)(3)'s predominance requirement given the individualized issues of fact that apply to each class member's claim.