In a recent decision, a Pennsylvania federal court refused to enjoin grocery store Giant Eagle’s mandatory face covering policy in light of a shopper’s claim that he suffers from anxiety and has trouble breathing when wearing a mask. Despite previously denying Giant Eagle’s motion to dismiss, Judge Nora Barry Fischer in the Western District of Pennsylvania found a number of flaws with the plaintiff’s argument, leading her to conclude that the named plaintiff was unlikely to succeed on the merits of his claims and deny the requested preliminary injunction.

First, the plaintiff had failed to demonstrate that he had a disability preventing him from complying with Giant Eagle’s policy. On its face, the policy permits consumers to wear a face mask, cloth face covering, or a full face shield, and the plaintiff failed to show that he was unable to wear a face shield. The Court found that the plaintiff’s statements regarding his alleged inability to wear a mask was contradicted by his social media posts asserting that he was able to wear a mask, but has a right to refuse to comply with Giant Eagle’s policy.

Second, the plaintiff’s request for an accommodation to shop without a mask was not reasonable or necessary given the various alternatives provided to consumers. In addition to permitting shoppers to wear face shields as an alternative to masks, Giant Eagle also offered various services to those unwilling or unable to shop in person, including personal shopping services, curbside pickup and home delivery.

Given these two findings, the court did not even need to consider Giant Eagle’s “well-taken defenses that its face covering policy is a legitimate safety requirement during the COVID-19 pandemic and that [the named plaintiff] presented a direct threat to the health and safety of others, including customers and employees.”

With the impending second wave of the pandemic, more retailers are adopting (and state and local governments are imposing) mandatory face covering policies. While litigation is inevitable, this decision provides helpful guidance to consumer-facing businesses to ensure that their policies are sufficiently flexible and provide alternatives for those who are unable to wear a face mask.

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This Wednesday, July 22 Selling Online: How to Avoid Flattening the Curve of an Uptick in Website Traffic Register Here

This webinar will include practical tips to help companies minimize risk of enforcement and litigation and provide practical guidance. Topics include:

• Endorsers and Influencers
• Promotions and Pricing
• Subscription Plans and “Free” Trials
• Shipping and Delivery
• Consumer Reviews and the Consumer Review Fairness Act
• Customer Service Considerations – how timely refunds and responsiveness can help reduce legal risks

July 29 Cleaning Up From 2020: Guidance for Disinfectant, Germ and Virus Killing Claims Register Here

Please join us for a webinar covering the basics of germ killing and related product claims.

Discussion topics include:

• The regulatory landscape: Who regulates what – EPA, FDA and FTC jurisdiction and requirements
• What can you say and when can you say it
• Potential liability and enforcement considerations
• What to do if you receive a warning letter or other enforcement action

Register Here

July 30 California Consumer Privacy Act (CCPA) for Procrastinators: What You Need To Do Now If You Haven’t Done Anything Yet Register Here

If you’re not yet on the road to CCPA compliance (or would like a refresher), this webinar is for you.

We will cover:

• Latest CCPA developments
• Compliance strategies
• Potential changes to the CCPA if the California Privacy Rights Act (CPRA) ballot initiative passes

Register Here

Also join our counterparts for:

Tuesday, July 21 Not Normal: the Challenges of a Changed Workplace Register Here

• Politics, speech and activism in the workplace
• The changing role of HR
• What “diversity” means now
• New employment laws

Find replays of our webinars and other key resources relevant to advertising and marketing, privacy, data security, and consumer product safety and labeling on the Advertising and Privacy Law Resource Center.

The FTC has recently sent warning letters to hundreds of companies for allegedly falsely implying that products can be used to treat, cure, mitigate, or prevent COVID-19. The FTC has also issued warning letters for implied earnings claims connected to the pandemic, alleging that some have overpromised on the financial opportunities available and misleadingly tied them to the pandemic. These announcements have made clear that any claim mentioning COVID-19, the pandemic, or even “these times” will be closely scrutinized.

Please join us for a webinar covering the basics of advertising product and earnings claims, and how those should be applied during the pandemic. Discussion topics include:

• Claim Substantiation and Puffery
• Express and Implied Product Claims
• Express and Implied Earnings Claims
• Enforcement Examples and Takeaways
• Monitoring Third Parties Making Claims on Your Behalf (Endorsers, Independent Distributors)
• What to do if you receive a warning letter or other enforcement action

Trade Association Antitrust 101 Please join us on July 14 for a webinar geared toward association legal counsel, executives, marketers, staff and members, participants in association activities or attendees to association meetings.

Antitrust issues are a constant concern for trade associations and their members. Competition regulators will have associations and their members under even greater scrutiny as groups work together to address the ongoing challenges presented by COVID-19. Please join us for a webinar covering the basics of antitrust compliance for association legal and compliance counsel, executives, staff and outside advisers. This webinar is designed to help association professionals and those who attend association functions identify potential antitrust issues and provide practical guidance for effective compliance programs and mitigating risk. Finally, we will talk about how to respond to enforcement actions in the event your organization is involved in an investigation.

Discussion topics include:

• Antitrust law basics
• Best practices for associations and its membership
• Effective compliance and training programs
• Strategies for responding to warning letters or other enforcement actions

Additional webinars will be announced soon.

For some of these products, those claims have not been reviewed or accepted by EPA and, therefore, may present a risk to consumers, and healthcare providers in particular.

Earlier this year, EPA issued a list of disinfectants (“List N”) that meet the agency’s criteria for use against the coronavirus (SARS-CoV-2, the strain of coronavirus that causes COVID-19). While the surface disinfectant products on List N have not been tested specifically against SARS-CoV-2, they are expected to work against the virus because they demonstrate efficacy against other viruses that are deemed harder-to-kill or another similar strain of coronavirus.

Please note that just because the product label states that it kills “99.5% of viruses,” this does not necessarily mean that it will kill coronavirus.

See my prior post on EPA enforcement activity in this area, as well as a more detailed description of EPA’s approval policy for products deemed effective against SARS-CoV-2.

EPA’s advisory is available here. List N can be found at: www.epa.gov/ListN.

As of April 30, 2020, more than 150 class actions have been filed directly relating to or stemming from the pandemic. Tens of millions of individuals have filed for unemployment, and the plaintiffs’ bar is eager to “help.” No amount of social distancing, and no impending treatment or vaccine, can insulate companies from the threat of class litigation.

While the specific factual circumstances underlying these claims are novel, the types of claims being asserted – and the jurisdictions where such actions are being filed – are not. Companies should stay on top of the following pandemic-related class action trends and, wherever possible, get ahead of or try to prevent the additional strain of a class action during these already difficult times.

Pandemic-Related Refunds

Millions of people throughout the United States hope to receive refunds for events and services that have been cancelled or postponed as a result of coronavirus-related bans on large gatherings, stay-at-home orders and travel restrictions. The strength of these cases will ultimately turn upon the specific cancellation, force majeure and limitation of liability clauses in the relevant contracts, with courts turning to common law doctrines of impossibility and impracticability where the contracts do not address these specific issues.

Rapid and widespread event cancellations have understandably tested companies’ abilities to fulfill their obligations. For many companies that act as intermediate platforms for transactions—such as tickets to events and rental of vacation properties—handling refunds on such a scale is not manageable or even possible given that money consumers pay is often forwarded to venues, festival promoters and other clients, who often control potential rescheduling. These circumstances have led to a series of class action lawsuits against ticket sellers, educational institutions, subscription fitness, sport, and health companies, and ski areas and theme parks who offer season ticket memberships.

Getting there can be difficult too. While air travel has not been suspended entirely, cancellations and postponements, and general advisories against “non-essential” travel, have stretched airlines’ cancellation policies. There has been a surge of litigation against nearly every major airline concerning refund policies during the pandemic.

Companies not only must navigate how to deal with existing liability, but how to reopen their business and charge their customers who return balancing compliance with written policies, supporting their customers and maintaining a good public image, and remaining financially solvent. Examination of potential ways to maintain cash-flow, through government incentives, customer credits against future transactions, and other means, is an important first step.

Negligence in Addressing the Threat of Coronavirus

Class actions have also been filed alleging negligence and inaction to respond to and prevent harm arising from the coronavirus pandemic. Thus far, these actions have largely been focused on cruise lines, alleging that the ships maintained business as usual despite increasing knowledge of the danger posed to passengers and crew, but it is easy to imagine additional lawsuits against companies that continued operations as the coronavirus spread (or were forced to continue throughout the shutdown). It is also expected that similar allegations will arise as the economy reopens and people resume their normal activities. Companies must design and implement a careful plan to minimize risk when they resume operations—by not opening too soon, providing adequate protective equipment and training to staff, and effectively warning customers of ongoing risks despite the business reopening.

False Advertising of Health Benefits

With consumers anxiously seeking products that can help them protect themselves during this public health crisis, it is important that companies are mindful of claims that may potentially overstate the effectiveness of a given product in treating or preventing the virus. A number of companies have already seen warning letters from federal agencies or class action lawsuits concerning the alleged lack of evidence that hand sanitizers can effectively prevent the spread of disease, including coronavirus. These lawsuits, asserting claims for consumer warranty and unfair competition, will likely spread from hand sanitizers to other products. It is unclear how courts will evaluate the objective “reasonable consumer” under present circumstances. Thus, companies should closely examine their existing advertising claims (both express and implied) to ensure they are not misleading in light of the “new normal.”

Price Gouging

Another area where class actions have been slow to file, but are expected to increase, is price gouging. The pandemic has caused sharp spikes in demand for disinfecting products, basic necessities, and essential food staples and empty shelves—both in brick and mortar stores as well as online shops—have increased consumer’ willingness to pay a premium for these types of products. While there is no federal law with strict guidelines for price gouging, more than half of the states have laws the prohibit charging excessive prices on certain products after a triggering event, such as a declaration of a state of emergency. Companies should closely monitor the prices they charge, both during the crisis and after it resolves, to ensure that any increases to their prices comply with applicable law. And while third party sellers like Amazon may be able to pass liability through to the ultimate seller in certain circumstances, it may be wise to actively monitor the pricing activities of their sellers and try to curb price gouging activity before getting hit with litigation.

Privacy

To alleviate the pains of social distancing, companies, schools, and families have turned to video conference apps to stay connected. As usual, with increased popularity comes increased scrutiny and, unfortunately, increased litigation.

Popular videoconferencing apps Zoom and Houseparty have already been hit with several class actions challenging their privacy practices. Not surprisingly, these actions have been filed in California, where the California Consumer Privacy Act (“CCPA”) went into effect earlier this year. While the CCPA only provides for a private right of action under limited circumstances, these actions demonstrate consumers’ ability—or at least attempt—to use other provisions of the CCPA as underlying statutory violations to support other California consumer protection claims, such as California’s Unfair Competition Law.

Technology companies whose platforms have seen a surge in popularity during the pandemic should closely monitor potential vulnerabilities and reexamine privacy protections that may no longer be adequate in this new virtual economy.

Securities Class Actions

Shareholder class actions have also been filed challenging both affirmative representations and omissions relating to the pandemic. These include actions against cruise lines that allegedly downplayed the risk of coronavirus to investors, pharmaceutical companies that allegedly overstated their ability to develop a treatment or vaccine, and technology companies that allegedly withheld privacy concerns that have come to light with increased use. These early cases illustrate why publicly traded companies must exercise great care when discussing their products and business both to the public and to their investors. It remains to be seen how defenses deflecting blame for decreases in stock prices to the pandemic (similar to those asserted in the wake of the mortgage crisis) will play out.

Conclusion

With court closures and delays throughout the country, the evolution of class action litigation relating to the coronavirus may take some time to come into focus. We expect the above described categories of cases to proliferate, and expand in scope as different issues arise from the reopening of the economy. We will continue to monitor these cases and provide regular updates as to the types of claims being asserted and any decisions that come out. For a more in-depth treatment of these cases and for a comprehensive collection of case citations, click here.

We noted a couple news items this week that help add context to the pervasiveness of and risks related to price gouging enforcement. In this story, the New York Times reported on a merchant who was selling hand sanitizer and related protective gear on Amazon, at profit levels that corresponded with the growing public concern. Amazon removed his listing along with hundreds of thousands of others and suspended thousands of sellers’ accounts for price gouging. He’s now left with 17,700 bottles of hand sanitizer.

The California, Washington, and New York attorneys general offices are investigating price gouging complaints. The New York AG issued multiple cease and desist letters last week relating to exorbitant prices on hand sanitizer and disinfectant spray. The California AG issued a consumer alert regarding price gouging following announcement of a state of emergency. The Washington AG issued a similar alert calling on consumers to report price gouging and scam products.

On the advertising claims front, the New York AG announced enforcement against Alex Jones, who operates the InfoWars website. The

AG alleged that Jones was marketing and selling toothpaste, dietary supplements, and creams as treatments to prevent and cure the coronavirus. The NY AG also issued cease and desist letters to Dr. Sherill Sellman, who was selling colloidal silver as a coronavirus cure, and to disgraced televangelist, Jim Bakker, for featuring claims that Sellman’s colloidal silver product could “eliminate [coronavirus] within 12 hours.” The State of Missouri has also brought enforcement action against Mr. Bakker.

So, what’s the lesson? In our prior coronavirus marketing post, the lessons were to know and understand the pricing laws and to avoid overstating the benefits of any product. The follow-on issue is one of ethics and brand management: We’re in a public health crisis. Brands and platforms that demonstrate that they are working to comply with the law and take proactive consumer protection measures may forego short term profits, but they stand to gain long term consumer trust and maybe even generate some goodwill with regulators.

In addition to retail platforms, advertising and social media platforms may want to take note. CDA Section 230 is alive and well but does any platform want to go to bat for advertising allegedly scam products? The Washington AGs office stated that they will use their consumer protection laws to sue platforms or sellers even if they aren’t in Washington, as long as they were trying to sell to Washington residents. Every other state AG undoubtedly agrees with this approach.

And finally for some comic relief…for some insightful advice from John Oliver, check out this link at the 17-minute mark.

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Join us for our next webinar, covering influencer issues, on March 24 by signing up here.

Not anymore.

The public is rightly concerned about coronavirus and how to avoid catching it. And where the public has questions, marketers will have answers. Here are a couple things to think about before rushing that next campaign out the door.

State and Local Laws Prohibit Price Gouging

As hand sanitizer has become scarce, some who have it have sought to capitalize on consumer demand and no small amount of fear. We noticed this story about Amazon cracking down on third-party merchants selling coronavirus products at inflated prices.

Many states have laws governing price gouging. New York’s law prohibits merchants from taking unfair advantage of consumers by selling goods or services that are “vital to the health, safety or welfare of consumers” for an "unconscionably excessive price" during an abnormal disruption of the market place or state of emergency.

New York's price gouging law does not specifically define what constitutes an "unconscionably excessive price." However, per the NY AG, the statute provides that a price may be "unconscionably excessive" if: the amount charged represents a “gross disparity” from the price such goods or services were sold or offered for sale immediately prior to the onset of the abnormal disruption of the market. Merchants may provide evidence that justifies their higher prices were justified by increased costs beyond their control.

California’s law is more prescriptive. California’s anti-price gouging statute, Penal Code Section 396, prohibits raising the price of many consumer goods and services by more than 10% after an emergency has been declared. There may also be local laws that prohibit price gouging.

State attorneys general and CA district attorneys have reported receiving price gouging complaints. Companies that fail to comply will risk being enforcement targets.

Be Careful Not To Oversell

The FTC and FDA issued warning letters to seven companies allegedly selling unapproved products that may violate federal law by making deceptive or scientifically unsupported claims about their ability to treat coronavirus. Both agencies issued statements indicating that they are prepared to take further enforcement action to prevent the public from being misled.

An equally concerning scenario is the marketer who sees an opportunity to market around coronavirus with a product that has value but not to the degree that it would be an effective prevention tool. For example, dust masks are not the same as N95 face masks. Hand wipes without alcohol will not kill the same germs as those with alcohol. Tito’s Handmade Vodka is not hand sanitizer. It would be potentially misleading and deceptive to market dust masks, hand wipes without an effective sanitizer, or even Tito’s Handmade Vodka hand sanitizer as effective coronavirus prevention tools. It’s also a waste of good vodka. But, we digress.

The lesson is this: The rush to meet consumer demand should not overcome the legal clearance process or common sense. Rules still apply even in – and maybe especially in – times of public health emergency.

Stay tuned. We’ll update this post as the situation evolves.