Seyfarth Synopsis: The Illinois Supreme Court has held that a plaintiff may sue for mere violation of BIPA, regardless of injury. The ruling will likely greatly increase the potential exposure of companies in actions alleging violations of the Act and makes strict compliance with the Act significantly importantAccordingly, businesses using or licensing biometric technology in Illinois or collecting or receiving biometric data on individuals in Illinois must take immediate compliance measures or else face the potential of significant liability and damages in class action litigation.

The Illinois Biometric Information Privacy Act

Continue Reading Illinois Supreme Court Opens Floodgates For Damages In Class Actions Alleging Violations of the Illinois Biometric Information Privacy Act (“BIPA”)

On September 20, 2018, California Governor Jerry Brown signed into law AB 1884 and SB 1192, which prohibit certain restaurants from offering plastic straws and restrict the default beverage in kid’s meals to water or milk. These restrictions go into effect on January 1, 2019. Restaurants that fall within the scope of these laws are subject to statutory penalties including fines and potential class action exposure under California Business and Professions Code section 17200.

AB 1884 prohibits a “full-service restaurant” from providing single-use plastic straws to consumers unless requested by the consumer. A “full-service restaurant,” is defined as an establishment with the primary business purpose of serving food, where food may be consumed on the premises, and where employees of the establishment take the following actions: (1) escorting the consumer to an assigned eating area; (2) taking the consumer’s food and beverage order once seated; (3) delivering the consumer’s food and beverage order directly to the consumer; (4) delivering additional requested items to the consumer; and (5) delivering the check to the consumer at the assigned eating area. Accordingly, the ban does not apply to fast food restaurants, take out restaurants, and similar eateries where employees do not take the actions outlined above. The ban also does not apply to businesses that provide non-plastic straws made from materials such as paper, pasta, sugar cane, wood, or bamboo.

The provisions set forth in AB 1884 will be incorporated into California’s existing Retail Food Code, which establishes uniform health and sanitation standards for “retail food facilities,” as defined. The Retail Food Code also provides for the regulation of relevant facilities by California’s State Department of Public Health. First and second violations of these provisions will result in a Notice of Violation, and any subsequent violation will be punishable by a fine of $25 for each day the restaurant is in violation, not to exceed an annual total of $300.

AB 1884’s legislative history builds on California’s long-standing policy of regulating environmental impacts and developing concerns relating to plastics and microplastics. The Assembly noted in its Analysis several recent studies discussing the amount of plastic in the ocean, which currently stands at an estimated 1.8 trillion pieces of plastic and (rapidly) counting. The Assembly further considered the effects of plastics in the ocean, which degrade and eventually turn into microplastic due to ultraviolet radiation and other photo-degradation. According to the Assembly, the dangers of microplastics are not limited to aquatic life; through various processes, microplastics can make their way into the human food chain and water supply.

SB 1192 requires restaurants that sell a “children’s meal” with a beverage included to provide as the default beverage one of the following: water, sparkling water, unflavored milk, or a nondairy milk alternative. Similar to AB 1884, this law allows restaurants to sell alternative beverages upon request by the customer. However, unlike AB 1884, the provisions in SB 1192 apply to a much broader set of restaurants defined in the statute as “a retail food establishment that prepares, serves, and vends food directly to the consumer.” Thus, restaurants exempt from the single-use plastic straw ban, are still subject to this restriction if they offer a “children’s meal.” A “children’s meal” is defined as a combination of food items and a beverage, or a single food item and a beverage, sold together at a single price, primarily intended for consumption by a child.

A first violation of these provisions will result in a Notice of Violation. Subsequent violations will be punishable by fines; $250 for a second violation and $500 for a third violation.

The legislature wrote its findings into the text of the statute, which clearly outline its intent to curb child obesity. In fact, the legislature expressly stated, “it is the intent of the Legislature to support parents’ efforts to feed their children nutritiously by ensuring healthy beverages are the default options in children’s meals in restaurants.” This statement is based on the legislature’s findings that American children eat 25% of their calories at fast food and other restaurants outside of the home, and that children consume nearly twice as many calories when they eat out (compared to what they would eat at home).

SB 1192 was proposed as a result of the legislative findings on steadily increasing obesity rates. In particular, the California legislature found that from 1990 to 2016, the obesity rate in California increased by 250%, and that recent trends suggest a parallel increase in obesity among children. The text of the law states that, in 2009, 10.9% of children ages 0-5 and 12.2% of children ages 6-11 were overweight, and these numbers rose in 2015 to 13.7% of children ages 0-5 and 16% of children ages 6-11. The legislature further explained that obese children are at least twice as likely as nonobese children to become obese adults and are at a greater risk for adverse health conditions including, but not limited to the following: type 2 diabetes, heart disease, stroke, high blood pressure, high cholesterol, certain cancers, asthma, low self-esteem, depression, and more.

The law was also proposed as a solution to the “serious economic costs” associated with obesity-related health conditions. The legislature found that these costs amount to a medical burden of about $147 billion annually in the United States, accounting for almost 10% of all federal medical spending and borne primarily by taxpayers through government-sponsored vehicles like Medicare and Medicaid.

Takeaways

Given the nearing effective date for both AB 1884 and SB 1192, restaurants should review their existing practices to make sure they are in compliance with both laws prior to January 1st. Business owners should be mindful of these new laws to avoid fines, and more importantly, potential class action lawsuits. Fortunately, for many restaurants, implementation of compliant policies is likely to be quick and painless. At a minimum, restaurants should ensure that the default option for any kids’ meal is a permissible choice of either milk or water and that employees do not offer consumers plastic straws. Restaurants may also consider switching to plastic straw alternatives, e.g., paper, pasta, sugar cane, wood, or bamboo. And of course, as with any change in policy, restaurants subject to these provisions should seek counsel regarding compliance.

After recently hearing oral argument in Lamps Plus Inc. v. Varela, the United States Supreme Court is set to decide whether the Federal Arbitration Act forecloses a state-law interpretation of an arbitration agreement that would result in permitting class arbitration. Arbitration is a function of contract, and therefore parties may agree to aggregated arbitrations in theory, though many questioned their practicality given the principal aims of arbitration – efficiency, speed, and finality. The question before the Court, however, is whether state-law contract interpretative principles should control when arbitration agreements are silent on the issue of class arbitration.

In the underlying decision, the Ninth Circuit held that, under California law, when an arbitration agreement is silent on the issue of class arbitration, it may be ambiguous, and therefore subject to interpretation against the drafter, i.e., interpreted to permit class arbitration. Lamps Plus, however, argues that federal law demands clearer language before a party can be required to arbitrate on an aggregated basis.

This case follows the heels of Stolt-Nielsen, where the United States Supreme Court held that a party may not be compelled to submit to class arbitration under the Federal Arbitration Act, unless there is a contractual basis for concluding that the party agreed to do so. As a practical matter, the Court’s ruling in Lamps Plus Inc. v. Varela may have limited practical impact because of the ever-growing prevalence of class action waiver clauses in arbitration agreements, the use of which the Court has repeatedly affirmed as legally enforceable.

On Thursday, December 6, 2018 from 8:00 a.m. – 10:30 a.m. Central, the Chicago office of Seyfarth Shaw LLP will present “Seyfarth Legal Forum and CLE: 2018 Highlights And a Look to 2019″.

About the Program

Why should you be interested in joining us?  Because we will be providing our clients with a multidisciplinary overview of Legal Hot Button issues and Best Practices — featuring a panel of Seyfarth Chicago subject matter experts — with an eye toward preparing for the developments in the coming year.

The program will consist of an engaging 90 minute presentation with speakers from each of Seyfarth Chicago’s practice groups: Benefits, Corporate, Labor & Employment, Litigation and Real Estate, as well as an exciting presentation on the use of technology in law. This outstanding panel will address:

  • Biometric Information Privacy Act: What a long, strange year it’s been (and there’s more on the way!)
  • Legalize it: will Illinois go from medical to recreational marijuana and what would that mean to the real estate industry?
  • Affordable Care Act Update & Enforcement Activities, 401(k) Student Loan Repayment Arrangements, Socially Responsible Investments, and HIPAA Privacy & Security Audits
  • Mergers and Acquisitions: Current State of the Market and Post-Merger Integration Strategies
  • The “Cloud”…is in a building?: Data Centers are the newest, and maybe most important, type of real estate
  • Latest Developments in Pregnancy Accommodation (Illinois’ New Lactation Law and Nationwide Trends)
  • Litigation Hot Topics for 2019, including: Developments in trade secret and non-compete law; New laws affecting threshold issues such as forum selection and choice of law; Frontloaded discovery in federal court: Mandatory Initial Discovery Pilot Programs; Best practices for protecting the attorney-client privilege for in-house counsel
  • Welcome to the Future: It arrived yesterday – The intersection of Technology and Legal Services
  • Bots, bits and bytes… Artificial Intelligence and its leading role in recent legal projects

But that’s not all! We will then offer 30 minute break-out sessions on hot topics warranting a deeper dive that Companies are facing when looking at their legal compliance needs. The break-out sessions will address Privacy/Data Security, Managing in the #metoo Environment and Blockchain/Cryptocurrency in business. You will be able to attend the session most relevant to your business needs.

To register for both the panel presentation and the break-out session of your choice, please click here.

Speakers
Tracy Billows, Partner, Labor and Employment
Benjamin Conley,  Partner, Employee Benefits
Erin Dougherty Foley, Partner, Labor and Employment
Sara Eber Fowler, Associate, Labor and Employment
Jason Priebe, Partner, eDiscovery and Information Governance
Michael Rechtin, Partner, Real Estate
Suzanne Saxman, Partner, Corporate
Ryan Tilot, Associate, eDiscovery and Information Governance
Jordan Vick, Partner, Litigation
Kevin Woolf, Director, Seyfarth Lean Consulting

If you have any questions, please contact Fiona Carlon at fcarlon@seyfarth.com and reference this event.

Seyfarth Shaw LLP is an approved provider of Illinois Continuing Legal Education (CLE) credit. This seminar is approved for 2.0 hours of CLE credit CA, IL, NY, NJ and TX. CLE Credit is pending for GA and VA. HR professionals: please note that the HR Certification Institute accepts CLE credit toward recertification.

On September 19, 2017, Governor Jerry Brown signed into law AB 2632, which amends California’s slack fill law, and provides manufacturers, retailers, and consumers with greater clarity regarding the requirements for packaging.

Slack fill is the empty space between the actual container capacity and the volume of the product in the container (i.e., the air in a bag of potato chips). Manufacturers and retailers may include slack fill in their products, but the question of whether slack fill is permissible turns on whether the empty space is deemed “non-functional.” “Non-functional” slack fill is impermissible because it can mislead consumers into believing they are getting more product than the package actually contains.  Continue Reading CHIP CHIP HOORAY! California Adds Exemptions to Slack Fill Law

One of the latest efforts by a municipality to address public health concerns by requiring warnings on certain products may be revived depending on the outcome of a recent rehearing before an 11-judge en banc panel of the Ninth Circuit. The en banc panel is reconsidering its 2017 decision blocking on First Amendment grounds a San Francisco ordinance that would require soda and other sugary drink sellers to provide a prominent health warning on billboard and other outdoor advertising. Continue Reading Ninth Circuit Reconsidering San Francisco Soda Health Warning

2018 Amendment to California’s Auto-Renewal Law Adds New Requirements For Promotional Offers and Cancellation Mechanisms

Often cited as one of the most aggressive efforts to curb automatically recurring charges to consumers, California’s Auto-Renewal Law (Cal. Bus. & Prof. Code § 17600 et seq.) has become a popular tool for both plaintiff’s lawyers and government regulators. The California Auto-Renewal Law (“ARL”) applies, with limited exceptions, to any arrangement in which a paid subscription or purchase agreement is automatically renewed until the consumer cancels. Continue Reading Subscription Services, Beware

In light of the recent uptick in litigation involving the decade-old Illinois Biometric Information Privacy Act (BIPA), the Illinois state legislature is now considering amending the Act to allow for business efficiency and to bring the Act back to what some believe to be its original intent. Continue Reading BIPA: Exemptions May Be On The Horizon For The Decade-Old Statute

On July 6, 2018, Leandra English, through her attorney via Twitter, announced she would be resigning from the Consumer Financial Protection Bureau (“CFPB”). In so doing, Ms. English is also dropping her lawsuit against the CFPB in which she challenged Mick Mulvaney’s status as the acting director and claimed that she was the true acting director. Ms. English attributed her resignation decision to President Trump’s nomination of Kathy Kraninger, a White House aide, to be the CFPB’s director.

Ms. English was previously promoted by then-Director Richard Cordray before his departure the day after last November’s Thanksgiving holiday. Later, during that holiday weekend, Ms. English filed suit to block President Trump’s appointment of Mr. Mulvaney as the CFPB’s acting director. In her suit, Ms. English argued that she was the rightful successor to Director Cordray and challenged the President’s authority to appoint Mr. Mulvaney under the Federal Vacancies Reform Act of 1998 (“FVRA”). Ms. English pursued the lawsuit even though the U.S. Department of Justice’s Office of Legal Counsel had issued a memorandum that concluded the president had the authority to appoint a temporary replacement since the statute provided him with the “exclusive means” to do so unless there was a supervening statute that specified otherwise.

The U.S. District Court for the District of Columbia denied relief to Ms. English over Mr. Mulvaney’s appointment. She appealed that decision to the D.C. Circuit, which appears poised to reject her claim due, in part, to her lack of standing. If the Senate confirms Ms. Kraninger’s nomination, the confirmation will moot Ms. English’s lawsuit. Although Ms. English’s decision may end that lawsuit, the CFPB faces other challenges, and several courts have found the agency’s statutory structure unconstitutional. For additional information, see our prior alerts on this issue here.

Executive Summary and Takeaway. User agreements for websites and apps have become increasingly prevalent in recent years, and courts have had to adapt traditional rules of contract interpretation to the new digital frontier. On June 25, 2018, the First Circuit reversed a district court decision enforcing an arbitration clause contained in the terms of service for the defendant’s smartphone app, finding that those terms were not sufficiently “conspicuous” for a user to know that he or she had agreed to be bound by them. The First Circuit’s decision continues a trend of judicial hostility to arbitration clauses, and is notable for its scrutiny of the record below: the court studied in minute detail the design and content of the registration screen containing a hyperlink to the terms of service—including the size, shape, color, font, and location of the hyperlink—and concluded that the link to the terms of service failed “to grab the user’s attention.” Businesses with similar user agreements governed by Massachusetts law or that could potentially apply to Massachusetts consumers should review their websites and/or apps to ensure that their platforms disclose any terms of use in a clear and conspicuous manner in relation to the rest of the content on the screen.

Additional Background. To use the services provided by the defendant company (the “Company”) via its smartphone app, a customer must first register with the Company by creating an account. As part of the registration process, users are shown a screen that requests their payment information and notifies them that by creating an account they are agreeing to the Company’s Terms of Service and its Privacy Policy:

The words “Terms of Service & Privacy Policy” are in a clickable box that includes a hyperlink. Upon clicking on that hyperlink, the user is directed to a screen with two other links: one to the Terms of Service, and the other to the Privacy Policy. The user can view either document by clicking on the appropriate link.

Continue Reading First Circuit Invalidates Arbitration Clause in Mobil App User Agreement