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.

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

On Monday, the U.S. Supreme Court issued its highly-anticipated opinion in  DirecTV, Inc. v. Imburgia et al., 577 U.S. ___ (2015), which reaffirmed its ruling in AT&T Mobility LLC v. Concepcion, 56 U.S. 333 (2011), dealing yet another blow to California Courts’ attempts to invalidate class action waivers.

Background

The plaintiffs in Imburgia filed their lawsuit in 2008, arguing that class action arbitration waivers were per se unenforceable in California under Discover Bank v. Super. Ct., 36 Cal. 4th 148, 162-163 (2005).  Under the Discover Bank rule, California courts were free to find such provisions, when contained consumer contracts of adhesion, unconscionable and to rule that they should not be enforced. Id.

The DirecTV service agreement at issue in Imburgia provided for arbitration of customer disputes and included a class action waiver but also stated that “[i]f . . . the law of your state would find this agreement to dispense with class arbitration procedures unenforceable, then this entire [arbitration waiver] is unenforceable.”  While the Imburgia case was pending, the Supreme Court issued its decision in Concepcion, which ruled that the Discover Bank rule was preempted by the Federal Arbitration Act (“FAA”).  Despite Concepcion, the California Court of Appeals still found the class action waiver provision in the DirecTV service agreement unenforceable under the theory that the parties had chosen the law of California to govern at the time of drafting and, absent federal preemption, California law would not enforce such provisions.

Opinion

Justice Breyer delivered the opinion of the Court, which began with this “elementary” lesson:  “The Federal Arbitration Act is the law of the United States, and Concepcion is an authoritative interpretation of that Act.  Consequently, the judges of every State must follow it.”  (Slip Op. at 5). Unsurprisingly, the Supreme Court went on to rule that the California Court’s failure to do so indicated that it was not placing arbitration contracts “on equal footing with other contracts” and had therefore run afoul of the FAA.  (Id. at 10-11).

Justice Ginsburg and Justice Sotomayor dissented, opining that, given the specific language of the service agreement and the fact that it was drafted before Concepcion, the state court was free to interpret the contract as it had, and to find the class action arbitration waiver unenforceable.  (See Ginsburg Dissent at 3).  They also lamented that the Court’s recent decisions in Concepcion and Italian Colors had effectively deprived “consumers’ rights to seek redress for losses” and “insulated powerful economic interests.”  (Id. at 10-11).

Implications

Imburgia eliminates any doubt as to the enforceability of class action arbitration waivers.  Retailers and service providers wishing to avoid class action claims are encouraged to include them in their contracts and to be aggressive in enforcing them in litigation, even in the face of arguably ambiguous language.

We are pleased to let you know that the webinar “Avoiding Liability and Limiting Exposure Under California’s Call Recording and Monitoring Privacy Laws” is now available as a podcast and webinar recording.

In Seyfarth’s first installment of its 2014 Class Action Webinar series, attorneys discussed how plaintiffs’ attorneys are increasingly filing class actions in California seeking to apply the state’s privacy laws to routine telephone communications between businesses and their customers.

As a conclusion to this well-received webinar, we compiled a list of key takeaway points, which are listed below.

  • CIPA applies to both in-bound and outbound calls. In some cases, companies may have compliant in-bound call procedures with appropriate disclaimers but lack such procedures with respect to outbound calls. Prudent companies will ensure that they have appropriate disclaimers for both in-bound and outbound. They should also look for opportunities to notify their customers of monitoring and call recording for quality assurance in other communications with customers, such as billing and on their website.
  • The use of a standard, nonbypassable disclaimer advising callers that their calls may be monitored or recorded is imperative.  Be sure callers hear the disclaimer before any recording or monitoring commences, ensure that the disclaimer plays for each call your company places or receives, and provide multilingual versions of the disclaimer where appropriate.  Consider using the sample language included in the presentation materials.
  • The recent trend is for consumer plaintiffs to bring CIPA claims under Section 632.7 as opposed to Section 632 to avoid the “confidential communication” requirement that may likely involve individualized inquiries that impede the ability to obtain class certification.

On Thursday, May 29, 2014 at 12:00 p.m. Central, Robert Milligan, Joseph Marra and Joshua Salinas will present the first installment of Seyfarth’s 2014 Class Action Webinar series, our class action attorneys will discuss how plaintiffs’ attorneys are increasingly filing class actions in California seeking to apply the state’s privacy laws to routine telephone communications between businesses and their customers.

Companies located outside of California are not immune: These privacy laws arguably encompass any call made to or received by someone located in California. If your company records or monitors inbound or outbound telephone calls with customers or employees, you need to attend this webinar.

California privacy laws seemingly couple stringent compliance requirements with staggering liability damages. Aggregating damages in a class action context can quickly place exposure figures in the millions of dollars for even innocent but alleged technical violations of the statutes. Recent case law has influenced the attractiveness of these claims, and companies should take proactive measures to protect themselves against these suits now. The Seyfarth panel will specifically address the following topics:

  • Understanding the California Invasion of Privacy Act (“CIPA”) and why these claims are so enticing for plaintiffs’ attorneys, including Penal Code Section 632 and 632.7 claims; • Recent case law that has strengthened plaintiff’s abilities to bring CIPA claims as well as a discussion of typical defenses to such claims;
  • Recent case law that has strengthened companies’ abilities to defend against CIPA class actions;
  • Specific steps a company should take to protect itself against such suits; and
  • Additional mechanisms for limiting exposure and avoid liability under CIPA.

There is no cost to attend this webinar, however, registration is required.