Proposed Federal Privacy Legislation and the Year Ahead

Data securityIn a recent Corporate Counsel article, Jenner & Block Partner Jeffrey A. Atteberry examines the current federal privacy legislative proposals and the impact potential data privacy and cybersecurity legislation could have on businesses.  Mr. Atteberry explains that several recent high-profile data breaches and questions about how social media platforms share consumers’ personal data are contributing to increasing demand for passage of federal data privacy legislation.  He explains that the bills and proposals that have circulated in the last year are the best indicator of what lies ahead in terms of any potential federal privacy regime.  To help corporate counsel anticipate changes that may arise, Mr. Atteberry breaks down the current congressional proposals and provides key takeaways for in-house counsel.

To read the full article, please click here.


Jenner & Block’s Food and Beverage Practice Once Again Named a “Practice Group of the Year” by Law360

PGotY-B-Linkedin-Single-1400x800For the third consecutive year, Jenner & Block’s Food and Beverage Practice is recognized as a Law360 Practice Group of the Year for successfully leading a diverse array of matters for the titans of the food and beverage industry.  Law360 notes that the firm fended off claims against our clients that include household names such as Hain Celestial, Kraft and Mondelēz and led Snyder’s-Lance in its $6 billion sale to Campbell Soup.  In addition, Partner Dean N. Panos highlights that the group is handling cases in many areas, including commercial litigation, supplier, distributor, joint venture disputes, M&A, insurance coverage, antitrust and investigations and enforcement.  He adds that the practice is not “totally a litigation practice: it is transactional, litigation, and…a counseling practice.”  He explains that because of the group’s experience and knowledge, “we understand, as best as an outside counsel can, the business pressures our clients face and how these businesses are run so that we are being a net positive to their work environments.”

To read Law360’s profile, please click here.


Businesses Express Concerns with CCPA at Public Forum

ConsumerIn an article published by the Daily Journal, Jenner & Block Partner Jeffrey A. Atteberry discusses the recent public forum that was hosted by the California attorney general’s office regarding the California Consumer Privacy Act of 2018 (CCPA).  The forum was held in order to seek public comment on the CCPA as the attorney general moves forward with the initial phase of the rulemaking process.  Mr. Atteberry summarizes the concerns that businesses expressed at the forum, including a request to clarify the scope and meaning of the word “sell” as it relates to the sale of personal information, the need for guidance relating to the calculation of the revenue threshold in the CCPA, and the data security risks associated with the CCPA’s verification requirements, among others.

To read the full article, please click here.


En Banc Ninth Circuit Rejects Compelled-Commercial Speech Ordinance on First Amendment Grounds

By Gabriel K. Gillett

Beverage1Last week the en banc Ninth Circuit unanimously struck down San Francisco’s ordinance requiring warnings on ads for certain sugary beverages as a violation of the First Amendment.  In American Beverage Ass’n v. City and County of San Francisco, No. 16-16072, the court held that the Ordinance is an “unjustified or unduly burdensome disclosure requirement[] [that] might offend the First Amendment by chilling protected commercial speech.”  Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626, 651 (1985).  (Jenner & Block filed an amicus brief in the case, on behalf of the Retail Litigation Center.) 

Four of the eleven judges who participated joined three special concurrences, however, explaining why they believed the majority had erred even though it reached the right result.  Those three concurrences highlight a number of issues related to commercial speech for courts to address in the wake of the Supreme Court’s decision in National Institute of Family & Life Advocates v. Becerra (NIFLA), 138 S. Ct. 2361 (2018).   
 

San Francisco’s “Sugar-Sweetened Beverage” Ordinance

The American Beverage Association v. City and County of San Francisco centers on a 2015 ordinance that required ads for certain “Sugar-Sweetened Beverages” to include the following:  “WARNING: Drinking beverages with added sugar(s) contributes to obesity, diabetes, and tooth decay. This is a message from the City and County of San Francisco.”  Slip op. 8.

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What’s In Your Baby Powder? New York Proposes Stringent New Disclosure Requirements on Cleaning and Personal Care Products

By Alexander M. Smith

Personal-Care-ProductsLast week, New York Governor Andrew Cuomo announced the Consumer Right to Know Act (“Act”) as part of his proposed executive budget.  The Act would authorize the New York Department of Environmental Conservation, along with the New York Department of Health and the New York Department of State, to promulgate regulations requiring product manufacturers to disclose the presence of potentially hazardous substances on their product labeling.  Among other things, the Act would require these agencies to assess the feasibility of on-package labeling; develop regulations establishing a labeling requirement for designated products; develop a list of more than 1,000 substances that must be labeled; and identify the types of consumer products that will be subject to these new labeling requirements.  The Act would also extend the Department of Environmental Conservation’s disclosure requirements for household cleaning products to encompass all cleaning products sold in New York, and it would empower the Department of Health to require similar disclosures for personal care products like shampoo, deodorant, or baby powder.  Needless to say, these disclosure requirements would be among the most stringent—if not the most stringent—in the United States. 

Governor Cuomo’s announcement is available here.  We will keep our readers updated on the progress of Governor Cuomo’s proposal. 


Top 10 of 2018: The Best Consumer Law Round-Up Posts of the Year

2018 was another busy year for the Consumer Law Round-Up. Launched by the firm’s Consumer Law Practice, the blog updates readers on key developments within consumer law and provides insights that are relevant to companies and individuals that may be affected by the ever-increasing patchwork of federal and state consumer protection statutes. In 2018, the Consumer Law Round-Up featured posts by approximately 20 different authors on a wide array of topics. 

Below is a list of the Top 10 most popular posts of 2018. 


#1 SDNY Rules CFPB Unconstitutional, Creating Split of Authority and Raising New Questions

Since its inception, the Consumer Financial Protection Bureau (CFPB) has faced controversy over its structure as an independent agency headed by a single director who can be removed by the President only for cause. Critics have invoked the unitary executive theory to argue that the Constitution permits an agency to enjoy independence from at-will termination by the President only if the agency is headed by multiple commissioners, directors, or board members...Read more

#2 SEC Take on Tokens Clarifies Some Crypto Community Quandaries

In a June 14 speech, William Hinman, the SEC’s Director of the Division of Corporate Finance, began to place additional definition around the raging debate over whether digital assets, including tokens, are securities. Until that speech, much commentary had focused on the repeat statements by SEC officials that digital assets distributed in initial coin offerings (ICOs) are almost always securities in the SEC’s view, with the possible exception of widely disseminated cryptocurrencies like Bitcoin...Read more

#3 The Supreme Court Reaffirms the Reach and Force of the Federal Arbitration Act, This Time in Employment Cases

On May 21, 2018, the Supreme Court issued its long-awaited decision in the consolidated cases Epic Systems Corp. v. Lewis, No. 16-285; Ernst & Young LLP v. Morris, No. 16-300; and NLRB v. Murphy Oil USA, No. 16-307. In a 5-4 opinion by Justice Gorsuch, the Court held that courts must enforce arbitration agreements requiring employees to bring employment-related claims in individualized arbitration proceedings, and barring them from pursuing those claims...Read more

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Crypto Winter Continues With Ongoing Enforcement

   

By Michael W. Ross, Andrew J. Lichtman and Emily A. Bruemmer

Crypto-winterSeveral recent “first of kind” enforcement proceedings continue the flurry of enforcement activity by regulators.  In two settled proceedings, the Securities and Exchange Commission (SEC) brought two cases for failure to register digital tokens as securities in connection with initial coin offerings (ICOs), without allegations of fraud.  With such enforcement actions now commonplace, a “crypto winter” has clearly set in.  In another development, a federal court recently issued the first opinion concluding that the SEC had failed to establish that a digital asset issued in connection with an ICO was a “security” under the federal securities laws, underscoring that digital assets will not be subject to a one-size-fits-all analysis.

As for the two settled charges, according to the SEC’s orders, Paragon Coin, Inc.[1] and AirFox[2] launched their ICOs in 2017.  Paragon is an online company that was established to implement blockchain technology in the cannabis industry, as well as to work towards legalization of cannabis.  Through its ICO, Paragon raised approximately $12 million in digital assets to develop and expand its business.  As for AirFox, it sells mobile technology intended to allow customers to earn free or discounted data by watching advertisements on their phones.  AirFox raised approximately $15 million in its ICO to help expand its business overseas.  Neither Paragon nor AirFox registered their ICOs.

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Blockchain, Antitrust and Standard Setting

BlockchainIn an article for Fintech Weekly, Partner Michael W. Ross explains that, as companies have experimented with blockchain and other distributed ledger technologies, commentators have highlighted antitrust concerns.  Mr. Ross suggests areas to watch as the technology expands, particularly at the International Standards Organization and the Federal Trade Commission.  The article also notes the possibility for developing blockchain standards that may foster efficiency, compatibility and interoperability of diverse technologies through the adoption of “FRAND licensing” concepts.

To read the full article, please click here.


SDNY Extends RD Legal Funding Dismissal to the NYAG; CFPB Appeals

By Nicolas G. Keller

new updateOn September 12, 2018, Judge Loretta Preska of the District Court for the Southern District of New York dismissed the New York State Attorney General’s (“NYAG”) suit against RD Legal Funding, LLC, and related entities (collectively, “RD Entities”)[1] for allegedly defrauding individuals awaiting payouts from two separate funds—the September 11th Victim Compensation Fund of 2011 (“VCF”) and the fund arising out of the NFL Concussion Litigation Settlement Agreement (“NFL Fund”).[2] The Court’s ruling demonstrates the potentially far-reaching implications of the ongoing debate over the constitutionality of the CFPB’s structure in terms of not only the CFPB’s enforcement actions but also those of state actors. 

The lawsuit, commenced jointly by the NYAG and the Consumer Financial Protection Bureau (“CFPB”) in February 2017, alleges that the defendants’ transactions with individuals that the defendants characterized as “purchases” or “assignments” of VCF or NFL Fund payouts are substantively high-interest loans.[3] The CFPB and the NYAG assert that the alleged loans are usurious and violate provisions of the Consumer Financial Protection Act (“CFPA”)—also known as Title X of the Dodd-Frank Act—and various New York state fraud and usury laws.[4]

Nearly three months ago, on June 21, the Court dismissed the CFPB from the suit.[5] The gist of the Court’s holding, which we wrote more about here, was that the CFPB’s structure as an independent agency headed by a single director who can be removed by the President only for cause violates separation of powers.[6]  And the Court ruled that the remedy for this constitutional infirmity is to strike the CFPA in its entirety, thereby leaving the CFPB without the authority to bring suit.[7]  The Court also noted that:

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October Term 2018 Preview: The Supreme Court’s Class Action Docket

SCOTUSBy Alexander M. Smith

The Supreme Court’s next term kicks off next week, when the court re-convenes for its first oral argument since last April.  The docket currently features four cases of interest to the consumer law and class action bar:

  • In Lamps Plus, Inc. v. Varela, a divided panel of the Ninth Circuit construed a provision stating that “arbitration shall be in lieu of any and all lawsuits or other civil legal proceedings relating to my employment” to authorize class arbitration, even though the plaintiff’s employment agreement with Lamps Plus did not expressly authorize class-wide arbitration.  The Supreme Court granted certiorari to determine whether the Federal Arbitration Act “forecloses a state-law interpretation of an arbitration agreement that would authorize class arbitration based solely on general language commonly used in arbitration agreements.” 
  • In Frank v. Gaos, the district court authorized a class-wide settlement of a lawsuit alleging that Google violated federal and state privacy laws by disclosing users’ search terms to third parties, even though the settlement consisted only of cy pres relief and attorneys' fees.  A divided panel of the Ninth Circuit affirmed, rejecting the objectors’ arguments that (1) a settlement that provided no direct relief to the class was inappropriate and (2) that the cy pres beneficiaries, which had previously received settlement funds from Google and which were affiliated with the law schools attended by class counsel, were improper.  The Supreme Court granted certiorari to determine “[w]hether, or in what circumstances, a cy pres award of class action proceeds that provides no direct relief to class members supports class certification and comports with the requirement that a settlement binding class members must be ‘fair, reasonable, and adequate.’”

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