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December 2016

2016 Top 10: The Best Consumer Law Round-Up Posts of Year

It's been a 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 2016, the Consumer Law Round-Up featured posts by approximately 20 different authors for a total of nearly 100 posts for the year. 

Below is a list of the Top 10 most popular posts of 2016. 

#1 What’s That Trump University Lawsuit About Anyway?

On Super Tuesday, the news regarding Republican Presidential Candidate Donald J. Trump was not limited to the campaign trail.  On March 1, 2016, the New York Supreme Court’s Appellate Division reinstated claims in a 2013 suit filed by Attorney General Eric T. Schneiderman alleging that Trump University (“TU”) “through various fraudulent practices,[] intentionally misled more than 5,000 students nationwide...Read more

#2 Ninth Circuit Hears Oral Argument in Two Significant Consumer Class Action Appeals

On Monday September 12, the Ninth Circuit heard oral arguments in two consumer class action appeals – Brazil v. Dole and Briseno v. ConAgra – that could significantly impact California consumer protection law...Read more

#3 New Federal Trade Secrets Legislation Passed

On April 27, the U.S. House of Representatives passed the Defend Trade Secrets Act of 2016, the much-debated federal legislation that provides a civil right of action under the existing Economic Espionage Act of 1996 to prevent or redress a theft of trade secrets...Read more

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DTSC Seeks Comments on New Safer Consumer Products Guidance

6a01310fa9d1ee970c01bb096080e5970dBy E. Lynn Grayson

The California Department of Toxic Substances Control (DTSC) has issued draft guidance titled Alternatives Analysis Guide and is seeking comments through January 20, 2017. California’s Safer Consumer Products (SCP) Program challenges product designers and manufacturers to reduce toxic chemicals in their products. According to DTSC, the SCP regulations establish innovative approaches for responsible entities to identify, evaluate, and adopt better alternatives. The SCP approach requires an Alternatives Analysis (AA) that considers important impacts throughout the product’s life cycle and follows up with specific actions to make the product safer. DTSC prepared the Draft Alternatives Analysis Guide to help responsible entities conduct an AA to meet the regulatory requirements. Public comments are specifically requested to provide DTSC with insight on the clarity and usefulness of the Draft Alternatives Analysis Guide.

DTSC’s SCP Program regulations took effect October 1, 2013 and are being implemented based on the various regulatory requirements. The goals of the program are to: 1) reduce toxic chemicals in consumer products; 2) create new business opportunities in the emerging safer consumer products industry; and 3) help consumer and businesses identify what is in the products they buy for their families and customers.

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CFPB Continues to Pursue Investigations Amid Questions About its Future

IStock_000003205885SmallBy Kelly M. Morrison

Despite speculation that its powers may be watered down under the incoming administration, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) is showing no signs of dialing back its investigative activities at this time.  Within the past few weeks, the CFPB instituted federal actions to enforce civil investigative demands (“CIDs”) served on Harbour Portfolio Advisers, LLC (“Harbour”), National Asset Advisors, LLC (“NAA”), National Asset Mortgage LLC (“NAM”), and Zero Parallel, LLC (“Zero Parallel”).

On November 29, the CFPB sued in the Eastern District of Michigan to compel Harbour, NAA, and NAM to respond to CIDs issued as part of an investigation into potential violations of the Truth in Lending Act and other consumer finance laws.  The CFPB petition alleges that Harbour “has purchased foreclosed properties in bulk and has resold them to consumers through agreements for deed, also known as land contracts,” with marketing and loan-servicing support from NAA and NAM.   Two days later, the Bureau filed a petition to enforce a CID against Zero Parallel in the Central District of California.  The petition alleges that Zero Parallel, which allegedly “obtains consumer-loan applications from online advertisers and then sells the loan applications to purchasers that include payday and other small-dollar lenders,” rescinded a prior agreement to produce materials requested by the CFPB as part of an investigation into whether payday loans violated the Consumer Financial Protection Act of 2010.  

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E-Warranty Act Brings Warranty Disclosures into the Digital Era

Network_iStock_000005265503LargeBy Benjamin R. Mulcahy

As a result of the recently-enacted E-Warranty Act (Public Law 114-51 [Sept 24, 2015), 16 CFR Parts 701 and 702), companies that issue written consumer warranties can now migrate their warranty disclosures from the paper formats that have been used in the past to the Internet. 

The Magnuson-Moss Warranty Act (15 U.S.C. § 2301 – 2312) (the “MMWA”) and the implementing regulations promulgated pursuant to the MMWA by the Federal Trade Commission (“FTC”) apply to written warranties on the sale of consumer products and establish two disclosure requirements: (1) the “Pre-Sale Availability Rule,” which requires warrantors and sellers of consumer products to provide warranty terms to consumers before the sale of the warranted product; and (2) the “Disclosure Rule,” which provides that (i) written warranties on consumer products costing more than $15.00 be disclosed in simple, concise and easy to understand language in a single document, and (ii) any limitations on the duration of implied warranties must appear “on the face of the warranty.”

The E-Warranty Act amends the MMWA to allow warranty providers to comply with the Pre-Sale Availability Rule and the Disclosure Rule under certain circumstances by posting warranty terms on the Internet.  The E-Warranty Act requires that warrantors who choose to disseminate their warranty terms online must, in a clear and conspicuous manner: (1) provide consumers with the URL where the specific product’s warranty terms can be reviewed; and (2) provide a phone number or mailing address or other non-Internet based method that consumers and sellers can use to request a written copy of the full warranty terms promptly and free of charge.

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The New Frontier of Investor Lawsuits and Private Company D&O Insurance Coverage: Theranos and Other “Unicorn” Lawsuits

WHt Binary_iStock_000004319108LargeBy Matthew L. Jacobs

On October 10, 2016, Partner Investments, L.P. and two related entities filed a lawsuit under seal in the Delaware Chancery Court against Theranos, Inc., Elizabeth Holmes, its founder; and Ramesh Balwini, the former Chief Operating Officer. Partner Investments is a San Francisco-based hedge fund that invests in health care and technology companies, and the lawsuit alleges that it invested $96.1 million in Theranos in February 2014 after a series of meetings between fund personnel and the individual defendants that started in December 2013.  On November 8, 2016, Walgreen Company, a Walgreen Boots Alliance Inc. unit,  filed a similar, $140 million, lawsuit against Theranos alleging that it also was induced to invest funds through misrepresentations about the state of Theranos’ technology and operations, even when the two entities were working together. The lawsuit was also filed under seal in a Delaware federal court. See Walgreens Co. v. Theranos Inc., No. 16-cv-1040 (D. Del. filed Nov. 8, 2016).

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