The Learned Concierge - May 2024, Vol. 8

The Learned Concierge

Welcome to your monthly legal insights on the trends impacting the Retail, Hospitality, and Food & Beverage Industries.

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Bankruptcy

Beloved Clothing Retailer Files for Bankruptcy, Will Close about 95 Stores

Clothing retailer, Express Inc. is the latest major company to file for Chapter 11 bankruptcy.

The company announced early Monday morning that it has received a non-binding letter of intent from a consortium led by WHP Global, and participants including a wholly owned indirect subsidiary of Simon Property Group and Brookfield Properties for the potential sale of a substantial majority of the company’s retail stores and operations. Click here to learn more.

Cannabis

Cannabis Lounges Provide a New Lure for Las Vegas Visitors

Cannabis consumption lounges were legalized through AB341 in 2021, five years after voters authorized the recreational use of marijuana in 2016. While dispensaries flourished — there are more than 100 retail cannabis stores throughout the state, according to the Nevada Cannabis Compliance Board (CCB) — the lounges needed extra time to ensure they meet state regulations.

Dazed! and Smoke and Mirrors are the first two CCB-regulated lounges to open. Another 38 lounges are in various stages of consideration, making it unclear when more competition will arrive. Click here to learn more.

Corporate

Why Are So Many Home Retailers Going Private?

In the not-so-distant past, the holy grail for any company was to grow big enough to go public. Now it seems, especially for home furnishings retailers, the goal is just the opposite: Take the company private and escape the scrutiny—and often the scorn—of Wall Street and investors. Click here to learn the reasons behind the shift.

Cybersecurity & Privacy

Target Hit with IL BIPA Suit for Biometric Collection

A class action lawsuit was filed March 11 in Cook County Court alleging that the surveillance system used by Target in its stores improperly collects biometric data of customers without their knowledge. Similar suits have been settled against Facebook, Google, TikTok and Snapchat. This suit, though, moves the litigation to brick-and-mortar retailers and, in particular, Target’s surveillance system, encompassing 14 investigation centers as well as two forensic labs used to enhance video footage and analyze fingerprints, is accused of using improperly collecting biometric facial recognition information as well as fingerprints without obtaining consumer consent in violation of Illinois’ law.

MLB Stadiums Experimenting with Facial Recognition Tickets

Four Major League Baseball teams (Phillies, Giants, Astros, and Nationals) are rolling out facial recognition ticket technology this year. The technology would allow users to ditch paper or digital tickets when coming to the stadium and instead rely solely on their face to gain access to stadiums. The system allows users to avoid ticket lines altogether and to enter the stadium without having to stop for anyone as they head to their seats. For now, the program is optional and does not use an actual image of fan’s faces to operate (relying instead on a unique number generated as a result of analysis of the user’s image, and this data is not used for any purpose other than stadium access and is not being sold to any other companies. But concerns over privacy and abuse of this technology abound.

Lawmakers Unveil Sprawling Plan to Expand Online Privacy Protections

Key federal lawmakers Sunday unveiled a sweeping proposal that would for the first time give consumers broad rights to control how tech companies like Google, Meta and TikTok use their personal data, a major breakthrough in the decades-long fight to adopt national online privacy protections.  The issue has befuddled lawmakers despite near-universal agreement — in Silicon Valley and in Washington — on the need for federal standards to determine how much information companies can collect from consumers online. Click here to learn more about the new legislation.

The Monthly Rundown of All Things Cyber, Privacy, and Technology

Click here to read the Right to Know – April 2024, Volume 16

ESG (Environmental Social & Governance) Trends

The Environmental Cost of Misleading “Green” Labels 

In an age where sustainability is a mandate among consumers, the Animal Legal Defense Fund’s recent study sheds light on the pressing issue of greenwashing in product labeling, particularly within the food industry. As consumers gravitate towards products with minimal environmental footprints, the misuse of “climate-friendly” claims by companies to market their products leads to widespread confusion and, more critically, misleading consumers. Click here to learn more.

California Launches Unprecedented Targets to Achieve Carbon Neutrality by 2045

California on Monday released a first-of-its-kind plan to harness more than half of the state’s land to decrease carbon emissions.

Over the next two decades, the state will work to accomplish 81 nature-based goals that serve to help achieve California’s target of achieving carbon neutrality by 2045.

These solutions, which will strive to support the capacity of lands to absorb more carbon than they discharge, are part of Gov. Gavin Newsom’s (D) broader California Climate Commitment plan. To learn more about the plan, click here.

Food & Beverage News 

Splenda Class Action Claims Stevia Product Falsely Labeled as 100% Natural

Packaged food product company TC Heartland falsely labels its Splenda Naturals Stevia Zero Calorie Sweetener product as “100% natural,” a new Splenda class action lawsuit alleges.

Plaintiff Mete Karabas’ class action lawsuit claims the Splenda stevia product, in reality, contains the non-natural, synthetic ingredients stevia leaf extract and erythritol. Karabas argues in the stevia 100% natural class action that Heartland falsely markets the stevia product as “100% natural” in an attempt to appeal to health-conscious consumers. Click here to learn more about this class action claim.

Have a V8: Healthy Drink or Sugary Treat?

Campbell’s Soup Company is facing a class action in the District of New Jersey, Serrano v. Campbell Soup. The lawsuit claims that Campbell’s Soup engaged in deceptive marketing because V8 Splash is not a healthy drink, but instead, largely just sugar water. The suit seeks to enjoin further misleading labeling and marketing and seeks damages. Claims are presented under NJ’s Consumer Fraud Act, one of the strongest in the nation, California’s Consumer Legal Remedies Act, Unfair Competition Law, and the False Advertising Law, since the lead plaintiffs live in California. There are many other legal theories too.

Campbell’s Soup has been the target of other class actions focusing on false advertising claims, including those against its Kettle-branded potato chips as being “air fried” instead of fried in oil in a lawsuit filed in the District of Northern California (Hussain v. Campbell Soup). Click here to learn more.

International Trade  

US Trade Gap Widens to $68.9 Billion, Largest in Nearly a Year

The US trade deficit widened in February for a third month as the value of imports exceeded exports.  While the US trade balance has improved since 2022, the appetite for imported merchandise may stay elevated given resilient consumer spending and inventories that are more in line with sales. Moreover, recession risks in overseas markets are restraining demand for US exports. To learn more, click here.

Baltimore Port to Open Deeper Channel, Enabling Some Cargo Ships to Pass After Bridge Collapse

Officials in Baltimore plan to open a deeper channel for commercial ships to enter and leave the city’s port starting on Thursday — a significant step toward reopening the major maritime shipping hub that has remained closed to most traffic since the Francis Scott Key Bridge collapsed last month.

The new channel will be 35 feet (12 meters) deep, which is a substantial increase over the three other temporary channels established in recent weeks. It puts the cleanup effort slightly ahead of schedule, as officials previously said they hoped to open a channel of that depth by the end of April.

Five of the seven cargo ships that have been stuck in Baltimore’s harbor will be able to pass through the new channel, including one loaded car carrier, officials said Tuesday, marking one month since the deadly disaster. Other ships are scheduled to enter the port, which normally processes more cars and farm equipment than any other in the country. To learn more, click here.

Labor & Employment

Wisconsin Supreme Court Lets Ruling Stand That Declared Amazon Drivers to be Employees

The Wisconsin Supreme Court on Tuesday let stand a lower court ruling that declared some delivery drivers for Amazon were employees as the state argued, not independent contractors as the online retail giant contended.

The court, in a unanimous decision, said the appeal was “improvidently granted,” meaning the Supreme Court should not have reviewed the case. That decision dismissing the case, issued after the court heard oral arguments, leaves a 2023 Wisconsin appeals court ruling against Amazon in place.  To learn more about the ruling, click here.

Senate Rejects NLRB Joint Employer Rule as Biden Promises Veto

The Senate approved a measure to block the National Labor Relations Board’s joint employer rule, siding with business groups that argue it would be too costly in another blow to the rule after a federal court recently struck it down.

The Congressional Review Act resolution, which passed in a 50-48 vote Wednesday now heads to President Joe Biden’s desk for an expected veto.  Click here to learn more.

House Passes WIOA Revamp, Modernizing Workforce Development

The nation’s primary workforce development and training law was amended and reauthorized by lawmakers in the U.S. House of Representatives on April 9.

Originally enacted in 2014, the Workforce Innovation and Opportunity Act (WIOA) provides funding to state agencies to help job seekers access employment, education, training, and support services.

House lawmakers passed the bipartisan H.R.6655 A Stronger Workforce for America Act by a vote of 378-26, with another 26 not voting. The bill now goes to the Senate for consideration.

If enacted, the WIOA reauthorization would fund the system through 2030. The reauthorization aims to make improvements to WIOA to help close the national skills gap, provide more accountability in the system, and help U.S. workers obtain high-quality, well-paying jobs. Click here to learn more. 

FTC Announces Final Rule Banning Most Noncompetes in Employment Agreements

Jonathan Vegosen authored an article, “FTC Announces Final Rule Banning Most Noncompetes in Employment Agreements.”

On April 23, the Federal Trade Commission (“FTC”) announced a final rule (the “Final Rule”) banning most noncompete agreements in the United States. According to the FTC, “It is an unfair method of competition—and therefore a violation of section 5 [of the Federal Trade Commission Act] — for persons to, among other things, enter into noncompete clauses (‘noncompetes’) with workers on or after the final rule’s effective date.”

Under the Final Rule, the FTC has adopted a comprehensive ban on new noncompetes with all workers, including “senior executives.”  The Final Rule will not go into effect until 120 days after Federal Register publication (as opposed to after the FTC’s public announcement), which we expect to be sometime in August 2024. To learn more about the final rule, click here.

US Department of Labor (DOL) Issues Final Rule for Farmworkers

On April 26, 2024, the DOL announced its Final Rule “Improving Protections for Workers in Temporary Agricultural Employment is the United States.” The Final Rule extends protection to workers employed under the H-2A visa program to advocate for themselves and others and strengthens existing anti-retaliation provisions. It also prohibits employers from holding or confiscating workers’ passports, visas, or other immigration/governmental documents to prevent human trafficking and exploitation. The Final Rule will be effective on June 28, 2024. Final Rule: Improving Protections for Workers in Temporary Agricultural Employment in the United States.

The DOL Makes Changes to Overtime Rules

The Fair Labor Standards Act (FLSA) mandates that companies pay workers at a rate of 1.5 times their regular rate of pay for overtime work (more than 40 hours in a work week), unless that employee falls within an exception to the overtime rule under the executive, professional and administrative exemptions and meets a minimum salary threshold >Under the DOL’s new rule, the salary threshold will increase to from $35,568 to $43,888 on July 1, 2024 and to $56,656 on January 1, 2025. Starting July 1, 2027, the salary threshold will be updated every three years based on the then current wage data. Click here to learn more.

Predictions & Trends  

How Generative AI is Transforming the Shopping Experience

Generative AI, a cutting-edge technology that uses vast amounts of data to create new, original content, is revolutionizing the way we shop. From virtual try-on experiences to personalized product recommendations, retailers are harnessing the power of AI to create immersive, tailored shopping experiences that keep customers coming back for more. Click here to learn more.

Top 3 Spring/Summer Trends in Retail

In a few short years, retail will be a totally immersive and data-driven experience highlighted by personalized AI recommendations for health and home, smart carts to increase efficiency (and solve the traveling salesman’s dilemma in-store), and much more. Until all these technologies are made manifest, however, the 84.51 team recently released several trends to watch for this summer and beyond (84.51 is Kroger’s retail data science, insights, and media company). To learn more about these trends, click here.

Artificial Intelligence in Retail: 6 Use Cases and Examples

Artificial intelligence in retail is injecting a fresh dose of energy into the industry, helping retailers optimize their operations, explore new ways to engage with customers, and take CX to the next level.

We all know that the new frontier for retail success is personalization, but we face digitally savvy shoppers with constantly changing preferences who expect shopping experiences that are tailored, instant, and effortless. AI is the ultimate tool for delivering on these expectations, with its ability to intuitively understand customer desires and craft personalized services.

Yet, staying profitable is about more than creating experiences that grow loyalty. Retailers face tremendous challenges — geopolitical unrest, economic volatility, and the climate crisis, to name a few. While traditional tactics might be losing steam, AI lends a strategic lens, offering cutting-edge analytics and forecasting to help retailers adapt swiftly to market twists and turns.  To review the 6 ways retailers can use artificial intelligence, click here.

Not Everyone Needs a College Degree

Young people have been told for decades that achieving the American dream requires a college degree. But as student-loan debt soars to nearly $1.8 trillion, many are wondering whether that dream is dead. As leaders of two of the nation’s largest private-sector employers—representing about two million jobs—we know it isn’t. While a college degree is a worthwhile path to prosperity, it isn’t the only one.

Employers should value skills above degrees and recognize that workers can develop skills in many different ways. One is through hourly roles in retail, fast food, or customer service, which have led many into great careers. At Home Depot, 90% of store leaders started as hourly associates. At Walmart, 75% did. These leaders often manage hundreds of people and earn six-figure salaries, plus bonuses and stock grants. Some have college degrees; others don’t. Click here to learn more.

California Democrats Bring Down the Hammer on Crime – Or Try To

In our previous blog posts, we have written about and have been following the deleterious impact that shoplifting has on the retail sector. Now, the speaker of the California Assembly and fellow Democrats Tuesday will announce a package of bills targeting retail theft — all without touching a landmark criminal justice measure voters approved nearly a decade ago.

A wide-ranging proposal from Speaker Robert Rivas and Assembly member Rick Chavez Zbur would allow police to make arrests without witnessing the incident or footage of it, establish a new crime targeting “serial” theft and allow the value of stolen items from multiple retailers within 60 days to be aggregated into a grand theft, which can be a felony. To learn more about these bills, click here.

Real Estate  

Investor Sentiments and Trends in Retail Real Estate

Posting a year-over-year increase in transaction volumes, it appears the consecutive decline in retail real estate trades has turned the corner. After surviving a few years of negative headlines and threats of the much-hyped “retail apocalypse,” the story has largely shifted, as accumulated capital to acquire assets is actively deploying.

An abundance of capital continues to target retail assets in Denver, and, with limited opportunities, we are seeing that capital become more flexible and aggressive for the right deal. For example, Colorado Springs has become a viable market for some investors that may not have considered it five years ago. In our discussions with capital sources both locally and nationally, we hear consistent sentiments and trends across the sector that are worth noting. Click here to learn more about the transformation.

The Trends Reshaping Retail Real Estate in 2024

The retail real estate landscape underwent various changes in 2023 that will likely be maintained in 2024. It has been impacted by evolving consumer preferences and the supply of quality retail, changing the types of tenants driving demand and the types of centers supplying it. Through various conversations with industry and data experts, a few key trends rose to the top, including wellness as a notable growing tenant, neighborhood centers and streets as popular properties for leasing and investment, and a scarce supply fueling a competitive market. Click here to learn more.

Chicago Updates Mandatory Tenant Rights Summary

Thomas Ball and Chad Poznansky authored an article, “Chicago Updates Mandatory Tenant Rights Summary.”

Landlords owning Chicago properties in most circumstances are now required to provide tenants with the new summary of the Residential Landlord Tenant Ordinance (“RLTO”) posted by the city in March.  The summary can be reached at this link.  Landlords are required to attach the new summary to leases and provide copies when entering an oral lease agreement pursuant to Chicago Municipal Code Section 5-12-170.

Substantively, the new guide does not differ from the previous summary and is indeed treated as a “revision” as opposed to a new document, relying on the 2020 approval of the previous iteration by the City Council. Stylistically, the document moves to the front provisions related to rent increase notice timing and prohibitions on lockouts.

Retailers’ Shifting Real Estate Strategies Prompt More Questions for Downtowns

The challenges facing America’s downtowns are frequently linked to the staggering amount of empty office space sitting in towers. But another important segment of the downtown revitalization conversation is how to fill a growing amount of vacant retail space in cities across the country. To read more, click here.

Pennsylvania Lawmaker Hopes to Avoid ‘Retail Apocalypse’ with Mall Redevelopment Tax Abatement

A state lawmaker said he wants to avoid a “retail apocalypse” by encouraging developers to add other uses to increasingly struggling mall properties and shopping centers. Click here to read more.

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