different areas so they can help work with
counsel across multiple different companies,” she says.
There are several cases for the industry to address. Plaintiffs are going after
retailers for violating the Telephone
Consumer Protection Act if they repeatedly contact a consumer on a phone
number that previously belonged to
someone else. In an unrelated series of
suits, plaintiffs firms are bringing cases
against retailers under New Jersey’s
Truth-in-Consumer Contract, Warranty
and Notice Act, citing violations in company terms and conditions that can lead
to costly damages.
Lawyers who specialize in intellectual
property, meanwhile, will be tracking the
fallout from a recent U.S. Supreme Court
case, Star Athletica v. Varsity Brands, which
examined whether certain designs, including zigzags and stripes, used on cheerleading uniforms could be copyrighted. The
U.S. Supreme Court ruled in March that
the designs are largely eligible for copyright protection. IP specialists will now be
watching to see whether the ruling makes
it more difficult for knock-off manufacturers to sell their products.
To investigate the decision’s impact,
attorneys can “look to the filings in the
copyright office to see if fashion brands
are increasing the number of filings
related to the designs embodied in their
clothing products and the filings in federal court to see if there’s an uptick in
copyright claims brought against parties
responsible for selling knock-off clothing
products,” says Howard Hogan, a Washington, D.C.-based partner at Gibson,
Dunn & Crutcher and co-chair of the
firm’s fashion, retail and consumer products group.
It’s also clear that more retailers
likely will have to tap outside counsel
to assist with bankruptcy cases. While
some companies may re-emerge from
bankruptcy with a smaller physical
presence and a greater focus on online
sales, others may disappear altogether,
as chains like Sports Authority and The
Limited have done.
“Overall, you’re going to see bankruptcies continue and you’re going to see
a contraction in the industry,” says Brian
Shaw, a member at Chicago bankruptcy
boutique Shaw Fishman Glantz & Tow-bin. “That contraction is going to include
a decrease in the number of players and a
decrease in the number of physical outposts for the players that survive this sort
of culling.”
THE REGULATORY FRAMEWORK
David French, senior vice president for
government relations at the National
Retail Federation (NRF), a trade association, says that one of the biggest policy
issues facing retailers at the moment is
tax reform—and the possible passage of
a border adjustment tax, which would
impose an additional tax on imported
goods. The provision is backed by some
leading House Republicans, though it’s
not yet clear whether the White House
would ultimately support such a measure.
The retail trade groups also are moni-
toring several Obama-era regulations
that they hope the Trump administra-
tion will reverse. One of the most critical
is the Department of Labor’s overtime
rule, finalized in May 2016, which would
expand the number of workers required to
be paid overtime.
U.S. District Judge Amos Mazzant of
the Eastern District of Texas granted a
preliminary injunction against the rule
last November—just days before it was
set to go into effect on Dec. 1—siding
with critics who said that the rule overstepped the agency’s authority. Dozens of
business associations, including the NRF,
and 21 states filed the suit in September.
“We expect that we will have a permanent injunction against the Obama
administration’s overtime rule and we’ll
be working with the Department of
Labor on next steps for this rule in the
future,” French says.
Trump’s Labor Secretary Alexander
Acosta, approved by the Senate in late
April, said at his confirmation hearing a
month earlier that he had concerns about
the rule, though he expressed some support for raising the salary threshold for
overtime pay.
Experts say that retailers are also contending with what they view as onerous
rules when it comes to treating certain
products as hazardous waste, especially in
California.
“With respect to waste handling, retailers are now facing regulatory pressure and
investigations using laws that were really
intended to go after chemical manufacturers and others who handle really toxic substances,” says Morgan, Lewis & Bockius
partner Gregory Parks, who is based in
Philadelphia and serves as co-chair of the
firm’s retail practice.
For major retailers like Wal-Mart,
meeting heightened requirements for the
disposal of baby shampoo and lip balm
can be costly and time-consuming, Jorgensen says. “If you think about the volume of Wal-Mart,” he says, “how many
bottles of shampoo we sell and how many
lip balms we sell and incinerating all the
ones that have something go wrong with
them—it’s a major issue for us and causes
a lot of difficulty.”
“Overall, you’re going to see bankruptcies continue and
you’re going to see a contraction in the industry,” says
Brian Shaw, a bankruptcy lawyer in Chicago.
industry insights
RILA’s Deborah White says GCs must become
strategic advisers to their companies.