Owner: CPG & Retailer Litigation Blog URL:cpglitigation.blogspot.com Join Date: Mon, 10 Dec 2007 17:27:48 -0600 Rating:0 Site Description: Addressing litigation-related issues relevant to Consumer Packaged Goods manufacturers ("CPGs"), retailers, and CPG advertisers. Issues include antitrust, securities, advertising, and commercial litigation. Site statistics:Click here
State Resale Price Maintenance Laws and Leegin 2008-03-02 05:57:00 State laws governing resale price maintenance have gained in importance after last year's Supreme Court's decision in Leegin Creative Leather Products v. PSKS (.pdf), which weakened the applicable federal standard. Leegin applied a rule of reason analysis to vertical price restraints rather than a per se rule. Chart of State RPM Laws - A useful chart that will assist in understanding applicable state laws governing resale price maintenance is available (.pdf) from the ABA's most recent Antitrust magazine, as mentioned by the Antitrust & Competition Policy Blog. The chart includes not only the numerous applicable state statutes, but also the varying case law interpreting the statutes.Sources of Confusion - For those not familiar with the controversy surrounding resale price maintenance, Read more:State
, Resale
, Maintenance
Attorneys in Coke Case May be Disqualified for Paying for Stolen Documents in Channel-Stuffing Lawsuit 2008-02-29 09:16:00 The WSJ Law Blog and Fortune's Legal Pad reported that the law firm Coughlin Stoia Geller Rudman & Robbins may be barred from serving as class counsel because it had purchased stolen company documents from a former Coke executive.After two Coke executives approached the firm with an offer of providing evidence, Coughlin Stoia hired them as consultants, one of whom then gave the firm over 3,000 documents taken from the company, including many marked confidential.The firm filed a class-action suit against Coca-Cola on behalf of investors for allegedly inflated reported revenues through channel-stuffing. Carpenters Health & Welfare Fund v. Coca-Cola Co., No. 00-2838 (N.D. Ga.). A special master recommended that a motion for class certification be denied without prejudice so that new c Read more:Attorneys
, Documents
, Channel
, Lawsuit
FTC Chair to Become P&G VP-General Counsel 2008-02-29 08:50:00 FTC Chair
woman Debora Platt Majoras will resign from the FTC and will join Procter & Gamble as Vice-President GeneralCounsel
, its number two attorney. P&G's current general counsel, James Johnson, earlier this month announced his plans to retire in June. The company named deputy general counsel Steven Jemison, 56, as his successor. There is speculation that Majoras, who is over ten years younger, will be in line to succeed Jemison when he retires. Majoras will primarily be responsible for the company's global antitrust and litigation departments. P&G is the top-spending advertiser in the country, according to Nielsen, and is involved in a number of big cases. For example, P&G's $57 billion acquisition of Gillette was allowed by the FTC in 2005, though the FTC required P&a Read more:Become
General Counsel in Food/Beverage Industry the Highest Paid, According to Survey 2008-02-25 08:33:00 In its March issue, Inside Counsel
magazine published the results of recent surveys of in-house attorney compensation. The survey results included salaries of Chief Legal Officers and General
Counsel pay by industry. The Food/Beverage
and Retail Trade industries led the pack with median total cash compensation exceeding $500,000. The results also included a summary of Median Total Cash Compensation for in-house lawyers generally, which ranged from $208,100 for the Technology industry, to $230,300 for the Biotech, Pharma & Medical Devices industry. Of potential interest to readers of this blog, median total cash compensation for other industries included: Consumer Products $222,900 Food & Beverages $217,900 While corporate law departments are concerned with the rising salaries of as
Investigation of Chocolate Price Fixing Goes Global 2008-02-23 09:45:00 An investigation into price-fixing by chocolate manufacturers has been expanded to Europe.I originally posted on the investigation after it was revealed that Canadian authorities were investigating chocolate pricing, and that the U.S. DOJ had followed suit. More recently, it was reported that Germany's Federal Cartel Office raided the offices of several chocolate makers. In addition, the European Commission has requested information on pricing practices of chocolate makers, as reported by the AP. In its annual report, Hershey's states that it is the target of over 50 class action lawsuits in the U.S. and 3 in Canada. Hershey's reported that several other chocolate confectionaries are co-defendants. Hershey's further stated that: "While it is not feasible to predict the final outcome of the Read more:Chocolate
, Global
Insignia Provides Update on Legal Proceedings 2008-02-22 07:24:00 Insignia Systems reported earnings on February 20 and provided an update on legal proceedings. Insignia's President and CEO, Scott Drill, was optimistic about the lawsuit against News America Marketing, stating: "On the legal front, the schedule now calls for us to be trial ready December 12, 2008. The slippage in the schedule was due primarily to the sheer volume of documents being exchanged. As has been the case from the start, we continue to be optimistic about the prospects for our affirmative claims and our defense of the counterclaims. Legal expense for the fourth quarter of 2007 was $495,000 versus $310,000 in the fourth quarter of 2006."Insignia reported net income for the quarter ended December 31, 2007 of $0.15 a share ($0.14 per fully diluted share), compared to one cent more fo Read more:Update
Shareholder Lawsuit Forces Company to Reregister Its Stock 2008-02-19 09:34:00 In response to a shareholder lawsuit, off-price retail clothing company Syms Corp announced that it has decided to reverse its recent decision to move its stock from the major exchanges to the pink sheets.Syms original decision was driven by a desire to reduce costs related to Sarbanes Oxley compliance. In reversing its decision, Syms' management also cited a desire to reduce costs – this time from litigation related to the delisting decision. The company is now seeking a listing on the Nasdaq exchange.While management likely had the shareholders' best interests at heart in deciding to delist, and it was likely protected from a legal standpoint by the Business Judgment Rule, the decision turned out to be a strategic mistake.Related Post: Retail Clothing Company Sued for Decision to Delis Read more:Lawsuit
, Forces
, Stock
Developing Legally-Compliant Trade Promotion Management Programs 2008-02-12 08:54:00 How can a manufacturer design a legally-compliant trade program that rewards those retailers that deliver the best profit per trade dollar? That's a question that Daniel Kotchen, a contributor to this site, addressed in an article he recently wrote for Forum magazine. Specifically, he addressed the legality of:Conditioning trade funds on minimum retail price points consistent with the resale price maintenance standards of Leegin Creative Leather Products v. PSKS; andAwarding trade funds on the basis of profitability consistent with the Robinson-Patman Act. The full article is available here. Read more:Compliant
, Trade
, Management
, Programs
Court Approves Consent Decree Between Minnesota AG and News America Marketing 2008-02-10 07:04:00 Last week, the U.S. District Court
in Minnesota
approved a consent decree entered into between the Minnesota Attorney General and News AmericaMarketing
. The Minnesota AG had intervened in the ongoing lawsuit between Insignia Systems and News America in December 2006, alleging that News America had engaged in deceptive trade practices. I previously discussed the lawsuit here. Under the terms of the consent decree, the State agreed to release its claims without an admission of liability from News America. In return, News America agreed that it would not make any further representation to any CPG or other customer regarding Insignia's compliance rate through December 31, 2003, falsely disparage its competitors, or violate the Minnesota Deceptive Trade Practices Act, Section 325D.44. News Ame Read more:Consent
Update: Valassis v. News America Marketing Lawsuit Over FSIs 2008-02-08 21:04:00 I posted earlier on Valassis' $1.5 billion dollar lawsuit against News AmericaMarketing
, which had been scheduled for trial this month. As expected, however, trial has been postponed -- likely until early 2009. A status conference was held on January 23, 2008 before Judge John Feikens. In a status report filed by News America the day before the status conference, News America indicated that it had produced 374,404 documents, while Valassis had produced 107,479. While this is a lot of documents, such voluminous discovery is increasingly common in high-stakes antitrust litigation, and attorneys should have systems in place to effectively cope with such a volume of discovery, including suitable document review software and tools, as well as sufficient staff for document review (which, for la Read more:Lawsuit
, Update
Securities Class Action Filings Expected to Increase 2008-02-06 05:07:00 A recently released study, Predicting Securities
Litigation, found that securities class action filings rose 43% in 2007, and predicted another year of increased litigation in 2008.The study found that small and mid-cap companies are increasingly subjected to such lawsuits, and found that a strong indicator of potential securities litigation is whether CEO compensation practices are poorly-aligned with shareholder interests.2008 is already off to a strong start for securities filings, with a reported minimum of 24 securities class actions filed in January.Related Post: Retail Clothing Company Sued for Decision to Delist Read more:Action
, Expected
Live and On-Demand Trial Video Service Launched 2008-02-06 04:46:00 The launch of Courtroom Live was announced today, providing access to live trial video and on-demand video of trial highlights. The service aims to assist attorneys in trial preparation, expert witness evaluation, and education and training.The site includes only prominent or precedent-setting trials, and only has a handful available for viewing so far. These include a few cases related to consumer goods or the retail industry, e.g., Valassis v. Advo (seeking cancellation of Valassis' agreement to acquire Advo); Tellez v. Dole Food (personal injuries sustained on banana plantations); McDarby v. Merck (Vioxx product liability); and McCreary v. Wyeth (product liability based on Wyeth's HRT drug). Read more:Trial
, Service
, Launched
Arbitrator Certifies Class of 70 Million Plaintiffs in Suit Against Verizon Wireless 2008-01-31 07:40:00 It was reported this week that an arbitrator at the American Arbitration Association certified a plaintiff class of 70 million VerizonWireless
subscribers challenging the $175 early termination fee in their customer agreement. Plaintiffs argue that the fee is an unenforceable penalty provision. Verizon's customer agreement contains a prohibition on class action lawsuits, which the arbitrator found unenforceable. The result is the opposite of that reached in another lawsuit against Verizon, O'Quin v. Verizon Wireless
, 256 F. Supp. 2d 512 (M.D. La. 2003), which found that Verizon's arbitration clause was not unconscionable despite its ban on class actions. The ruling is a reminder that mandatory arbitration clauses prohibiting class actions can sometimes be ineffective, depending on the jur
Australian Commission Investigates Competitiveness of Grocery Industry 2008-01-28 09:15:00 Last week, the Australian
Competition and Consumer Commission
("ACCC") announced that it is holding public inquiry into the competitiveness of grocery prices in Australia, as mentioned here.Amid concerns that grocery prices are rising faster than the prices of other goods, the inquiry will consider: the current structure of the grocery industry at the supply, wholesale, and retail levels, including mergers and acquisitions by the national retailers; the nature of competition and the pricing practices in the grocery industry; and factors influencing efficient pricing of inputs along the supply chain, according to a press release from the Assistant Treasurer. The ACCC is soliciting public submissions on topics to be detailed in an Issues Paper to be released shortly.As I mentioned in a recen Read more:Competitiveness
, Grocery
A Price Fixing Scheme Is Not Forever for De Beers 2008-01-25 06:46:00 De Beers
, a diamond importer and mining conglomerate that controls 40 percent of the world's diamond trade, settled a class action lawsuit for $295 million, after being accused in several state and federal lawsuits of violating antitrust, unfair competition, and consumer-protection laws. Stories on the settlement earlier this week were reported by, e.g., the Chicago-Tribune and UPI.The plaintiffs' complaints alleged that De Beers monopolized diamond supplies and conspired to control diamond prices. E.g., Sullivan v. DB Investments, Inc., No. 04-cv-02819 (D.N.J. June 14, 2004). De Beers continued to deny wrongdoing under the settlement agreement. Of the $295 million, direct purchasers are to receive $22.5 million, and indirect purchasers $272.5 million. Of the indirect purchaser amount, con Read more:Scheme
, Forever
Retail Clothing Company Sued for Decision to Delist from NYSE 2008-01-25 00:43:00 Delisting Decision - Discount clothing retailer Syms Corp was sued last week when it decided to delist its stock from the New York Stock Exchange in favor of the pink sheets. Syms, which operates 33 stores, said its decision was motivated by an estimated $750,000 in direct annual cost savings from not having to comply with Sarbanes-Oxley ("SOX"). The company also stated that there would be indirect cost savings, as its management team would be more focused on operations. Investors Critical - The decision was roundly criticized by investors, who sent its stock price sharply downwards. The stock was delisted on January 14, and on January 18, a group of shareholders filed suit against the board of directors, alleging a breach of fiduciary duty. See Barington Co. Equity Partners, L.P. v. Syms Read more:Retail
, Clothing
Ninth Circuit Finds T-Mobile Mandatory Arbitration Clause Unconscionable 2008-01-23 07:15:00 Last week I posted about a class action lawsuit against Overstock.com that was dismissed because of a binding mandatory arbitration clause that prohibited class action lawsuits. I mentioned that there is a split of authority regarding whether or not such clauses are unconscionable. Yesterday, the NinthCircuit
weighed in again, issuing an opinion finding such a clause unenforceable under Washington state law. See Lowden v. T-Mobile
USA, Inc., No. 06-35395 __ F.3d __ , 2008 WL 170279 (9th Cir. Jan . 22, 2008), as reported by Reuters. T-Mobile's arbitration clause prohibited class action lawsuits and barred punitive damages, but required T-Mobile to pay most or all of the administrative costs for small claims.Washington Precedent on Unconscionability - The Ninth Circuit relied heavily on a r Read more:Mandatory
, Clause
An Attorney’s Transition from Private Practice to In-House Counsel 2008-01-21 21:18:00 In a recent article in Law.com, Todd King describes his transition from private practice to in-house counsel.Following a two-year clerkship, Mr. King worked for six years at Jones, Day in Atlanta. The opposing party in one of his cases was The Schwan Food Co. After getting to know Mr. King through his representation of their adversary, Schwan hired King as an in-house division counsel. Mr. King experienced two challenges in transitioning to in-house work: (1) being exposed to a number of different issues involving different areas within Schwan – such as marketing, sales, and logistics; and (2) balancing the need to add value to his in-house clients (thereby earning their trust) while maintaining the discipline to push back on ideas or initiatives that involve undue legal risk.I faced cha Read more:Counsel
, Attorney
, Private
, Practice
, House
FTC Approves Mergers after Divestitures: A&P, Schering-Plough. 2008-01-19 08:05:00 Earlier this month, the FTC approved final consent orders for the Great Atlantic & Pacific Tea Company's (A&P's) acquisition of Pathmark Stores, and Schering-Plough's acquisition of Organon BioSciences, but only after each acquirer divested certain assets. A&P Acquisition of Pathmark Supermarket Stores - In March 2007, A&P proposed a $1.3 billion acquisition of all of the voting securities of Pathmark, which has about 141 supermarkets along the east coast. Last November, the FTC announced a complaint alleging that the merger would harm consumers in Staten Island and Long Island, New York because the markets are highly concentrated. As a condition for approval of the merger, the FTC required the sale of six grocery stores – five owned by A&P and one owned by Pathmark.
Retailer Overstock.com Is Saved by Mandatory Arbitration Clause from Consumer Class Action 2008-01-17 05:37:00 Mandatory arbitration clauses have come under attack recently because they may prevent consumers from effectively vindicating their rights. A case in point is the recent decision Deaton v. Overstock
.com, No. 07-cv-643, 2007 WL 4569874 (S.D. Ill. Dec. 27, 2007).Class Action
Lawsuit Against Overstock Based on FCRA Violations - A customer of the online retailer Overstock.com claimed that Overstock violated the Fair Credit Reporting Act (FCRA) by displaying on her receipt the last four digits of her credit card and the expiration date (while the law allows the display of the last 5 digits or the expiration date). 15 U.S.C. § 1681c(g). The customer, Shandie Deaton, filed a class action lawsuit against Overstock in federal court in Illinois seeking the statutory damages of between $100 and $100 Read more:Mandatory
, Clause
, Retailer
, Consumer
News America Marketing’s Bullying, and Insignia Systems’ Ongoing Lawsuit 2008-01-15 07:08:00 Discovery is scheduled to continue in Insignia Systems
' multi-million dollar lawsuit against News AmericaMarketing
until July of this year, with trial to follow sometime thereafter.News America Marketing is the player to beat in the free-standing insert ("FSI") and in-store marketing arenas, as mentioned in my earlier post regarding a billion-plus dollar lawsuit brought by Valassis against News America regarding FSIs. News America is part of Rupert Murdoch's conglomerate News Corp, which was the subject of the recent article: Murdoch Issues World Takeover Update. News America, which is worth over a billion dollars, is described by News Corp as "a portfolio of consumer marketing services," and it not only includes FSIs and direct mail, but also a full range of in-store marketing products. Read more:Lawsuit
Court Examines Private Label Product Trade Dress That Mimics Name-Brand Products 2007-12-27 08:44:00 Third Circuit Ruling - The Third Circuit Court
of Appeals recently issued an opinion examining whether private label products could be sold in packaging that was nearly identical to name-brand products. SeeMcNeil Nutritionals v. Heartland Sweeteners, No. 07-2644 (3d Cir. Dec. 24, 2007). Similarity of Packages - McNeil Nutritionals, which is the manufacturer of artificial sweetener Splenda, sued Heartland Sweeteners and Heartland Packaging Corp., which packages and distributes a generic version of Splenda as store brands for various supermarket chains, including Ahold, Food Lion, and Safeway. Heartland's private label packaging mimics Splenda-brand packaging, using the same colors, the same packaging size and shape, and similar font and design. For each supermarket, the logo of the store ap Read more:Trade
, Private
, Label
, Brand
, Products
, Private Label
Chocolate-Makers Allegedly Fixed Prices 2007-12-24 01:23:00 A few days ago, we reported on allegations that Christmas-tree growers conspired to fix prices. Now, there are allegations that another product considered sacred by many has been subjected to price fixing: chocolate. Government Investigations - Hershey's, Mars, Nestle, and other chocolate makers were accused in recently unsealed Canadian court documents of secretly meeting to discuss prices at industry conventions and restaurants, several reports indicated. According to the reports, the U.S. DOJ antitrust division is also investigating. The conspiracy allegedly began in February 2002, and continued through most of 2007. While search warrants were issued in the Canadian investigation, no charges have yet been filed. An industry spokeswoman noted that candy-makers are facing higher dairy an Read more:Chocolate
, Makers
, Allegedly
, Fixed
, Prices
Ahold Receives $8 Million Settlement from Former CEO of Subsidiary 2007-12-20 07:20:00 Ahold announced that it reached a settlement agreement with James Miller, who had been the CEO of its former subsidiary U.S. Foodservice. Miller will pay Ahold $8 million, and the litigation between the parties will be dismissed.The $8 million constitutes a portion of the salary and bonuses Miller received as CEO during an accounting scandal, reported the Baltimore Sun and the Maryland Daily Record. Miller, who had founded U.S. Foodservice, had sued Ahold in February 2004, claiming that the company had reneged on its promises of severance pay and benefits. The company counterclaimed, alleging breach of fiduciary duties and his employment agreement.The company exaggerated profits by $880 million over three years. Other executives were charged with securities fraud, conspiracy, and making fa Read more:Settlement
, Former
Bah, humbug! Price Fixing of Christmas Trees 2007-12-20 06:52:00 Failing to understand the holiday spirit, the Danish Christmas
Tree Growers Association allegedly fixed the prices of its Nordmann firs, reported the BBC and NYT, and reported here. Prices rose about 25 percent this season after the tree-growers association sent price guidelines to its members despite warnings from Denmark's competition authority in 2001 and 2005 not to do so.Group activities of competitors, such as trade associations, are inherently suspect under the antitrust laws as they are often a conduit for price-fixing. Trade associations and their members should be careful to avoid sharing price or price-related information with a trade association or other trade association members unless cleared with their attorneys. Read more:Trees
U.K. Offers Cash Rewards for Antitrust Informants 2008-03-10 08:22:00 The U.K.'s Office of Fair Trading ("OFT") on February 29 began offering rewards of up to 100,000 pounds (almost $200,000) to informants who provide information about price fixing and illegal cartels, according to media reports and the OFT's press release. The rewards are being offered as part of an 18-month pilot program, which, if successful, may be made permanent. The OFT has become the second regulator to implement such a reward program, with South Korea's Fair Trade Commission being the first.Potential Affects on U.S. Antitrust Enforcement -The OFT's program may affect antitrust enforcement in the United States in at least two ways.First, in an age of global commerce and competition, antitrust violations that are first unearthed in the U.K. may lead to the discovery of similar violatio Read more:Offers
, Rewards
Supermarkets Hit by Data Security Breach 2008-03-18 18:24:00 Customer Data Exposed - Delhaize-owned Hannaford Bros and Sweetbay grocery store chains announced on Monday that a computer hacker stole its customers' debit and credit card numbers and expiration dates. About 4.2 million cards were affected, and 1,800 cases of fraud have been linked to the breach so far, including use of the card data in Houston, Detroit, San Francisco, France, and Brazil. (Reuters). Recent Security Breach
es Involving Other Merchants - This is the latest of numerous security lapses in the last few years involving exposure of private consumer information, including several lapses by retailers or consumer goods companies. On March 3, 2008, for example, Kraft reported the theft of a company laptop containing 20,000 names and possibly social security numbers of employees. On
Hannaford and Sweetwater Hit with Class Action Lawsuits Over Data Breach 2008-03-20 09:15:00 On March 18, two federal class action lawsuits were filed against Delhaize, the parent company of Hannaford and Sweetwater supermarkets. These filings were made only one day after the two retail grocery chains announced that hackers had accessed 4.2 million customer credit card numbers.Plaintiffs filed suit in Florida, where Sweetwater operates, and in Maine, where Hannaford operates. See Dobryniewski v. Delhaize America, Inc. et al, No. 2:2008cv00235 (M.D. Fla. filed Mar. 18, 2008); Ryan v. Delhaize America, Inc. et al., No. 1:08-cv-00086 (D. Maine filed Mar. 18, 2008). According to their press release, the attorneys who filed the Maine suit also represented plaintiffs in the recent TJX settlement.Hackers accessed the information during the card authorization process, which may not have Read more:Action
, Lawsuits
, Breach
California Court Permits Class Action to Proceed Against Retailers That Didn’t Label Artificially Colored Salmon 2008-03-25 10:20:00 A class action against various retail grocers alleged that the undisclosed addition of color to salmon misled consumers about its origin, quality, freshness, and flavor. Reversing the lower courts' dismissal of plaintiffs' claims, the California
Supreme Court
found that the allegations were not insufficient as a matter of law, and could proceed.Without the coloring, farm-raised salmon would have a grayish tint, but the pinkish hue added to the fish makes it resemble wild salmon, which consumers prefer. Plaintiffs sued under California's Unfair Competition Law and Consumer Legal Remedies Act.Defendants included Albertson's, Safeway, Kroger, Trader Joe's, Whole Foods, Costco, and others. They responded that the claims were preempted by federal law. Federal regulations permit the use of the c Read more:Action
, Label
, Colored
Herman Miller Contends That Consent Decree Allows it to Continue Minimum Resale Pricing Policy 2008-03-30 21:56:00 State AG Investigation - New York's Attorney General launched an investigation of HermanMiller
Inc.'s pricing policies in 2003, and the investigation was joined by Illinois and Michigan. The chair manufacturer's policies prohibit retailers from advertising or otherwise disclosing to consumers a price of less than $949 for its popular Aeron chair. If retailers advertised a price below $949, the company would deny shipments to the retailer. Complaint Filed - The state AGs filed a complaint, New York v. Herman Miller Inc., No. 08cv02977 (S.D.N.Y. Mar. 21, 2008), alleging that the minimum pricing constituted anti-competitive conduct that harmed consumers, denying them the benefits of unrestrained price competition and access to price information in violation of federal and state antitrust law Read more:Consent
, Continue
, Minimum
, Resale
, Pricing
, Policy