Circle K Announces Agreement with 39 States to Curb Underage Tobacco Sales

Last week, it was announced that Circle K Stores, Inc. and Mac’s Convenience Stores LLC have reached an agreement with attorneys general for 39 states and the District of Columbia to cut-down on the sales of tobacco products to minors.  (See copy of the 22-page agreement here).  The agreement, which does not include South Carolina, encompasses approximately 4,000 convenience stores.  The agreement goes into effect on June 1, 2011.  Previous multi-state agreements have similarly been reached between states and convenience stores selling fuel under Conoco, BP, Exxon, Mobil, and Shell, among others, and with retail and pharmacy chains Walgreens, Rite Aid, CVS, WalMart, Kroger, and 7-Eleven.

The agreement, called the “Assurance of Voluntary Compliance” (AVC), provides that Circle K will adopt procedures intended to reduce the amount of marketing and sales of cigarettes to minors, and additional procedures designed to curb underage tobacco sales.  Terms of the agreement include:

1. Clerks must check the IDs of all persons who appear to be under the age of 30 to avoid illegal sales based on appearance;
2. In-store advertising of tobacco must be limited in ways intended to reduce the effect on young people, and outdoor advertising of tobacco must eliminated at stores within 500 feet of playgrounds or schools;
3. Employee training will focus on the mechanics of eliminating underage tobacco sales and on emphasizing the serious health issues that give rise to the legal efforts to restrict underage access to tobacco products;
4. Circle K will test itself on these safeguards by conducting “mystery shopper” compliance checks at 500 of its stores every 6 months;
5. Circle K will pay the attorneys general a total of $225,000 to be used for consumer education, public protection, or the implementation of programs to protect against tobacco abuse by minors.

Both the AVC agreement and the individual statements of the attorneys general (see here, for example) note that more than 2,000 children per day begin smoking cigarettes and that 1/3 of those will one day die from a tobacco-related disease.  It is estimated that 690 million packs of cigarettes are sold illegally to children in the United States per year.

Lawsuit Alleging False Advertising and Misrepresented Prices Comes Week Before Black Friday

Think you’re outsmarting the system by avoiding the hoards of Christmas shoppers and choosing instead to order gifts this year online? Perhaps not always the case, according to a complaint recently filed by seven northern California district attorneys against online retail giant, which is headquartered in Salt Lake City. Just as Christmas shopping reaches its peak, the discount retailer has been forced to defend its advertising and pricing practices, both of which have come under fire in the wake of allegations raised by the lawsuit.

According to the 33-page complaint, filed on November 17 in California’s Alameda County, Overstock has for several years “routinely and systematically made untrue and misleading comparative advertising claims about the prices of its products.” The suit alleges that Overstock used misleading measures to inflate its comparative prices and thus artificially increase the discounts that it claimed to be offering consumers. According to the suit, these misleading statements accompanied virtually every product listing on the Overstock site. Essentially, the complaint alleges that instead of comparing its prices with other merchants’ prices as claimed, Overstock often would make up “list prices” and “compare at” prices based on arbitrary markups over its costs for the products. The complaint seeks $15 in restitution and penalties.

As reported by, the complaint cites by way of example one buyer’s purchase of a patio set that Overstock advertised as having a “list price” of $999. The website offered the set for a seemingly huge discount at $449. The buyer who purchased the set, however, found a WalMart sticker on the set listing the sale price as $247, about $200 less than Overstock’s sale price. Vice president and general counsel for Overstock reportedly explained that this particular instance was simply the result of a misunderstanding between Overstock and its vendor. He said that Overstock strives to be as accurate as possible with its pricing because customers can easily check prices that are available elsewhere.

Overstock’s official statement regarding the lawsuit fires back, explaining that it had been in discussions over a period of several years with the California representatives who ultimately filed suit, and that Overstock had been under the impression that “great progress” had been made toward resolution. It thus “profoundly regret[ed]” that these officials chose to file a lawsuit “at what appears to us to be a strategically-timed moment” — i.e. about one week before “Black Friday” and “Cyber Monday.”

It certainly does seem suspicious, if Overstock’s representations are true, that California officials decided after years of discussions, to file suit on the eve of the height of Christmas shopping. Time will tell if media coverage of the suit is enough to turn shoppers away from Overstock this season.

Bedbug Infestations on the Rise, Lawsuits Follow

Bedbugs are quickly becoming a national epidemic. Indiscriminate in their selection of venue, the bugs are popping up everywhere, from luxury hotel suites in Manhattan to hospital beds in Tennessee and college dorm rooms in Pennsylvania and North Carolina. Not surprisingly, a significant number of lawsuits have followed. The most recent of these is a high-profile suit filed by a Michigan couple against New York’s famed Waldorf-Astoria hotel, which illustrates that the alleged damages in these cases can be extraordinary.

The New York Daily News reports that the Michigan couple were both Allstate Insurance Company employees who had won a three-night stay at the luxury hotel for being top company performers. They allegedly awoke after their first night in the hotel covered in bites and with blood on their sheets. The two complained and were given a new room. However, not only was their trip ruined, according to their recent lawsuit, but bedbugs got into the couple’s luggage and were taken back to their Michigan home, where they infested their house and bit the couple and their 12-year-old daughter. The family allege that they had to move out of their home for six weeks, spend thousands of dollars for extermination and clean-up, and that they were feared and ostracised by neighbors such that they endured “emotional havoc.”

Although this recent suit likely raises a negligence cause of action, product liability suits involving bedbugs seem inevitable. When a customer unknowingly purchases a product infested with bedbugs, he or she arguably could raise breach of warranty and/or strict liability claims against the seller. Retail sellers already have seen some exposure to such claims. The National Pest Management Association reports that retail giants Abercrombie & Fitch, Hollister, and Victoria’s Secret have all seen some bedbug infestation in stores. It recommends that shoppers inspect items for unusual stains or for signs of the bugs’ “sticky white eggs” (gross). As the Michigan couple’s lawsuit demonstrates, alleged damages from these claims can be extensive when buyers unknowingly take the products into their homes and cause further infestation.

In 2008, a New Jersey couple was awarded $49,000 after they sued J.C. Penney, alleging that the bedroom furniture they purchased from the retailer was infested with bedbugs. The likelihood of these claims going all the way to a jury is reportedly rare, however, as many business owners prefer to settle claims quickly and out of court. Such claims, even if unfounded, can cost a business a fortune in lawsuits and in loss of business. As the national epidemic continues, so too will lawsuits.

When Technology Outpaces the Law: The Driverless Car Problem

Fact: Technology is moving faster than many of us can fathom. This is, of course, news to no one. The laptop I bought just one year ago is now a “dinosaur,” and I could probably buy a brand new one with the same specs for roughly half of what I paid last year.

Fact: The law has not kept up with the quick pace of technology. This is also news to no one. Privacy concepts have been turned on their heads by the Facebook/MySpace/Twitter social media explosion. Entirely new concepts of law have also developed over the past few years; “e-discovery” has raised the stakes – and the cost – of litigation dramatically.

The ABA Journal provided another example of technology outpacing law in its newsletter last week: the driverless car, citing a recent New York Times article on the same subject. Apparently, Google has developed technology that can drive a car with minimal human input. In fact, the only accident that occurred during testing of the vehicle was caused by human, not car, error. This is a huge jump even from the Lexus LS460 that can park itself.

As both the ABA Journal and the New York Times point out, the obvious question is this: Who is liable for an accident caused by a car that is driving itself – the person sitting in the driver’s seat of the car who isn’t actually driving, or the manufacturer of the driverless car itself?

We don’t have an answer yet, because it’s all hypothetical at this point, and “the law” hates hypotheticals. But my point is this: Do we really want “the law” to keep pace with technology?

Technology always asks “Can we?”, but in my experience, sometimes fails to consider the better question of “Should we?” For my part, I’m not sure a driverless car is a good idea. Thus, I disagree with Kenneth Anderson of The Volokh Conspiracy, who recently opined that “[t]he idea of robotic cars that drive themselves is a good one, I think, and one whose time is rapidly coming.” But the law is different. It must always ask, what “should” the law be? And if that means that it moves slowly, even glacially, while it considers the answer to that question in a new situation, then that’s okay. Or maybe I’m just old [fashioned].

For my part, I’m still waiting for someone to sell me my own personal Rosie.


Colorado’s reasonable approach to distributor liability

One of the more interesting problems in products law is how to handle the middle man. If the retailer does not design or manufacture a product, but merely stocks its shelves, can he be liable to a plaintiff who is injured by the product? Different states handle the question differently.

In Colorado, unless the retailer is also the manufacturer of the allegedly defective product or a component of the product, it can’t be sued. In fact, a product liability suit cannot be maintained against a mere innocent seller of a defective product. Which begs at the obvious follow-up question: what makes a seller “innocent?”
The United States District Court for the District of Colorado was faced with just that question in the recently decided Zapien v. Home Depot, USA, Inc., No. 09-cv-02349-REB-BNB, 2010 WL 3522570 (D. Colo. Sept. 2, 2010). Home Depot rented a sewer snake to the plaintiff, who suffered injuries when it gave him a serious electrical shock. Home Depot filed a motion for summary judgment, claiming that it is an “innocent seller” under the terms of the Colorado products statute.
The “innocent seller” doctrine in Colorado, however, has a few exceptions. First, if the seller knows the product is defective, it is no longer an “innocent.” Second, if the seller alters the product, it is no longer insulated from liability (obviously, because it is no longer just a seller).
There was some tangential evidence in Zapien, based on some comments from a cashier at Home Depot, that the retailer knew that the sewer snake was defective, but the evidence was not allowed on appeal. As a result, Home Depot’s motion for summary judgment was granted.
If you didn’t build it, alter it, or know about it, you shouldn’t be held hostage by a plaintiff who, for whatever reason, can’t pin liability on those who may actually have been responsible for the defect. But if you, as a retailer, alter the product or know something about any problems it has, then it is reasonable that you should be at least partly responsible for any injuries stemming from the product. I acknowledge that “knowledge” is a slippery term that can be stretched, but the general theory is workable. Other states should take note and bring predictability back to retailer liability.