Article from NRF

Top retail GCs met in Washington, D.C., to exchange ideas and insights about current and emerging legal trends.

Just like general counsels in other leading industries, retail GCs are uniquely positioned to play a special role in the success of their organizations. They are the go-to advisors within retail companies — guiding executives, senior management and boards on laws, regulations, public policy, ethics and risk. And now more than ever, retail GCs are finding unprecedented value in gathering for the NRF General Counsels Forum biannual meetings.

This year’s summer meeting was held June 20-21 in Washington, D.C, and featured a lineup of expert speakers from Benesch, Hunton, Skadden, the U.S. Department of Homeland Security and The Sustainability Consortium. The event covered high priority topics in retail law, ranging from litigation risks to supply chain integrity, transparency and sustainability.

The tide is rising on class action threats

The recent rise of data aggregators, the metaverse, subscription programs and the like has opened the door to new high-risk threats for retail in-house counsel to contend with.

Among many of these developing threats is the high cost of mass arbitration. Stephanie Sheridan and Meegan Brooks from Benesch’s Retail and E-Commerce Group shared data showing arbitration costs totaling between $4.7 million and over $45 million dollars for one-day arbitration hearings as retailers face thousands upon thousands of claims.

General Counsels Forum

The General Counsels Forum is open exclusively to the most senior legal officers among NRF’s retail membership. Learn more.

Sheridan advised retail GCs on effective strategies for crafting arbitration clauses to curtail costs. Brooks noted that “long before the arbitration clause is written, consider enforceability.” When thinking ahead about whether a retailer’s arbitration clause will survive judicial scrutiny, the two offered high-level analysis down to the details of how general counsels should advise their web designers, since courts have gotten granular in holding that consumers cannot be required to “ferret out hyperlinks.”

The Benesch pair also underscored the focus on ESG advertising as one of retail’s biggest class action concerns in recent years. Although the appeal toward promoting sustainability and social consciousness appears to be commendable, Sheridan and Brooks stressed that, when executed carelessly, ESG advertising could run the risk of resembling greenwashing.

Given the nationwide influx of class action lawsuits against retailers that allegedly mislabel goods containing PFAS and other environmentally harmful substances, the two highlighted the value of cautiousness and being conversant with FTC recommendations and regulatory updates.

“Read all about” sustainability-related consumer protection laws, Sheridan said, and “don’t let plaintiffs sock it to you.”

DHS is committed to eliminating forced labor from supply chains

In the year since President Biden signed the Uyghur Forced Labor Prevention Act into law, the U.S. Department of Homeland Security has fostered collaborations with industry and others to prohibit the importation of goods manufactured wholly or in part by forced labor among ethnic minorities in China’s Xinjiang Uyghur Autonomous Region.

As retailers seek to combat forced labor, complying with this new federal law and prioritizing due diligence efforts, Rob Silvers, Under Secretary for Policy at the U.S. Department of Homeland Security, assured retail GCs that the DHS and the Forced Labor Enforcement Taskforce are committed to collaborating to ensure supply chain integrity within the industry.

Among many areas of interests that Silvers addressed regarding enforcement of the Uyghur Forced Labor Prevention Act was “de minimis” shipments.

Criticism of the UFLPA frequently arises from the fact that de minimis shipments, which are often smaller scale direct-to-consumer shipments of goods purchased online, are not subject to import duty and may enter without the filing of a formal entry. This trade rule gives an unfair advantage to foreign ecommerce companies, including those that might employ forced labor.

Silvers addressed these concerns, recognizing the potential loopholes around UFLPA enforcement and ensuring that efforts are already being made to tackle this problem.

Supply chains are sustainability’s new frontier

In the past, sustainability efforts by companies were “driven by voluntary action.” But Amy Scoville-Weaver from The Sustainability Consortium pointed out that, in today’s corporate world, sustainability is now driven by “risk mitigation” and “compliance.”

Scoville-Weaver, who has worked in the sustainability space for over 12 years, emphasized the fact that regulatory, investor and consumer demands have all pushed ESG and sustainability “to the core of corporate agendas” and now there is an increased focus on supply chains.

While there is marked increase in tools and technologies to help companies improve both traceability and transparency, extending sustainability throughout the supply chain is often considered the biggest challenge for a company, says Scoville-Weaver. One of the most effective ways to address that challenge is through a company’s legal department.

“The legal department occupies a peculiar position within the corporate organizational structure,” Scoville-Weaver said, “often serving as the intersection between business issues and sustainability.” And since sustainability is now often associated with compliance, the role of general counsel within companies is being altered to support this change.

Scoville-Weaver stressed that, to support sustainable supply chains, general counsels must embrace their transformed roles, invest in supplier development, create conditions for collaboration and remain present at the table.

The NRF General Counsels Forum is open exclusively to the most senior legal officers among NRF’s retail membership. The forum provides members with the opportunity to share strategies and ideas for addressing cutting-edge legal and management issues of concern to retail law departments. The forum also provides opportunities for members to earn CLE credits, when applicable.