CSP Roundtable Report: Let the Seller Beware

R O U N D TA B L E
REPORT
Participants in CSP’s 2010 Leadership
and Crisis Prevention Forum,
July 12–14 in Indianapolis:
RETAILERS
Circle K Stores Inc.
Doryce Norwood
Douglass Distributing
Beth Kratochvil
E-Z Mart Stores Inc.
Amy Bowers
Handee Marts Inc.
Suzanne Beebe
Holmes Oil Co.
Lance Farlow
Huck’s Convenience Stores
Sheri Stevens
Kocolene Marketing LLC
Gary Myers
Maverik Inc.
Nancy Couch, David Hancock
Quick Chek Food Stores Inc.
Suzanne Delvecchio
Ricker Oil Co. Inc.
Karen Mitchener
Royal Buying Group Inc.
Michael Zielinski
Let the
Seller
Beware!
The 8 Annual
Leadership & Crisis
Prevention Forum
th
Short Line Express Markets
Duane Shields
Stanley J. Clark Inc. and See USA LLC
Roger Distler
Stewart’s Shops Corp.
Mary Anne Macica
Stinker Stations
Jon Mangum
Susser Holdings Corp.
Cynthia Aguirre
TETCO Inc. and Business Financial Group
Todd Wright
C.E. Taylor Oil Co. Inc.
Janet Haag
Thorntons Inc.
David Bridgers
VPS Convenience Store Group
Paul Garrett
SUPPLIERS
AND SPEAKERS
The Bassett Firm
Mike Bassett
BIC Corp. and BIC USA Inc.
Steve Burkhart, Patrick Cordle
BlaxterLaw
Wells Blaxter
Emerson Retail Solutions
Scott Marshall, Jeff Riordan
Towne, Ryan and Partners P.C.
Claudia Ryan
ADVERTORIAL
REDUCE YOUR RISK
W
hile concepts such as
private label, foodservice and self-insurance
are opening doors for convenience
retailers, an equal amount of unwelcome exposure is sneaking in from laws
governing public safety, employment and
intellectual property.
Emphasizing the need to be proactive, attendees of CSP’s 2010 Leadership
and Crisis Prevention Forum held in July
in Indianapolis shared best practices on
how to protect their companies from
potential lawsuits.
The three-day gathering produced
numerous themes:
䊳 New ventures, new exposure.
As retailers try out new products or
expand with opportunities such as private label, they are advised to pay attention to product safety and intellectual
property.
䊳 Overseas partners. Working with
companies overseas may lead to the
sale of products containing hazardous
chemicals or having questionable construction. Retailers must be vigilant, especially in countries where finding the
responsible parties may prove difficult.
䊳 Trust can lead to exposure.
Working with both foreign and local
partners who say they have the proper
insurance may not eliminate liability.
Some partners may have inadequate
policies or may have a carrier that has
recently gone out of business.
䊳 Be proactive. From quickly gathering evidence after an incident to properly training employees, maintaining a
proactive stance to reduce exposure is
an important tactic to adopt.
Retailers as targets. The growing
strength of the retail sector as a whole
has made c-store operators a primary
target for lawsuits.
“Retailers have replaced manufacturers in many ways,” Steve Burkhart,
vice president and general counsel for
BIC Corp., Shelton, Conn., said.“Retailers have the money to drive what’s in
stores and are a perfect target [for litigation] and government enforcement.”
Growing areas of concern for the
industry, especially as it expands its
private-label endeavors, are product
liability and intellectual-property rights.
Burkhart of BIC spoke of instances in
䊳
which retailers can be sued for products they import or foodservice items
that make people ill. Retailers need
to know where items and ingredients
come from to track and assess liability.
Even if retailers are ultimately not
responsible, plaintiffs will go after local
businesses before trying to identify
and sue overseas companies.
While global opportunities do exist
for retailers, overseas companies may
produce food products with potentially hazardous chemicals simply
because they are not restricted by U.S.
regulation. In other cases, a foreign
manufacturer may agree with a retailer
not to use lead-based paints, but if the
retailer does not continuously monitor
the quality, the manufacturer may swap
in prohibited ingredients.
Burkhart said that many incidents
of such wrongdoing have emerged
from China, where not only is it difficult
to locate the original manufacturer
after defects have been found, but
many companies are state-owned,
making enforcement of U.S. laws even
more difficult.
Obtaining “certificates of conformance” or legal documents that hold
manufacturers to specific production
standards is one way to shield a retailer
from liability, Burkhart said. “At least if
you’re sued, you can say you made the
effort,” he said.
Not all these cases are about product liability either, he said, citing a case in
which a retailer developed a new product, only to be sued for infringement by
San Francisco-based Williams-Sonoma
Inc. “With private label, you may be
infringing on someone else’s idea—that’s
a common thing,” Burkhart said. “Are
you checking patents and trademarks
before selling products in your stores?”
Due diligence involves researching
relevant patents, as well as avoiding the
sale of counterfeit products.“Counterfeit products are a big issue,” he said.
“The government seizes product while
the legal process runs its course, and
then they destroy it. It may be product
you paid for—and they may require
you to pay destruction costs.
ADVERTORIAL
ACTIONS TO LIMIT YOUR RISK
Take Control & Verify
Control Purchasing—Establish a centralized procedure to review
all potential new products that will be merchandised in your stores.
Stay informed about new regulations that involve existing products.
Obtain Indemnification and sufficient insurance coverage from
highly rated companies
Verify Compliance with Government Regulations & Industry
Standards on all products you sell.
Use Caution
American companies should require Chinese Exporters to obtain
appropriate insurance coverage from an American or international
insurer that will protect your company in the event of a Product Recall
or Lawsuit in the United States.
Obtaining jurisdiction and enforcing judgments against Chinese
Companies (which can be state-owned) pose numerous jurisdictional
and collection problems.
Product Liability extends to private label; private label can make
the retailer liable in much the same way the manufacturer is liable.
National Novelty (Toy-Like) Lighter Bans
STATES WITH BANS
—Arkansas
—Illinois
—Louisiana
—Maine
—Massachusetts
—Mississippi
—North Carolina
—Nevada
—New Jersey
—Oregon
—Tennessee
—Utah
—Virginia
—Washington
Legislation has been introduced to both the US House of
Representatives and the US Senate to prohibit the distribution and
sale of novelty lighters.
Senate: S. 723 “Protect Children from
Dangerous Lighters Act of 2009”
House: H. 2050 “Protect Children
from Dangerous Lighters Act of 2009”
Source: Oregon Office of State Fire Marshall
Commo
n Sense
Deal only
wi
reputable, th
financially
responsibl
manufactu e
and distrib rers
utors*
*Sourc
e: Restatem
ent 3d of T
orts