Insights

ADA and e-commerce: What retailers should know

BY CSA STAFF

By Michael Wippler

We are or should be familiar with the Americans with Disabilities Act’s (“ADA”) requirements for accommodating the physically disabled. Wheelchair ramps, handicap stalls, handicap parking, lifts, and other items designed to assist the physically disabled are commonplace. However, the ADA is much broader than this, and the United States Department of Justice (“DOJ”) and the courts are focusing on making the internet more accessible for the visually impaired.

Accessibility of websites is not specifically addressed in the ADA or under DOJ regulations. However, advocates for the visually impaired have long argued that companies are legally obligated to make their websites accessible to the visually impaired. More recently, they have filed suits to press the issue, with some success. In light of these high-profile cases and pressure from the disabled community and its advocates, the DOJ announced plans to propose regulations on web accessibility and has intervened in private litigation to appraise courts of the DOJ’s expansive reading of the ADA.

Starting in June 2008, the DOJ announced its intent to issue regulations on website accessibility. In explaining the foundation for these new regulations, the DOJ stated that while the internet as we know it today did not exist when the ADA was enacted by Congress in 1990, the internet now “plays a critical role in the daily personal, professional, civic, and business life of Americans.”

Even so, many websites are difficult or impossible to use by disabled individuals due to their being designed without accessible features, putting individuals with disabilities at a “great disadvantage” with respect to accessing goods and services, education, social networks, entertainment, and information. Since 2008, the DOJ has repeatedly extended the time for issuing these regulations relying instead on the courts to enforce the DOJ’s interpretation of the ADA.

By contrast, over the last several years the DOJ has intervened in private litigation and has directly refuted arguments that accessibility is not required in the absence of specific regulations. In one such action against H&R Block, the DOJ alleged that assistive technologies long in use by visually impaired individuals, such as screen reader software, refreshable Braille displays, keyboard navigation, and captioning, were not compatible with H&R Block’s website.

As part of a settlement, H&R Block agreed, among other things, to make its website, mobile applications, and tax preparation tool comply with the Website Content Accessibility Guidelines 2.0 AA. Even in cases without DOJ intervention, courts have held that the accessibility requirements of the ADA apply to websites. In a case filed against Netflix, the court ruled that the ADA’s accessibility requirements even applies to web-only businesses, with the court stating that Congress intended for the ADA to adapt to unforeseen changes in technology.

Business Considerations Ignoring the court’s and DOJ’s ADA’s enforcement trend may force retailers to defend themselves in expensive litigation – whether against a private party or against the DOJ. Providing accessibility to a website for the visually impaired entails costs, but those costs are probably significantly lower than the cost of defending an action alleging ADA violations.

Moreover, being proactive and updating a retailer’s website can reap benefits. In addition to lowering litigation exposure, accessible websites makes available a company’s goods and services to a new segment of the market—the visually impaired. And due to the limited mobility that afflicts many visually impaired individuals, this is a market segment that may perform a disproportionate amount of its commerce online.

Thus, for some retailers, the cost of a new accessible website, or of retrofitting an existing website, may be a wise investment.


Michael Wippler is the managing member of Dykema’s Los Angeles office. His practice focuses on business, finance and real estate matters.

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FINANCE

American Apparel’s Dov Charney seeks $40 million in damages as chain’s loss widens

BY Marianne Wilson

New York — There is no let up of bad news for American Apparel. The company’s founder and ousted CEO, Dov Charney, plans to file a lawsuit claiming $40 million in damages related to breaches of his employment contract.

The disclosure came on the heels of news that the Securities and Exchange Commission has opened an investigation into the circumstances surrounding Charney’s departure.

Meanwhile, American Apparel’s sales continue to slide. Net revenue for its fourth quarter, ended Dec. 31, dropped 9%, to $153.5 million, with both retail and wholesale sales moving downward.

The retailer reported a net loss $28 million for the quarter, compared to a loss of $20.8 million in the year-ago period. (Legal and consulting fees related to the investigation into misconduct accusations involving Charney cost the company $3.8 million in the quarter.) American Apparel has not reported a profit since 2009.

American Apparel has had a tough time of it since last June when the board suspended the long-controversial Charney as chairman and, in December, fired him as CEO, citing misuse of company funds and inappropriate behavior with employees. He was succeeded as chief executive by apparel veteran Paula Schneider, who has been focused on turning around the fortunes of the ailing company.

“We remain focused on putting the right processes and systems in place, such as a rigorous forecasting process and disciplined bottom-up budgeting — so that we can better leverage American Apparel's strong brand," she said in a statement.
Claims: Charney’s claims include almost $6 million in severance, $1.3 million in vacation-time pay and at least $10 million for emotional distress. And that’s not the end of it, Reuters reported.

"There will be other lawsuits we will be filing against the company, which they are aware of but have not revealed to the media," Dov’s attorney, Keith Fink, told Reuters.

Charney is also seeking 13 million shares of the company, the report said.

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Coming soon to Sam’s Club: 3D printers

BY CSA STAFF

Home Depot had it first, but now MakerBot is coming to an even wider mass-market arena as the 3D printer rolls out atmore than 300 Sam's Club locations in the United States.

“I truly believe that having the opportunity to learn about 3D printing first-hand is a big step towards a better understanding of the technology,” said Frank Alfano, acting CEO of MakerBot. “By expanding our retail presence into Sam’s Club, we’re providing opportunities to reach professionals, entrepreneurs and small business owners and show them the power of 3D printing. Offering MakerBot Replicator Desktop 3D printers in retail stores exposes potential users to 3D printing technology and provides them an opportunity to understand the benefits of 3D printing today. We’ve made a conscious effort this past year to expand accessibility to MakerBot Replicator 3D Printers by working with key retailers like Sam’s Club.”

According to Alfano, bringing MakerBot printers into the mainstream offers a user-friendly way for the average consumer to leverage 3D printing technology and avail himself of the related software, apps, MakerBot Learning, lectures, classes and parts and support offered through the company's MakerCare program.

“We strive to provide our members with access to the latest technology, at a great value," said senior VP technology Dawn VonBechmann. "Offering the comprehensive MakerBot 3D Ecosystem is just one example of delivering on that commitment. Our members have shown interest in 3D printing, both from a professional and small business aspect. Any member with a natural interest in creating things will be excited to learn more about this amazing technology.”

Home Depot initially started selling the printers in its retail stores last summer, which it introduced in select markets like Chicago, New York City, Los Angeles and San Francisco.

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