Close Ad

The Spoon

Daily news and analysis about the food tech revolution

legal

COVID-19 Summit: Restaurant Owners Need to Act on the Paycheck Protection Program Now

Struggling restaurant operators in this country have a lot to worry about right now. And not to add one more thing to that list, but if you are a struggling restaurant owner, you need to stop what you’re doing and go learn about the Paycheck Protection Program (PPP) that was put into place as part of the federal response to the chaos the COVID-19 pandemic is causing.

Don’t believe me? Then listen to Ryan Palmer, a lawyer and partner at Lathrop GPM who specializes in restaurant law. He joined us as a featured speaker during our COVID-19 Virtual Strategy Summit today and had a lot of great advice for restaurant owners trying to weather this storm.

Paramount among that advice was the need to learn about the PPP, a loan program devised to help small businesses keep workers employed. These are loans that are made by your lender (not the Small Business Administration), but you need to act quickly to get one. There’s $349 billion dollars for relief in there but when it’s gone, it’s gone. So if you are looking for federal relief you need to get your application in now.

In addition to being fast, restaurant owners need to be smart. As Palmer explained, the whole situation is very fluid and changing by the day. It would behoove people to call up their lawyer to help them navigate all of the ins and out of the program.

You can also use your lawyer to help you negotiate new terms in contracts that pre-corona were probably off the table. Palmer said a good place to start would be with your landlord because, as he said, “A landlord wants tenants in its spaces and a tenant wants to be in the space.” The landlord may want to keep that space occupied instead of having the space go dark or need to be re-rented and therefore be more flexible in terms of when rent is paid, etc. If you’re a franchise, Palmer said you can talk with your franchisor about continuing fees and advertising fees.

Another suggestion from Palmer, which is actually pretty evergreen, is to check your insurance. As restaurants are pivoting to delivery or even curbside pickup, make sure that your business and employees are properly covered. As a good follow up, you should also check your local ordinances and lease to see what types of conveniences (drive-up window, curbside drop off, etc.) that you can actually provide for your customers.

The whole chat was actually very illuminating and filled with solid, boots-on-the-ground type advice; you should watch the whole thing (select Legal Considerations & Strategies for Restaurant Operators During COVID-19 from the drop down menu in the upper right of the embedded player below). We may not know what the long-term effects of COVID-19 will be on the restaurant industry, but learning about the PPP is something every restaurant owner should be doing right now.

You can watch the full session with Ryan Palmer below or check it out on Crowdcast.

The Spoon's COVID-19 Summit: Ryan Palmer on Financial Relief For Restaurants During COVID-19 Crisis

Legal Considerations Before Deploying Autonomous Delivery Robots

The following is a guest post written by Ariel Yehezkel and Allison Wu Troianos of the law firm Sheppard Mullin.

With e-commerce consumer expectations constantly rising with the ubiquity of same-day delivery, startups and established corporations alike are focusing on developing and investing in efficient last-mile delivery and e-commerce fulfillment solutions. Specifically, online grocery retail is one of the most rapidly growing e-commerce sectors for home delivery, with a projected 70 percent of consumers purchasing their groceries online and a market value of $100 billion within the next two to four years. Consequently, there is also a trend towards acquisition activity focused on disrupting and supplementing traditional logistics systems and developing technologies that facilitate various aspects of the direct-to-consumer grocery supply chain as corporations seek to secure a foothold in the market.

Several companies are using sorting robots in warehouses to assist in order fulfillment and other companies have been using and developing autonomous delivery robots that facilitate the last-mile logistics of direct-consumer-delivery.

With these technological developments come novel legal questions that potential acquirers or investors that develop and manufacture delivery robots and that use robotic systems in warehouses need to consider.  Such legal considerations include tort liability, privacy and data protection issues and regulatory concerns regarding traffic and motorized vehicle laws.

Tort law in many legal systems would impose liability on the person or entity in control of a device that causes damage. Therefore, liability in the event of a traffic accident or other tortious activity caused by a delivery robot would likely fall on the company that was controlling or steering the delivery robot at the time of the incident. Further, the designer or manufacturer of a delivery robot that injures a pedestrian or damages property could also be held liable under the theory of strict product liability if an injured party alleged that the robot was dangerous due to a defect in their manufacturing or design. Under a strict product liability theory, such injured party could argue that a reasonable person would not expect a small robot autonomously operating on the sidewalk without a conspicuous design feature such as a flag, which in turn creates unlawfully dangerous situations for pedestrians or drivers.

However, traditional civil liability frameworks may not be sufficient enough to address the potential issues that may arise from accidents or damage caused by delivery robots. The level of autonomy of robots and the level of influence humans have over their operation could affect how liability is allocated, as current tort laws assume human involvement in the operation of robots. As innovations enable robots to become more autonomous, current liability frameworks may not be able to adequately assign liability because the more autonomous a robot is, the less it can be treated simply as a tool of a human user.  It is yet to be seen how legal frameworks will evolve to account for liability arising from damage caused by autonomous delivery robots, but they will necessarily need to adapt as technological advances make it possible for robots to operate without as much human control or oversight.

Privacy and data protection issues could be implicated due to delivery robots using camera recording and collecting other consumer data through the delivery process. Certain federal, state and local laws restrict and regulate data collection and retention, so companies must be aware of all relevant data protection regulations and make sure any data delivery robots collect is handled in compliance with such regulations.

For example, the collection of personal data is restricted and regulated under certain data protection laws, which would include any information relating to an identifiable natural person. An individual may need to be given with notice or be required to give consent if their personal data will be collected, and the controller of such collected data would be the principal party responsible for compliance with the applicable privacy law. Any personal data collected and transmitted by a delivery robot, including the consumer’s address and biographical data, and any pictures, video or audio recordings, would need to be stored and processed in compliance with applicable privacy laws.

Certain local and state regulations regarding motor vehicles will also need to adapt to accommodate autonomous delivery robots, especially if they operate in public traffic. States have been adopting statutes permitting delivery robots up to a certain weight limit to operate on sidewalks and crosswalks. Starship Technologies, a leading company in the robot delivery space, has been actively involved in getting legislation passed in various states such as Virginia and Idaho. Starship has been advocating for proposals that allow Starship’s robots to operate, but that would exclude some of its competitors’ products from autonomous operation due to weight limits or other restrictions. Starship has demonstrated its robots in hearings for these proposed bills, which set forth the parameters for legal operation of these delivery robots, such as restricting their weight, requiring robots to have their own insurance and requiring a certain level of human monitoring, which could implicate some of the data privacy or liability issues discussed above.

Though several states have adopted such legislation, densely populated urban areas have been slower to follow suit. It could be quite some time before some large cities such as New York City pass legislation allowing delivery robots to operate in their streets and sidewalks.  Reportedly, when a same-day delivery robot appeared in Manhattan in November 2019, New York City officials promptly issued a cease and desist order, claiming that the delivery robots violated vehicle and traffic laws that prohibit self-driving cars and motor vehicles on sidewalks, and citing job loss and traffic congestion as their main concerns. Other critics cite accessibility and safety issues, asserting that the delivery robots pose undue obstacles to the disability community and violate the Americans with Disabilities Act of 1990.

The growth in the autonomous delivery space has been exponential over the last several years and is expected to continue to grow as home grocery delivery becomes the standard. The legal considerations raised above are not necessarily roadblocks to further autonomous delivery innovation, but compliance with all relevant regulations and potential liability concerns should be taken into account as companies continue their foray into the autonomous delivery space and as investors continue to invest and acquire such companies. 

Ariel Yehezkel is the Practice Group Leader of Sheppard Mullin’s Corporate practice group. Allison Wu Troianos is an associate in the firm’s Corporate practice group. They regularly handle transactions in food and beverage industry, and have developed extensive knowledge in this sector. They can be reached at ayehezkel@sheppardmullin.com and atroianos@sheppardmullin.com, respectively.

Tofurky and the ACLU go to the Meat-resses in Legal Dispute with Missouri

There are serious issues that sound silly when you say them out loud. For instance, this sentence: Tofurky and the American Civil Liberties Union are among a coalition challenging a new Missouri law that regulates what food products can be called “meat.”

No disrespect to the company, but it’s hard not to giggle when you hear about Tofurky lawyering up.

But the silliness of Tofukey’s portmanteau quickly subsides when you realize what’s at stake — or in this case, steak.

The debate over what can and can’t be called meat has been going on for a good part of this year. Traditional meat organizations have seen the investment and advancements in lab-grown meat (or cultured meat) and as so many threatened incumbents do, they have turned to government regulation. While the FDA held a public meeting about the naming issue, Missouri went ahead and became the first state to pass a law outlining what could be called meat.

Back in May, the Missouri Senate passed legislation that included Senate Bill No. 977, which prohibits “misrepresenting a product as meat that is not derived from harvested production livestock or poultry.” That law goes into effect today, and violators could be fined up to $1,000 and be imprisoned for a year.

The Missouri Cattlemen’s Association (MCA), which supported the bill, has the following statement on its website: “Major companies are investing in developing laboratory grown meat and calling it ‘beef.’ MCA will push for a protection of its nomenclature by protecting the word beef to only include food derived from actual livestock production. This is all about marketing with integrity. MCA will not stand for laboratory grown food or plant based meat alternatives to be marketed as something it’s not.”

Part of the argument from the MCA and similar agricultural organizations around the country is that alterna-meats will cause confusion among consumers. Sure, shoppers may not accidentally grab a Tofurky at Thanksgiving, but as lab meat makes its way to market, there are legitimate labeling issues at play. What should the labeling requirement be for meat grown in a lab? Beyond Meat likes to sell its burger patties in the meat aisle — does having “meat” in its name cause confusion?

While its moniker may not befuddle people, Tofurky has nonetheless joined up with the ACLU, the Animal Legal Defense Fund, and the Good Food Institute to take on this legislation. Among the complaints this coalition has is that the law plays favorites to benefit the meat industry, violates free speech, and violates a law preventing discrimination against out-of-state companies. Additionally, they argue that the law itself is so vague that it’s hard to follow.

Again, on the surface, it seems silly to make such a big ado about meat. But millions of dollars are being invested in lab-grown meat startups that are poised to drastically change what and how we eat meat — er, cultured animal tissue. And as the FDA has pointed out, it’s not just meat that has skin in the game. The government is looking at what can be called “milk,” and that itself will extend into what can be called “cheese” or “yogurt,” etc.

But passing a law to protect the past isn’t going to stop progress.

Smart companies have seen the writing on the wall and decided it’s better to join ’em rather than try to beat ’em with a legislative stick. Chicken giant, Tyson, is leading the way with numerous investments in both lab-grown and plant-based meat companies, and Cargill has gotten in on the cultured meat game with an investment in Memphis Meats.

Already there are glimmers of hope that we can work through this potential morass. Memphis Meats, a leader in the lab-grown meat space, teamed up with the North American Meat Institute to send a letter to President Trump urging him to “clarify the regulatory framework for cell-based meat and poultry products,” and suggesting that the FDA and USDA collaborate on oversight of the emerging cultured meat industry. Sure, it’s only a letter, but it’s two sides from across the aisle on this debate working together. If we can get other groups to do the same, the results won’t be silly at all.