Michigan Developments
Eric Rule,
Director of Governmental Affairs

Election results key to lame duck agenda
Legislators returning to Lansing after the November general elections could find a full slate of issues awaiting them. Which party holds control of the legislative chambers and the governor’s office will dictate the length of the lame duck session, how much voting will actually take place during this period and the extent to which the budget crisis is dealt with.

If the Republicans retain control of the House and Senate, but lose the Executive Office, legislators could be in session until Christmas Eve. If, however, the Republicans maintain the Executive Office and both chambers, no controversial issues will be handled. The biggest item that would be dealt with under that scenario would be drastically slashing budgets to put the onus on the outgoing Engler, allowing Posthumus to start with a cleaner slate.

Republicans may also use this opportunity to pass other legislation that could conceivably be vetoed if Granholm should take office. These include raising the cap on charter schools, banning local living-wage provisions and repealing the prevailing wage. Because of term limits, many legislators will not have another chance to weigh in on these difficult issues.

MRA to push two major issues
MRA is prepared to push two very important issues during the lame duck session.
At the top of the list is item pricing reform. This is the best chance in many years to achieve passage of this long-sought goal.
MRA’s other issue is reform of the state’s Unclaimed Property Act (UPA). Commonly known as escheating, the process involves the state collecting and remitting unclaimed property back to consumers. MRA supports recent legislation that would exclude certain items from being categorized as abandoned property. Among these are:

• Outstanding checks or credits to businesses (business to business exemption)
• Gift certificates or gift cards
• Property of $50 or less
• Credit balances in commercial accounts
• Unused travel and entertainment tickets
• Unclaimed layaway payments
• Unidentified remittances (credit card payments)
• Property subject to the Employee Retirement Income Security Act

The reporting and tracking of abandoned property costs Michigan businesses millions each year. By updating the UPA, state operating efficiencies would be improved and property of significant value would be quickly returned to its rightful owner.

Michigan retailers address tobacco problems
MRA and other retail trade associations recently met as part of the Compliance through Collaboration (CtC) forum designed to address issues related to the sale of tobacco products to minors across the state. The group focused on developing a state-specific strategy of collaboration to more effectively address and eliminate illegal tobacco sales.

Michigan stands to receive millions in substance abuse monies from the federal government if retailers can maintain the compliance rate on tobacco purchases by minors. The most recent data collected by the Center for Substance Abuse Prevention showed that Michigan retailers sold tobacco illegally 17.2 percent of the time, down from 26.8 percent in 2001.

The federally imposed goal for 2002 is 20 percent. Nationwide, Maine weighed in with the lowest number of tobacco sales to minors at 6.7 percent and Alaska was the highest at 27.2 percent.

Liquor Control Commission holds hearing
A public hearing is scheduled for 1:00 p.m., December 4, in Lansing to consider proposed amendments to the Michigan Liquor Control Commission’s (LCC) administrative rules regulating on-premises licensees.

According to the LCC, these include elimination of several regulations deemed unnecessary, clarification of existing rules, simplification of the administrative process and reduction of administrative burdens affecting applicants or liquor license holders.
Interested licensees should go to the governmental affairs section of MRA’s website, www.retailers.com, to download a complete copy of the proposed changes, along with further details about the hearing.

Update from Washington
James Goldberg,
MRA Washington Counsel

Credit card litigation notice published
Major newspapers recently carried a notice advising retailers and others who accepted Visa and/or Master-Card credit or debit cards at any time after October 25, 1992, about pending class action litigation.

The notice is a standard in such cases, giving class members (including virtually all MRA retailer members) the opportunity to opt-out of the lawsuit, which charges Visa and MasterCard with unlawfully forcing retailers to accept branded debit cards if they want to accept branded credit cards. There is virtually no reason to opt-out of the class, however, since members of the plaintiff class have no financial liability for lawyers’ fees.

Plaintiffs in the litigation—including Circuit City, Wal-Mart, Sears and The Limited—claim that Visa and MasterCard conspired with their member banks by forcing retailers who accept branded credit cards to also accept branded debit cards.

MRA members may obtain a detailed description of the lawsuit and their rights by calling 888.641.4437 or by visiting the litigation website, www.InReVisaCheck-MasterMoneyAntitrustLitigation.com.

House passes federal rent-to-own bill
The House of Representatives has passed legislation establishing federal disclosure requirements for rent-to-own contracts, but the narrow 215-201 margin by which it was passed indicates that the legislation will have major difficulties in the Senate.

More than 45 states (including Michigan) currently have laws requiring disclosures in rent-to-own contracts. Opponents of the legislation, including House Judiciary Chairman James Sensenbrenner (R-WI), charged that the real purpose of the bill was to override laws and court decisions in three to four states that characterize these transactions as credit sales.

Before passing the bill, the House rejected amendments that would have, among other things, established a federal limit on the amount that rent-to-own dealers could charge for products “purchased” under this type of agreement.

Retailers sued over patent infringement
The perils of operating in the world of e-commerce were underscored recently when more than two dozen small businesses were named as defendants in San Diego lawsuits charging them with patent infringement.

The plaintiff, PanIP, LLC, claims it holds U.S. and Canadian patents on two key elements of e-commerce: displaying text and graphics online and obtaining credit card information from online customers.

The defendants operate an “online store” as part of their websites, enabling those who click on to the site to order merchandise and pay for it using a credit card. In that respect, the sites are no different from thousands—perhaps millions—of other Internet sites operated by retailers across the country.

The inventor behind the lawsuit is no stranger to patent infringement litigation. In 1994, he filed a lawsuit against American Airlines, claiming that American’s SABRE airline reservation system infringed on other patents he holds. The inventor lost the suit in federal district court and lost again on appeal in 1997.

This time, he’s taking a different tack, filing suits against small business with the apparent hope that he can coerce them into settling by paying a one-time license fee for the right to use his patented technology.

MRA meets with Labor on white collar overtime
MRA’s Washington counsel met recently with a high-ranking official of the Department of Labor’s (DOL) Wage-Hour Division to hear the agency’s latest thinking on amending existing rules on overtime pay for so-called “white collar” employees.

The rules governing overtime pay for professional, executive and administrative employees haven’t changed in more than 25 years, and the Department is planning to propose amendments later this year or early in 2003.

The DOL official reported that unions wanted essentially no change in current rules, except for an increase in the salary test used to determine when an individual is exempt from overtime. The unions want a salary figure of more than $42,000, which they say represents the inflation-adjusted current salary test.

Employer groups, on the other hand, suggested that the salary be no higher than $22-24,000. The DOL official, while not divulging the contents of the Department’s proposal, did indicate that in the past, the agency has not relied on inflation-adjusted figures.