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Retail Law Advisor

Bite Kite Rides into Town: Cambridge Start-Up Tests New Trends in Fast Food Delivery

Posted in Restaurants, Retail

take-out-boxTake-out customers want quality food without complication and want it fast – with an emphasis on fast.  In a service market increasingly focused on instant gratification, fast food providers are striving to reinvent delivery services to meet the demands of customers who have very little time to spare but desire healthier, sustainable food options.  In the San Francisco Bay area, start-ups like Sprig and SpoonRocket have seized the opportunity by introducing a fast food delivery model that promises the delivery of warm, healthy meals in 20 minutes or less.  So far, they have garnered some success.  Sprig recently announced it will be expanding its hours and areas of delivery, and both entities have raised millions in seed money.

Bite Kite,” a start-up based in Cambridge, Massachusetts recently threw its hat into the ring by promising one of the fastest food delivery services in the greater Boston area.  The first to bring the Sprig/SpoonRocket business model to the northeast, Bite Kite hopes to replicate the success of its western counterparts.  Like Sprig and SpoonRocket, Bite Kite’s speed of delivery intends to attract diners pressed for time by offering delivery of low priced, healthy cuisine to one’s home or office within 25 minutes or less.  Focused on simplicity, Bite Kite provides only three meal choices a day for lunch and dinner in Cambridge, Somerville, and sometime this month, Boston.  Customers select meals through an iPhone app and within minutes, their orders arrive.  In order to provide products as swiftly as possible, Bite Kite has taken a page out of Uber’s playbook; drivers are placed in strategic locations in their respective market areas with pre-prepared meals on-hand so that orders can be delivered almost immediately after receipt.

At first glance, it appears Bite Kite has a viable approach to delivering on its promise of promptness.  But in an emerging era of customers seeking organic and local food sources, satisfaction with the quality of Bite Kite’s product may ultimately determine whether patrons come back for more. The websites for Sprig and SpoonRocket use words like “simple,” “wholesome,” and “fresh” to describe their products.  Likewise, Bite Kite’s website provides that there are “no shortcuts on quality” with their meals.  While quick service will be the bedrock of the Bite Kite model, quality will greatly influence their likelihood of success.  In the end, only time will tell if Bite Kite can meet the taste test.

Small Retailers Again Face Increased Health Insurance Costs

Posted in Healthcare, Insurance, Retail

Healthcare costsThe owners of small retail businesses in Massachusetts have come to expect to pay higher health insurance costs than their counterparts in the rest of the country, and unfortunately last year was no exception. According to a recent survey by the Retailers Association of Massachusetts (“RAM”), premiums for small retailers in Massachusetts rose an average of 11 percent last year across 3,500 of its members.

This increase, which matches an 11 percent increase from the previous year, is attributed to a combination of the federal rules under the Affordable Care Act (the “ACA”) and state health insurance mandates that both appear to target small businesses, as well as the rising costs of healthcare in general, according to RAM. The latest increase is the continuation of a trend over the past decade – an average annual increase of 12.3% for RAM members, which is three to four times the average increase for other common state benchmarks (e.g., the Group Insurance Commission and taxpayer subsidized plans available through the Massachusetts Health Connector).

Jon Hurst, the current president of RAM, thinks that the situation for small retailers has come to a breaking point, saying in the press release that accompanied the results of the survey: “When we set out on reforming health care both in Boston in 2006, and in Washington DC in 2010, the politicians sold us by saying the laws were designed to make sure we were all paying our fair share for our own health care costs. But today, employees of small businesses are forced into a system in which they [must pay] for coverage levels they don’t want, will never use, and can’t afford. In other words, they must pay for costs that are simply someone else’s. That’s not health insurance at all; it’s more accurately labeled a health care tax.”

As the costs to comply with the ACA increase and the maze of state-level mandates expands for small retail businesses, RAM is asking the Baker administration to advocate for a full small business waiver from the ACA. RAM is also pursuing fixes in Washington, D.C., asking both the Obama administration and the Massachusetts congressional delegation to craft changes to the ACA so small businesses are no longer categorized in a way that compels them to provide certain levels of coverage.

Small retail business owners don’t have many options at this point – they must comply with the current state and federal health insurance laws until a political solution arrives. After a historically harsh winter in Massachusetts, they still feel like they’ve been left out in the cold.

It’s Time to Give Your Hiring Processes a Check-up. Are They Compliant?

Posted in Employment, Litigation, Retail

List CheckingAs your prospective employees are brushing up on their interview skills, it’s also a good time to ensure your hiring practices and procedures are in order.  A regular review of employment application processes will keep them up-to-date. Scheduling time with hiring managers and Human Resources to freshen up interviewing procedure helps keep the entire organization on track.

Hiring laws and regulations are continually evolving. Employment applications must be consistently updated to reflect current law.  Part of this is defensive — there are few claims easier for a disgruntled rejected applicant to bring than a claim that the application was not in compliance with governing law.  These issues are particularly acute for the retail and hospitality industries, which experience high turnover and utilize seasonal employees.

This year — numerous states have adopted legislation barring prospective employers from including the question “Have you ever been arrested or convicted of a felony?” on employment applications. These laws are commonly referred to as “ban the box” initiatives.  According to the National Law Employment Project (NELP), fourteen states have adopted ban the box legislation.  A complete list can be found on the NELP website. The initiatives reflect a growing belief in rehabilitation, a sense that some felony convictions reflect circumstance more than character, and unwillingness to sentence former felons to a life of unemployment.

For example, New Jersey’s “ban the box” law took effect in February of this year. The new law states that Garden State employers with fifteen or more workers cannot inquire about a job applicant’s criminal history until completion of an initial interview.  This imposes two important requirements.  First, the application can’t contain the question.  Second, the question should not be asked during an initial interview.  Employers thus need not only update their forms, but make sure that they conduct interviews in conformity with the new law.

Massachusetts’ Criminal Offender Record Information (CORI) reform changed the rules in Massachusetts effective in 2010. In 2012, employers were given access to a new online tool through which they could request CORI forms for potential applicants.  As in other states with changing laws, the Commonwealth’s CORI laws require careful navigation during the hiring process.  Again, not only applications warrant review; employers must take care to comply with governing law and regulations during the interview process.

As employers navigate the many changing employment regulations concerning the hiring process, the United States Equal Employment Opportunity Commission (EEOC) website is a good place to start.

Climate Change Adaptation: Massachusetts Releases New Policies to Address

Posted in Environmental, Retail

Globe in SpaceIn one of our prior posts, we reported on efforts by Boston and New York City, in the wake of Hurricane Sandy, to undertake comprehensive climate change preparedness planning to review the vulnerabilities of each city’s built environment and to assess potential measures to enhance the resilience of both public and private infrastructure.

Today, we highlight new state policies, recently released for public review and comment, which also seek to assess and mitigate the likely impacts of climate change, specifically for proposed projects that are subject to review under the Massachusetts Environmental Policy Act (or MEPA).

The Massachusetts Executive Office of Energy and Environmental Affairs (EEA) recently released a draft policy on Climate Change Adaptation and Resiliency (the Policy) under MEPA.  This Policy, roughly a year in the making and initially outlined in EEA’s 2011 Massachusetts Climate Change Adaptation Report, would require a proponent of a proposed project subject to MEPA to address the impacts of climate change on a project and the project’s impacts on climate change.

Once this Policy becomes effective (on a date yet to be determined) a proponent would be required to include a “Climate Impact Assessment” in their Environmental Notification Form submitted under MEPA.  The proposed Climate Impact Assessment is intended to evaluate the potential impacts of climate change on a proposed project, including sea level rise, coastal flooding, storm surge, and changes in precipitation and temperature, and to assess the effectiveness and feasibility of measures to reduce hazards and increase the project’s resiliency.  The assessment would also evaluate how a project could contribute to (or reduce, as applicable) climate change impacts.

Under the proposed Policy, project proponents are encouraged to identify specific measures that would reduce greenhouse gas emissions and/or serve as effective climate change adaptation.  A project that completes the Climate Change Resiliency Questionnaire as part of Boston’s Article 80 Large Project Review would likely comply at least in part with this new state-level Policy. The Policy also indicates that the MEPA office would be receptive to off-site mitigation (including payments in lieu) when on-site mitigation is not feasible.

In moving toward adopting a policy on Climate Change Adaptation and Resiliency, Massachusetts builds on the work of the federal government, which in 2010 published guidance on how federal agencies should analyze the environmental effects of climate change when reviewing projects or other undertakings subject to review under the National Environmental Policy Act.  Often a forerunner in environmental legislation and related initiatives, Massachusetts’s implementation of its currently proposed Policy will be one to watch and continue to review, particularly as other states consider how to prepare for and respond to the issue of climate change adaptation – which is both a significant environmental and economic development issue, and should be a shared responsibility between the public and private sectors.

Massachusetts Expands Parental Leave Rights

Posted in Employment, Retail

parental-leave-150x143Effective April 7, 2015, Massachusetts employers with six or more employees must provide childbirth leave on a gender neutral basis.  Under a new Parental Leave Act law (“PLA”) signed by former Governor Deval Patrick on the day before he left office, Massachusetts men will now be guaranteed eight weeks of unpaid, job protected paternity leave.  To that end, the PLA amends and replaces the existing Massachusetts Maternity Leave Act (“MMLA”), which provides childbirth leave only to female employees.

Under the PLA, any employee regardless of gender or primary caregiver status who has completed the employer’s probationary period, or at least three months of full-time employment, whichever is shorter, is eligible to take up to eight weeks off without pay.  Such leave may be taken (1) for the purpose of giving birth or for the placement of a child under the age of 18, or under the age of 23 if the child is mentally or physically disabled, (2) for adoption with the employee adopting or intending to adopt or (3) for the placement of a child with an employee pursuant to a court order.

Employees who wish to take leave ordinarily must provide at least two weeks advance notice of their departure.  Alternatively, however, employees may provide notice “as soon as practicable if the delay is for reasons beyond the individual’s control.”  Where two employees of the same employer require leave for the birth, adoption or placement of the same child, they will be entitled only to an aggregate of eight weeks of leave.

Employers must restore employees to their previous or similar positions once they return from leave with the same status, pay, length of service credit and seniority.  However, employers who provide leave in excess of eight weeks should take note:  if you permit an employee to take more than eight weeks of parental leave, the employee retains his or her right to reinstatement and other benefits for the full duration of the leave unless you clearly inform the employee in writing prior to the beginning of the leave, and prior to any subsequent extension of the leave, that a leave longer than eight weeks will result in denial of reinstatement or a loss of other rights or benefits under the statute.

Notably, the PLA resolves a major inconsistency between the MMLA and guidance issued by the Massachusetts Commission Against Discrimination, which has advised employers to provide gender neutral leave because to do otherwise could violate state and federal anti-discrimination laws.  The PLA also is consistent with existing federal law, which allows both new mothers and fathers to take up to 12 weeks of unpaid leave for purposes of childbirth or adoption. But that law, the Family and Medical Leave Act, applies only to businesses with 50 or more employees.  The PLA is much broader in scope.

Covered employers must post a notice describing the PLA and the employer’s parental leave policy.  Accordingly, employers with six or more employees are encouraged to consult with counsel to ensure that their current policies comply with the PLA and to draft the necessary notices.

The Pop-Up Regulatory Maze

Posted in Licensing, Permitting, Pop-up Retail, Regulatory, Retail, Retail Sales, Zoning

popupshopsPop-up retail establishments, or “pop-ups,” generally refer to stores, restaurants, or events with a short duration. Pop-ups are typical for seasonal retail products, like Christmas or fireworks, but they have become common for designers (clothes, furniture, toys, etc.), restaurateurs (i.e., dinner clubs, food trucks), or other performers (concerts, parties) to conduct a one-time event, to test out new markets or products, or to begin operating while looking for a permanent location.  We have previously written about the considerations for both landlords and tenants with respect to pop-ups.  Also, while pop-ups are temporary, they may face a regulatory maze.  Pop-ups are usually subject to the same land use laws, regulations, and licensing requirements as traditional retailers, and, in some cases, they may be subject to additional or different regulations.

In most local jurisdictions, the zoning and land use regulations do not distinguish between temporary and more permanent uses. For a pop-up to be permitted in a particular building, the pop-up use typically must be allowed in the zone where the building is located. That does not necessarily mean that a new use permit or certificate of occupancy will be required for the pop-up because it may depend on how general the permitted use is and how closely the pop-up aligns with an existing permit. However, obtaining a certificate of occupancy or use permit can often be a long and onerous process, so pop-ups may be deterred from locating in certain available spaces because of the time investment required to obtain a permit.   Temporary or conditional certificates of occupancy or use permits are sometimes an option for pop-ups, but the process is not necessarily faster or easier than for a permanent use.

However, some local jurisdictions have recognized the unique advantages of pop-ups, so they have revised their zoning and permitting laws accordingly so that pop-ups do not have to go through the usual entitlement process.  In Austin, Texas, for example, the city approved an ordinance allowing pop-ups to easily obtain short-term permits to occupy vacant downtown retail spaces. Other cities have gone further to amend their zoning regulations to encourage pop-ups by relaxing restrictions that may otherwise apply to permanent establishments.   In Norfolk, Virginia, the city streamlined and simplified the permitting process for pop-ups. Other cities may follow suit.

Pop-ups are often one-time events, and make take place outside of buildings, in which case entirely different regulations may apply.  For one-time events in public space, an event or other type of special permit may be required. In the District of Columbia, for example, special event permits require the coordination of several agencies.

Finally, licensing for particular uses may still apply despite something being a pop-up. Food trucks, for instance, are often considered pop-ups, but some cities have adopted regulations specific to them.

Anyone planning on operating a pop-up should begin by determining how their jurisdiction treats pop-ups, then proceed from there.

Lift Off for Commercial Drone Regulations

Posted in Retail, Technology

DronesDrones are everywhere. Technological innovations have created countless commercial opportunities for drones, also known as unmanned aerial vehicles (UAVs). Until recently, however, the Federal Aviation Administration’s (FAA) prohibitions on drone commercialization have contrasted starkly with the soaring growth of drone-based businesses in Europe, Asia, and other parts of North America.

Now, depending on whom you ask, the FAA either has taken a significant step toward allowing commercial drones in the national airspace, or has proposed restrictive regulations that will stifle innovation and impede the deployment of drone-based services in the United States.

On February 15, 2015, after years of delay and the disclosure of leaked documents, the FAA released proposed regulations for commercial drone use. Following a 60-day public comment period and public meetings, the FAA expects to release final regulations that will become effective in 2017. Key points in the FAA’s proposed regulations include:

  •  Only daytime flights are permitted.
  • An operator can operate only one drone at a time.
  • Only line-of-sight flights are permitted; a drone operator must be able to see the drone unaided.
  • Drones must operate in a “sterile environment,” which means they cannot operate over any person not involved in their operation.
  • Drones must weigh no more than 55 lbs. and cannot carry external payloads.
  • Drones are limited to a maximum airspeed of 100 mph and a maximum altitude of 500 feet.
  • Drone operators are not required to obtain a private-pilot license, but must pass a written examination.
  • Commercial drones must display an FAA identification number, but airworthiness certification requirements are not required.

Although these proposed regulations are less onerous than many had feared, they still impose significant limitations on permitted commercial drone applications. For example, by forbidding external payloads and requiring line-of-sight flights, the proposed regulations would thwart the drone package-delivery services touted by Google and Amazon. Nonetheless, these regulations permit the commercial use of drones for agricultural crop inspections; research and development; educational/academic uses; power-line, pipeline, and antenna inspections; aiding search-and-rescue operations; bridge, other infrastructure and building inspections; aerial photography; and wildlife area evaluations. (Note that these proposed regulations do not affect recreational drones and model aircraft hobbyists, who remain subject to the longstanding provisions of Section 336 of Public Law 112-95.)

As the U.S. drone industry attempts to catch up with the rest of the world, the FAA’s proposed rules arguably represent an initial movement in the right direction. As FAA Administrator Michael Huerta has acknowledged, regulations governing drones must strike the appropriate balance between encouraging the emerging drone industry while maintaining aviation safety.

Concurrent with the FAA’s release of proposed drone regulations, the White House issued a memorandum discussing policies to address concerns about privacy, civil rights, and civil liberties in connection with the use of drones by federal agencies. The White House’s memorandum requires the development of a framework to address privacy, accountability, and transparency issues raised by commercial and private drone use.

Clearly, those interested in using drones for commercial applications should continue to monitor the regulatory process and stay abreast of the latest developments.

Recent Guidance on Geographically Descriptive Trademarks May Help Brand Owners

Posted in Intellectual Property, Retail

imagesBrand owners frequently adopt geographic terms to describe the origin or a characteristic of goods, such as NANTUCKET NECTARS for beverages from Nantucket and HYDE PARK for high end apparel.  They may also adopt such terms to describe the origin of services, such as CALIFORNIA PIZZA KITCHEN for restaurant services originating in California and FASHION OUTLETS OF LAS VEGAS for shopping centers in Las Vegas.  But geographically descriptive marks are generally considered weaker marks along the spectrum of trademark protection and may be difficult to enforce if found to be merely descriptive rather than inherently distinctive.  While a geographically descriptive mark may acquire distinctiveness, and therefore be protected, once they are recognized by consumers as identifying the source of goods or services, establishing distinctiveness may be difficult.  Therefore, when considering the use of a geographically descriptive brand, serious consideration should be given to the challenges that may arise in the enforcement and registration of such a brand.  Fortunately, the U.S. Court of Appeals for the Federal Circuit (CAFC) recently provided some helpful guidance on this issue in the case of In re Newbridge Cutlery Company.

Although trademark rights arise primarily through use of the mark rather than registration, obtaining a trademark registration from the U.S. Patent and Trademark Office (USPTO) offers significant advantages, including nationwide priority and constructive notice to the public of the owner’s use and ownership of the mark.  Under U.S. trademark law, however, a trademark that is “primarily geographically descriptive” or otherwise merely descriptive of the goods or services cannot be enforced unless and until such mark has acquired distinctiveness.  While the USPTO may presume that a descriptive mark has acquired distinctiveness after five years of continuous use, an applicant may establish acquired distinctiveness sooner by demonstrating that the consuming public recognizes the mark as a source identifier.  Sometimes, however, it may take more than five years of use to demonstrate that the mark has become distinctive.  In any case, brand owners who choose geographically descriptive marks should be prepared to address the descriptiveness issue.

Determining whether a mark is “primarily geographically descriptive,” and therefore unenforceable, requires courts and the USPTO to consider whether:

  1. the mark sought is the name of a place known generally to the American public;
  2. the American public would believe that the goods originate in that place (known as the “goods/place association”); and
  3. the source of the goods is the geographic region named in the mark.

The USPTO often rejects trademark applications on geographically descriptive grounds.  After thirty years of silence on this topic, however, the CAFC recently reined-in the USPTO’s restrictive analysis and provided some helpful guidance to brand owners.  In the Newbridge case, the CAFC reversed the USPTO’s refusal to register the mark NEWBRIDGE HOME for silverware, jewelry, desk items and kitchenware made in Newbridge, Ireland.  In doing so, the court noted that the fact that Newbridge is the second largest town in county Kildare and the seventeenth largest in the Republic of Ireland “reveals nothing about what the relevant American purchaser might perceive the word ‘Newbridge’ to mean and is too insignificant to show that Newbridge is a place known generally to the American purchasing public.”  According to the CAFC, the fact that Newbridge was mentioned in the Columbia Gazetteer of the World and some Internet websites was not sufficient for the USPTO to conclude that Newbridge, Ireland “is a place known generally to the relevant American public” and did not demonstrate that the mark was primarily geographically descriptive.  Thus, the first prong of the test for geographic descriptiveness was not met.

In practice, marks containing geographic locations are viewed with greater scrutiny, but the Newbridge case can provide a helpful roadmap for brand owners who seek to use and register marks that contain geographic terms.  In light of the CAFC’s recent decision, careful consideration should be given to the public’s perception of a geographic term before incorporating it as part of a brand to ensure that it is not merely geographically descriptive or that it can acquire distinctiveness in the near term.

It’s Snowing (Again!) – What Responsibility Does a Landlord Have for Snow and Ice Removal?

Posted in Compliance, Landlords, Restaurants, Retail, Risk Management

ShovelAfter four major snowstorms have buried much of Massachusetts in more than six feet of snow, and with other areas of the country dealing with storms of their own, landlords nationwide are wondering how responsible they are for clearing and managing snow and ice that has accumulated in their parking lots and on their sidewalks. The answer is: very responsible.

On July 26, 2010 in Papadopoulos v. Target Corp., 457 Mass. 368, the Supreme Judicial Court (SJC) substantially revised 125 years of Massachusetts common law relating to land owner liability for snow removal. Prior to the Papadopoulos decision, Massachusetts law held that a property owner was not liable for injuries caused by “natural” accumulations of snow or ice on the owner’s property. In Papadopoulos, the SJC discarded the distinction between “natural” and “unnatural” accumulations of snow and ice and ruled that in snow and ice cases property owners are now held to the same duty of care to lawful visitors as they are in all slip and fall cases– to act as a “reasonable person under all the circumstances.”

The snow removal reasonably expected of a property owner will depend on several factors, most importantly: (1) the amount of foot traffic on the property, (2) the amount of the risk reasonably feared, and (3) the burden and expense of snow and ice removal. While all owners of property owe visitors a duty of reasonable care, what constitutes reasonable snow removal will vary, with retail stores, restaurants, and hotels owing a higher standard of care than residential owners.

The decision in 2010 does not create a new standard of care, rather it provides for a more uniform application of the “reasonable person” standard.  The SJC stated, “If a property owner knows or reasonably should know of a dangerous condition on its property, whether arising from an accumulation of snow or ice, or rust on a railing, or a discarded banana peel, the property owner owes a duty to lawful visitors to make reasonable efforts to protect against the danger.”  Plaintiffs in snow and ice cases will still need to prove that the land owner was negligent in its snow or ice removal, and owners will still have defenses such as comparative negligence.

Massachusetts is now in line with other New England states that have also rejected the natural accumulation rule. However some states, such as Missouri, Texas, Illinois and Ohio, still follow the natural accumulation rule in snow and ice cases. Additionally, individual town and city regulations will govern how long a property owner has to remove the snow and ice before violating local rules.

It is important to note that once the snow is cleared, property owners still have a duty to guard against ice that may have melted during the snow removal process and then refrozen during the night.  So keep shovels and ice melt products handy until all the snow and ice are truly gone!

What’s on the Menu? A Look at the New FDA Quick Serve Restaurant (QSR) Labeling Requirements

Posted in Restaurants, Retail

We recently reported in to our clients about a little-known element of the Affordable Care Act (“Obamacare”) that will require many QSRs (Quick Serve Restaurants) to provide specific calorie and nutrition information to their customers and on their menus. Mandated by the legislation, it was left to the Food & Drug Administration (FDA) to implement.

In December, the FDA has released final rules on the labeling as it applies to the QSRs meeting certain criteria (including as to the number of locations in the chain). Essentially, food that is consumed on the premises or available by take-out is covered by the regulations. Items excluded are condiments, daily specials, or purely “display” elements such as beverage bottles at bars or decorative displays.

Some QSRs have already been following this practice, at least in part. Panera Bread highlights new offerings because of their health and nutritional value. Now others will do the same, required to provide to customers information as to total calories; calories from fat; total fat; saturated fat; trans fat; cholesterol; sodium; total carbohydrate; dietary fiber; sugars; and protein. It’s quite like the FDA nutrition labeling that can be found on everything today from cereal boxes to cans of soup and bottles of juice.

Menu labeling is an extension of widespread concern over weight-related health risks in the US and the desire by many public health specialists to help consumers make more informed eating decisions. As in retail, consumers have more options available to them each year, and the delivery methods are getting easier. Along with new restaurants come mobile apps that can be used to purchase and receive food by delivery. Without wait lines, QSR has taken on a new meaning and consumers need not even leave their living room to order a burger and fries.

With the fast growing category of qQSRs providing healthier options and aggressively marketing those options, for this sector the FDA’s rulesmay be both a mandate and a marketing opportunity to help consumers make more informed choices.

There are the obvious first and tactical changes that customers will see under this regulatory structure. Signage and menu boards at QSRs subject to rules will need to change. Longer-term, if consumers respond to the new transparency and begin making choices based on content and not just taste or desire, there may be further health-oriented changes coming to retail food marketing. As consumers become accustomed to seeing nutritional information on their food choices, they may forego an unhealthy item.

Whether or not this development will help with the issues of overall obesity or not remains to be seen. Opinion on the topic varies widely; some believe this is a trend in the right direction; others believe that when someone wants a cheeseburger, they want one regardless – -or even fully aware – – of its nutritional attributes. The one thing we do know is that change is coming to the QSR world. Those ubiquitous, bright, backlit displays enticing consumers with mouth-watering shots of their food may have to compete with the sobering reality of the numbers behind it all.