Ad Law Access https://www.kelleydrye.com/viewpoints/blogs/ad-law-access Updates on advertising law and privacy law trends, issues, and developments Wed, 03 Jul 2024 05:30:20 -0400 60 hourly 1 CPSC Requests Feedback to Reduce Compliance Burdens https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/cpsc-requests-feedback-to-reduce-compliance-burdens https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/cpsc-requests-feedback-to-reduce-compliance-burdens Thu, 22 Jun 2017 18:02:08 -0400 Have ideas to lighten the load for complying with consumer product safety regulations? The Consumer Product Safety Commission (“CPSC” or “Commission”) wants to hear about them. The Commission has asked for comments and suggestions for ways it could potentially reduce burdens and costs of its existing rules, regulations or practices without harming consumers. CPSC requests that any submissions include information and data in support of the suggestions.

The CPSC is open to any proposals. According to Acting Chairman Ann Marie Buerkle, “The agency’s recent request for information seeking public input on ways to potentially reduce burdens and costs is not limited to existing rules. CPSC is interested in hearing any and all ideas, big or small, that might help ease regulatory burdens without compromising safety.” Acting Chairman Buerkle, who was nominated to the Commission by President Obama in 2013, has said that “seeking to reduce regulatory burdens is responsible governance.” The request for suggestions is in line with Buerkle’s general policy of promoting transparency and collaboration with the industry. For a further discussion of her policies, see our previous post here.

Submissions are due by September 30. This is an opportunity for companies to provide feedback in a collaborative, constructive context. We will continue to track the comments and provide updates on any important developments.

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Settlement Approved in Neutrogena Naturals Class Action https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/settlement-approved-in-neutrogena-naturals-class-action https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/settlement-approved-in-neutrogena-naturals-class-action Wed, 04 Sep 2013 14:12:56 -0400 Marketers of natural personal care products will want to take note of a recent nationwide settlement over marketing and advertising for Neutrogena Naturals. Plaintiffs filed suit in the Northern District of California in January of 2012. They alleged that product labels and website advertising for Neutrogena Naturals facial cleansers, body washes, and moisturizers violated California consumer protection laws. Specifically, the plaintiffs alleged that the labeling and advertising implied, falsely, that the Neutrogena Naturals products were entirely free of synthetic or synthetically-derived ingredients. The plaintiffs pointed to

  • the name of the line – Neutrogena Naturals;
  • the following claim, which appeared as part of an emblem on product labels: “NO harsh chemical sulfates, parabens, petrochemicals, dyes, [or] phthalates”;
  • claims about active “bionutrients” in the products (e.g., “Willowbark bionutrient & Jojoba bead scrub detoxifies pores”); and
  • claims related to Neutrogena using “pure” and “naturally derived” ingredients.

The plaintiffs alleged, separately, that the claim “NO . . . petrochemicals” was false and misleading, in and of itself, given the presence of petrochemical residues in the products.

Under the terms of the settlement, Neutrogena will (1) replace “petrochemicals” with “petrolatum” in the claim, “NO . . . petrochemicals” and (2) include on product labels, “a statement regarding the percentage of each product that is naturally derived.” Neutrogena will pay $1.3 million to a settlement fund. Following pay-outs to consumers, any remainder “shall be distributed to an appropriate non-profit or civic entity(ies) agreed to by the Parties and approved by the Court.” Neutrogena will pay up to $500,000 to the class counsel and up to $1,500 (total) to three class representatives.

Another “natural” class action in the personal care space is currently on appeal before the Ninth Circuit. That case is against the maker of Jason Naturals. The lower court dismissed the lawsuit, finding that primary jurisdiction over “natural” claims for cosmetics rests with the FDA. The FDA has since provided a letter to the plaintiffs stating that it has no plans to define the term, “natural,” as to cosmetics.

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Senate Confirms Two New CPSC Commissioners https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/senate-confirms-two-new-cpsc-commissioners https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/senate-confirms-two-new-cpsc-commissioners Fri, 28 Jun 2013 16:38:34 -0400 Late Thursday night, the Senate confirmed President Obama’s two appointments to the Consumer Product Safety Commission (“CPSC” or “Commission”), Marietta S. Robinson and former Representative Ann Marie Buerkle. The Senate Commerce, Science and Transportation Committee confirmed the women by unanimous consent, without hearings, ensuring that the upcoming departure of Commissioner Nancy Nord will not leave the Commission without a quorum.

While Ms. Robinson, a Democrat, was nominated in January 2012 and again in January 2013, Congress unsurprisingly did not act until it had a Republican nominee to consider as well. Ms. Robinson will fill the spot vacated by Thomas Moore, and her term will expire in October 2017. Rep. Buerkle will fill the spot vacated by Ann Northup, and her term will expire in October 2018. Background information on Ms. Robinson is available here, and on Rep. Buerkle here.

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White House Nominates New CPSC Commissioner and CPSC Adds Director of Compliance and Field Operations https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/white-house-nominates-new-cpsc-commissioner-and-cpsc-adds-director-of-compliance-and-field-operations https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/white-house-nominates-new-cpsc-commissioner-and-cpsc-adds-director-of-compliance-and-field-operations Thu, 30 May 2013 10:40:12 -0400 With a looming departure date for Consumer Product Safety Commission ("CPSC" or "Commission") Commissioner Nancy Nord that would leave the CPSC without a quorum, the Obama Administration announced last week the nomination of former Rep. Ann Marie Buerkle to serve as a Republican Commissioner. During her single term, Congresswoman Buerkle criticized what she described as an unchecked growth of government that stifled the free enterprise of small businesses. Her nomination will likely be paired with Marietta Robinson's nomination, President Barack Obama's pick in 2012 to fill the seat left vacant by Democratic Commissioner Thomas Moore.

In the wake of the White House's nomination, Ray Aragon quietly became the Commission's Director of Compliance and Field Operation. Although the CPSC has not issued a press release announcing the new Director or modified its online organization chart, Mr. Aragon is listed in the CPSC's phone directory and presumably has begun handling matters. Mr. Aragon was most recently a partner at McKenna Long & Aldridge LLP, with a commercial litigation practice that included product liability claims.

This Kelley Drye advisory provides background regarding these two individuals and what the new leadership means for the CPSC.

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Mandated Compliance Programs as the New Normal? Williams-Sonoma Agrees to $987,000 CPSC Civil Penalty & Comprehensive Compliance Program https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/mandated-compliance-programs-as-the-new-normal-williams-sonoma-agrees-to-987000-cpsc-civil-penalty-comprehensive-compliance-program https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/mandated-compliance-programs-as-the-new-normal-williams-sonoma-agrees-to-987000-cpsc-civil-penalty-comprehensive-compliance-program Wed, 08 May 2013 09:44:22 -0400 The tide continues to rise for Consumer Product Safety Commission (“CPSC”) civil penalties as the Commission announces a $987,000 penalty against Williams-Sonoma, Inc. and the company’s agreement to implement an extensive compliance program. On Monday, the CPSC announced that Williams-Sonoma has agreed to pay the civil penalty to resolve allegations that the company knowingly failed to report a defect in its Pottery Barn wooden hammocks. Williams-Sonoma also agreed to implement a comprehensive compliance program that arguably encompasses far more than the company’s alleged failure to report in a timely manner.

According to the settlement agreement, the wood in the hammock stands allegedly deteriorated over time, and Williams-Sonoma had received notice of a consumer injury resulting from the failure of the hammock as early as November 2004 and had received its eighth incident report by the end of October 2006. The company, however, did not report to the Commission until September 2008, when it knew of 45 incidents. In October 2008, Williams-Sonoma and the CPSC announced the recall of 30,000 hammock stands. Because the alleged failure to report occurred prior to September 2008, it was subject to the CPSC’s previous civil penalty cap of $1.825 million instead of the current cap of $15 million.

In addition to the civil penalty, Williams-Sonoma agreed: (1) to implement and maintain a comprehensive compliance program designed to ensure compliance with all safety statutes and regulations enforced by the Commission (not just the Consumer Product Safety Act, which was the subject of the penalty); and (2) to maintain and enforce a system of internal controls and procedures designed to ensure timely and accurate reporting to the CPSC. The comprehensive compliance program is the same as that imposed in the settlement agreement entered with Kolcraft Enterprises, Inc. earlier this year. In a statement issued in connection with the Williams-Sonoma settlement, Commissioner Nord expressed concern that, for a second time, the CPSC had insisted on a comprehensive compliance program absent evidence of widespread noncompliance and that “the compliance program language in [the] settlement is another step toward just such a de facto rule.” She also noted that using recalls to justify imposing mandates unrelated to the problem (in this case, timely reporting) discourages participation in the voluntary recall process.

Companies with products subject to the CPSC’s jurisdiction should note that mandated compliance programs appear to be the new normal for civil penalty agreements, regardless of a company's history with the Commission as civil penalty demands continue to increase.

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A New CPSC Chairman at the End of the Year? https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/a-new-cpsc-chairman-at-the-end-of-the-year https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/a-new-cpsc-chairman-at-the-end-of-the-year Fri, 01 Mar 2013 12:05:45 -0500 Yesterday Inez Tenenbaum, Chairman of the Consumer Product Safety Commission (“CPSC”), announced at the International Consumer Product Health and Safety Organization's ("ICPHSO") annual conference that she will not seek renomination when her term expires in October 2013. She took the position in 2009, and her confirmation brought the Commission to three sitting Commissioners for the first time since July 2006.

Much of her term has focused on implementation of the Consumer Product Safety Improvement Act (“CPSIA”) -- since the Act’s implementation in 2008, the CPSC has issued 40 final rules on children’s products, including cribs, toddler beds, and infant swings. Additionally, the CPSC has aggressively pursued litigation to seek recalls, filing four administrative lawsuits in 2012, and sought higher civil penalties for failure to file timely Section 15(b) Reports.

This announcement adds to existing uncertainty about how the Commission will look in 2014. Currently, two of the five Commission seats are unfilled. Commissioner Nord also expects to leave the CPSC in October (her term ended last year, but she is serving an extra year to avoid having an empty seat). Unless Congress acts on the nomination of Marietta Robinson or the White House nominates, and the Senate confirms, a Republican, that would leave only Commissioner Robert Adler on the Commission.

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CPSC Imposes Another Six-Figure Civil Penalty https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/cpsc-imposes-another-six-figure-civil-penalty https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/cpsc-imposes-another-six-figure-civil-penalty Wed, 06 Feb 2013 09:37:23 -0500 The Consumer Product Safety Commission ("CPSC") recently announced a settlement with Whalen Furniture Manufacturing, Inc. (d/b/a Bayside Furnishings), resolving allegations that the company failed to file a timely Section 15(b) Report and imposing a $725,000 civil penalty. The penalty demonstrates that the CPSC will be particularly aggressive when it goes to a company to seek information, even if the product meets certain safety standards.

Over a two-year period, Whalen sold approximately 7,700 children’s boat-shaped beds that contain a toy chest with a 20-pound lid in the “bow.” The CPSC alleges that, in November 2007, Whalen received notice that a toddler had died after the toy chest lid fell on his head, but did not file a full incident report with the CPSC until March 2008 and only at the staff's request. Whalen denies the allegations and states that it believed the reported death did not represent a "legitimate incident" and that the beds passed toy chest safety tests completed by third-party testing agencies.

The $725,000 civil penalty continues the trend of the CPSC seeking higher civil penalties for untimely reports. All penalties imposed since October 2011 have been for over $400,000, and this penalty is the second largest since September 2011.

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Round Two: President Obama Renominates Marietta Robinson as CPSC Commissioner https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/round-two-president-obama-renominates-marietta-robinson-as-cpsc-commissioner https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/round-two-president-obama-renominates-marietta-robinson-as-cpsc-commissioner Tue, 29 Jan 2013 16:52:05 -0500 President Obama has (again) nominated Marietta S. Robinson to fill the open Democrat seat at the Consumer Product Safety Commission. The President nominated her last January, and she had a Senate confirmation hearing, but the Senate took no further steps to confirm her nomination. The President has not nominated anyone to fill the open Republican seat, sparking speculation that the new Congress will not act until it has a pair of nominations (one D and one R) to consider. If this Congress confirms Robinson's nomination, Democrats on the Commission would outnumber Republicans 3-1 -- Chairman Tenenbaum and Commissioner Adler are both Democrats, and Commissioner Nord is a Republican. In addition, Commissioner Nord expects to leave the Commission in October (her term ended last year, but Commissioners may serve an extra year to avoid having an empty seat).

An experienced litigator, Ms. Robinson has practiced law for over 30 years. She also unsuccessfully ran for a seat on the Michigan Supreme Court in 2000 and ran for Michigan Attorney General in 2002, but withdrew from the race.

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Three's Company (or a Crowd)? CPSC Files Lawsuit Against Third Magnet Ball Seller https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/threes-company-or-a-crowd-cpsc-files-lawsuit-against-third-magnet-ball-seller https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/threes-company-or-a-crowd-cpsc-files-lawsuit-against-third-magnet-ball-seller Thu, 20 Dec 2012 11:03:14 -0500 Earlier this week, the CPSC filed an administrative complaint against Star Networks USA, LLC, the seller of Star Magnicube Magnet Balls and Magnet Cubes. The Commission voted 2-1 to file the complaint, with Commissioner Nord voting against the f. As described in our previous post, the CPSC has already filed three other administrative complaints since July, an unprecedented use of its litigation authority. This is the third filed against an importer of high-powered magnet balls. The other two magnet ball-related lawsuits involve Buckeyballs and Zen Magnets. Although the products have warnings to keep the magnets away from children, CPSC believes they continue to present an ingestion hazard.

In July 2012, Star Networks and eleven other companies, at the request of the CPSC, agreed to withdraw their magnet ball products from the market. Star Networks, however, reversed its withdrawal in November, and the Commission filed this complaint after discussions with the company failed to result in a voluntary recall. The complaint alleges that the products have a defective design, warning, and instructions. The CPSC is seeking an order that the company stop selling the Magnicube Magnet Balls and Magnet Cubes, notify the public of the defects, and offer customers a full refund. The Commission claims that it has received over two dozen reports of ingestion of small magnets like those imported by Star Networks.

The consolidated case involving Buckeyballs and Zen Magnets continues. Maxfield & Oberton, the importer of Buckeyballs, announced this week that it would stop selling the product and is selling through product in anticipation of the "Buckypocalypse." Any company that relies heavily on product warnings should continue to watch these cases very closely.

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Is CPSC the New "National Nanny?" Agency Files Third Lawsuit In Five Months Against Maker of Nap Nanny https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/is-cpsc-the-new-national-nanny-agency-files-third-lawsuit-in-five-months-against-maker-of-nap-nanny https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/is-cpsc-the-new-national-nanny-agency-files-third-lawsuit-in-five-months-against-maker-of-nap-nanny Fri, 07 Dec 2012 08:04:02 -0500 On Wednesday, the CPSC filed an administrative complaint against Baby Matters, LLC, the manufacturer of Nap Nanny and Nap Nanny Chill infant recliners. The CPSC alleges there have been at least five deaths and over 70 additional incidents resulting from the use of the products. The Commission voted 3-0 to file the complaint after discussions with the company failed to result in an adequate voluntary recall. Prior to this year, CPSC had used litigation to seek a recall in only a handful of situations, but this is the third lawsuit the Commission has filed in just five months. The other two lawsuits involve Buckeyballs and Zen Magnets.

The complaint alleges that the Nap Nanny recliners have a defective design, warning, and instructions, posing a substantial risk of injury and death to infants, and seeks an order requiring the company to notify consumers of the defect and offer a full refund. In June 2010, the CPSC and Baby Matters announced the recall of first generation Nanny Nap recliners, offering $80 towards the purchase of the newer model, and improved instructions and warnings to owners of the second generation model. The company claims that the new incidents were due to consumer misuse, but, according to the CPSC, the previous corrective action was insufficient.

Companies conducting a recall should continue to review incident reports and remember that the CPSC is still watching. The Commission monitors recall effectiveness and, as demonstrated by the latest lawsuits, will aggressively push for further action if it thinks the recall did not address the problem.

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CPSC Issues Long Awaited Rules on Testing https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/cpsc-issues-long-awaited-rules-on-testing https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/cpsc-issues-long-awaited-rules-on-testing Wed, 05 Dec 2012 16:39:16 -0500 The CPSC just issued the final rule on testing and certification for children's products. The final rule, effective February 8, 2013, requires manufacturers, importers, and private labelers to test representative samples of all children’s products to ensure compliance with the applicable safety rule(s). The CPSC voted 2-1 to approve the proposed rule without changes. Commissioner Nord had proposed an amendment to the proposed rule to reduce the costs of recordkeeping, but Chairman Tenenbaum and Commissioner Adler voted against it. The rule lacks the detail that some commenters sought, covering briefly representative testing and recordkeeping.

Representative Testing: The testing must be conducted by a CPSC-accredited third party certifier, who must issue a certificate of compliance (either a separate certificate for each applicable rule or a combined certificate demonstrating compliance with all applicable rules). The representative sample of products must provide a basis for inferring the compliance of all products. The Commission noted that companies may draw such an inference from the testing of products or components manufactured using the same grade of material, provided that the production processes are controlled and the dimensions are the same, or from random or cluster sampling (i.e., probability-based sampling methods).

Recordkeeping: Manufacturers, importers, and private labelers must maintain records of the representative testing, including the number of samples selected and the procedure used to select the samples. The Commission recognized the costs associated with developing testing procedures, selecting samples, and recordkeeping, but did not estimate those costs.

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CPSC Announces New General Counsel https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/cpsc-announces-new-general-counsel https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/cpsc-announces-new-general-counsel Tue, 04 Dec 2012 12:37:07 -0500 On December 3, 2012, the Consumer Product Safety Commission ("CPSC") Chairman Inez Tenenbaum announced the hiring of former Georgetown University Vice President and General Counsel Stephanie Tsacoumis as new General Counsel for the Commission. The Office of the General Counsel advises and counsels the CPSC Chairman and Commissioners, coordinates rulemaking, and pursues administrative lawsuits and civil penalties in the enforcement of federal safety standards. Ms. Tsacoumis will begin at the CPSC on Monday, December 10.

Ms. Tsacoumis served as Vice President and General Counsel for Georgetown University from 2009 to 2012, where she was responsible for all of the University’s legal affairs, including general compliance, federal contracts and grants, intellectual property, and health and safety. As a member of the adjunct faculty at the Georgetown University Law Center, she also taught classes on federal securities law disclosure.

Prior to joining Georgetown, Ms. Tsacoumis worked at Gibson, Dunn & Crutcher LLP. She served for six years as co-partner in charge of the D.C. office and worked on transactional and advisory matters for for-profit and not-for-profit organizations. Ms. Tsacoumis also managed the legal team for pro bono client Girl Scouts of the USA and currently serves on the Women’s Advisory Board of the D.C. Girl Scouts. She is also Secretary of Girls Inc. of the Washington, D.C. Metro Area – a non-profit organization dedicated to inspiring young girls. She graduated from the University of Virginia School of Law and Phi Beta Kappa from The College of William & Mary with a degree in economics. She also completed executive programs at Harvard Business School and the Kellogg School of Management at Northwestern University.

Ms. Tsacoumis will likely have a full plate, including ongoing litigation regarding magnetic balls, consideration of potential policy changes for how information is released under Section 6(b) of the Consumer Product Safety Act, and continued implementation of the Consumer Product Safety Improvement Act.

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Course Set for Higher CPSC Civil Penalties https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/course-set-for-higher-cpsc-civil-penalties https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/course-set-for-higher-cpsc-civil-penalties Wed, 13 Jun 2012 09:27:23 -0400 As the CPSC staff begins to negotiate settlements under new authority granted through the Consumer Product Safety Improvement Act, companies can expect more aggressive positions from the CPSC. Recent consent agreements give insights for the road ahead and turns companies should avoid taking when navigating product safety issues. Manufacturers, importers and sellers of consumer products will be interested in a new article published by BNA Product Safety & Liability Reporter that reviews penalties recently imposed by CPSC and recommends steps companies can take to minimize civil penalty exposure. Access the article by clicking here.

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CPSC Issues Revised Recall Handbook and New Guidelines for Reverse Logistics Plans https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/cpsc-issues-revised-recall-handbook-and-new-guidelines-for-reverse-logistics-plans https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/cpsc-issues-revised-recall-handbook-and-new-guidelines-for-reverse-logistics-plans Fri, 02 Mar 2012 11:55:43 -0500 Yesterday the Consumer Product Safety Commission ("CPSC") announced a revised version of its Recall Handbook and new Guidelines for Retailers and Reverse Logistics Providers ("Reverse Logistics Guidelines"). Although much of the documents' content reflects existing law and Commission practice, the guidance confirms an increasing focus on new media and on tracking recalled products. For example, the Recall Handbook contains the following new provisions:

  • Companies should file Section 15(b) Reports through the CPSC's website (saferproducts.gov), rather than by mail or phone. The staff repeated that preference at this week's annual meeting of the International Consumer Product Health and Safety Organization ("ICPHSO").
  • When announcing a recall, companies should consider use of their social media presence, including Facebook, Google+, YouTube, Twitter, Pinterest, and company blogs. Such posts should include a link to the company's recall website.
  • Companies conducting a recall should modify their websites to accept e-mail requests to participate in the recall.
  • Companies should consider the use of mobile scanners to obtain information on recalls from mobile devices. The recall poster should include a QR code or other mobile scanning code to let consumers act on the recall immediately.
  • Companies conducting a recall should develop a plan regarding disposition of the returned product and its parts and monitor any third parties hired to destroy or dispose of the product.
  • The Commission will monitor product recalls, as described in a new section of the Handbook and in the Reverse Logistics Guidelines.

The updated Recall Handbook also elaborates on some of the previous guidance:

  • When discussing how the Commission evaluates the timeliness of a company's Section 15(b) Report, the Handbook explains that the CPSC will consider knowledge obtainable upon the exercise of due care to ascertain the truth of representations. In other words, a company should not bury its head in the sand while relying on statements from a third party.
  • In addition to the factors previously identified for determining whether a risk of injury could make a product defective, the Commission will also consider whether the risk was obvious to the consumer; whether there were adequate warnings and instructions to mitigate the risk; and whether the risk of injury was the result of consumer misuse and, if so, whether the misuse was foreseeable.
  • For the Fast Track Product Recall Program, if a corrective action plan is not approved within 20 working days, the staff typically will not make a preliminary hazard determination if the company has provided the required information, but the staff has not been able to review it within the time period.
  • The number of units stated in the press release or recall alert announcing the recall must include units manufactured, imported, and distributed, even if those units were recovered prior to reaching consumers.

The Recall Handbook and Reverse Logistics Guidelines can serve as helpful quick references to company personnel involved in product safety issues.

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HP Agrees to Pay $425,000 CPSC Penalty https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/hp-agrees-to-pay-425000-cpsc-penalty https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/hp-agrees-to-pay-425000-cpsc-penalty Tue, 24 Jan 2012 09:56:46 -0500 Yesterday the Consumer Product Safety Commission ("CPSC") announced that Hewlett-Packard Company has agreed to pay a $425,000 civil penalty to settle allegations that the company failed to report safety issues with its lithium-ion battery pack to the CPSC in a timely manner.


Section 15(b) of the Consumer Product Safety Act requires companies to report immediately to the CPSC if they have information that a product could create a "substantial product hazard" or create an unreasonable risk of serious injury or death. The CPSC alleges that HP was aware of incidents of overheating, two of which allegedly involved injuries to consumers, 10 months before reporting to the CPSC. HP and CPSC recalled around 32,000 battery packs in October 2008.


According to a statement released by CPSC Chairman Inez Tenenbaum, the settlement with HP was negotiated under the pre-CPSIA enforcement scheme, which had much lower statutory limits on civil penalties. However, Tenenbaum indicated an expectation that the Commission’s future enforcement actions will “include civil penalty amounts that maximize the likelihood of deterring violations.”


Also yesterday, the Obama Administration announced the nomination of Marietta Robinson for CPSC Commissioner. Ms. Robinson is a trial attorney with 33 years experience and former trustee of the Dalkon Shield Trust.

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Build-a-Bear Workshop, Inc. Agrees to Pay $600,000 Civil Penalty and to Forego Indemnification https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/build-a-bear-workshop-inc-agrees-to-pay-600000-civil-penalty-and-to-forego-indemnification https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/build-a-bear-workshop-inc-agrees-to-pay-600000-civil-penalty-and-to-forego-indemnification Fri, 16 Dec 2011 10:09:44 -0500 Yesterday the Consumer Product Safety Commission ("CPSC" or "Commission") announced provisional acceptance of a $600,000 civil penalty settlement with Build-a-Bear Workshop, Inc. The agreement resolves CPSC staff allegations that the company failed to report potential safety issues to the Commission in a timely manner pursuant to Section 15(b) of the Consumer Product Safety Act (“CPSA”). In addition to agreeing to pay the civil penalty, in a very unusual provision, Build-a-Bear agreed not to seek or accept indemnification, reimbursement, insurance, or any other form of compensation from any manufacturer, importer, or retail store in connection with the civil penalty payment.

Specifically, the staff alleged that, from March 2001 to October 2008, Build-a-Bear imported and sold approximately 260,000 folding wooden frame toy beach chairs through its website and stores and that those chairs were defective and presented a substantial product hazard or an unreasonable risk of serious injury or death to consumers. The chairs allegedly had sharp edges that could pinch, lacerate, or amputate a child’s fingertip. The company received its first report of injury in July 2007, then in October 2008 stopped sale and issued a notice to its stores to return all stores in inventory. The company allegedly learned of ten other injury reports between July 2007 and January 2009, but did not report to the CPSC until March 20, 2009. The CPSC claims that the company had obtained sufficient information to reasonably support the conclusion that a report under Section 15(b) of the CPSA was required, but failed to report immediately. Consistent with other civil penalty settlements, the staff’s allegations do not identify exactly when the company should have reported.

This settlement serves as a reminder that companies should continuously monitor consumer complaints from all sources and make determinations about their potential safety implications. Although some companies may not think that eleven injury reports indicate a pattern, the Commission in this case thought they did. Publicly-available information does not reveal why the Commission would have demanded that the company forego any indemnification or other payment from third parties, but we will watch future settlements to see if this is new boilerplate language.

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Third Largest Toy-Related Fine Issued By CPSC: Spin Master Agrees To Pay $1.3 Million Civil Penalty https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/third-largest-toy-related-fine-issued-by-cpsc-spin-master-agrees-to-pay-1-3-million-civil-penalty https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/third-largest-toy-related-fine-issued-by-cpsc-spin-master-agrees-to-pay-1-3-million-civil-penalty Fri, 28 Oct 2011 13:33:34 -0400 Yesterday the U.S. Consumer Product Safety Commission (“CPSC”) announced that Spin Master, Inc., agreed to pay a civil penalty of $1.3 million for selling and failing to report that Aqua Dots, a product Spin Master distributed, contained a substance that metabolizes into the “date rape drug” when ingested. Aqua Dots was a craft kit that consisted of multi-colored beads that stuck together when sprayed with water, allowing children to create various shapes and designs.

Spin Master allegedly received reports in mid-October 2007 of children becoming ill, receiving emergency medical attention, and falling into comas after swallowing Aqua Dots and that Aqua Dots contained 1,4-butylene glycol (“TMG”), which, upon ingestion, metabolizes into gamma hydroxybutyrate (“GHB”), also known as the “date rape drug.” The CPSC also alleges that the company received reports of children becoming ill after ingesting a similar product made by the same overseas factory using the same ingredients list. The company did not file a Section 15(b) Report with the CPSC at that time. After receiving two reports of children ingesting the product and becoming ill, on November 5, 2007, the CPSC notified Spin Master, and two days later the parties announced a voluntary recall of 4.2 million units.

The CPSC claims that Spin Master violated the Consumer Product Safety Act by failing to report in a timely manner and the Federal Hazardous Substances Act by importing and selling a banned hazardous substance. In an unusually detailed response to the Commission’s allegations, Spin Master denies all allegations that they knowingly violated the law. For example, Spin Master states that the product underwent all legally-required testing and that the company engaged an outside testing company to evaluate the toxicity of the product. A board-certified toxicologist conducted a Toxicological Risk Assessment stating that none of the ingredients was banned or restricted for use.

The recall has also triggered product liability lawsuits against Spin Master, including some class action litigation. In August, however, the Seventh Circuit affirmed the lower court’s denial of class certification in one of the cases.

Companies should take note that the CPSC continues aggressive enforcement its civil penalty authority. Even if a company does not participate in the design or manufacture of a product, it must ensure that the product meets applicable safety standards and is safe for use by the intended audience during reasonably foreseeable use and misuse. In addition, when evaluating whether a product presents a substantial product hazard or unreasonable risk of serious injury or death reportable to the CPSC, a company should consider potential product liability exposure.

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Black & Decker Agrees to Pay $960,000 CPSC Penalty https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/black-decker-agrees-to-pay-960000-cpsc-penalty https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/black-decker-agrees-to-pay-960000-cpsc-penalty Wed, 03 Aug 2011 15:50:33 -0400 Today the Consumer Product Safety Commission ("CPSC") announced that Black & Decker (U.S.) Inc. has agreed to pay a $960,000 civil penalty to settle allegations that the company failed to report safety issues with its Grasshog XP grass trimmers/edgers to the CPSC in a timely manner. The CPSC also alleges that Black & Decker withheld information requested by the CPSC staff.

Section 15(b) of the Consumer Product Safety Act requires companies to report immediately to the CPSC if they have information that a product could create a "substantial product hazard" or create an unreasonable risk of serious injury or death. The CPSC alleges that Black & Decker had received a large number (at least 80) of safety complaints and "hundreds" of warranty claims before reporting to the CPSC. There is also an implication that the company may have conducted a "silent recall" in January 2006 without the CPSC. Although the CPSC staff requested information from Black & Decker in May 2006, Black & Decker allegedly failed to provide information about certain defects. The staff closed its file based on the information it received, but the closing letter included boilerplate language reminding the company that it must notify the staff if there was a different risk or additional information. At the time of the letter, Black & Decker allegedly had received 216 safety complaints and approximately 14 injury reports, but "silently acquiesced in the file closure without revealing this information." The company then provided the additional information in October 2006 and recalled the product in July 2007.

Although the CPSC now has authority to seek up to $15 million in penalties, this is one of the higher civil penalties the CPSC has obtained, particularly for a settlement involving only one product, no children's products, and no filing of a lawsuit. This could signal a more aggressive CPSC, particularly if it thinks that the company has withheld information, received large numbers of incident reports, or conducted a silent recall.

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Legislation Passed by Congress in One Day Provides Some Relief from the CPSIA Lead Limits https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/legislation-passed-by-congress-in-one-day-provides-some-relief-from-the-cpsia-lead-limits https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/legislation-passed-by-congress-in-one-day-provides-some-relief-from-the-cpsia-lead-limits Tue, 02 Aug 2011 16:29:18 -0400 Who says the Federal Government is in a state of gridlock? While all eyes were focused yesterday on the vote in the U.S. House of Representatives on the debt ceiling deal, the House and Senate both passed a bipartisan bill (H.R. 2715, “A Bill to Provide the Consumer Product Safety Commission with Greater Authority and Discretion in Enforcing the Consumer Product Safety Laws, and for Other Purposes”) to amend the Consumer Product Safety Improvement Act (“CPSIA”). Although the new legislation does not address all of the concerns with the CPSIA, it attempts to provide some needed relief before the looming August 14th deadline regarding lead content. In just one day, H.R. 2715 was introduced, passed the House under suspension of the rules (421 yeas, 2 nays), and was sent to the Senate where it was passed by Unanimous Consent. President Obama is expected to sign the bill.

BACKGROUND

H.R. 2715 is intended to correct some of the more burdensome consequences of the CPSIA, which, among other things, set very tight limits for lead and phthalate content of products intended for children 12 years of age and younger. Lead limits were set at 600 ppm beginning in February of 2009, 300 ppm effective on August 14, 2009, and 100 ppm on August 14, 2011, if the Consumer Product Safety Commission (CPSC) determined that it was technologically feasible to do so. The CPSC on July 13 determined, in a 3-2 split of commissioners along party lines, that it is technologically feasible for all products to meet the 100 ppm standard. As a result, the lead limit will be set at 100 ppm effective August 14, 2011. To make matters worse, the lead limit would have applied to all products "sold" on or after the effective date. Thus, products previously manufactured to the 300 ppm limit and currently on store shelves or in manufacturer/distributor warehouses would no longer be legally saleable after the effective date. Similarly, children's products are required to meet a phthalate limit of 1000 ppm. In the case of lead, an exception was made for products that could be demonstrated to be inaccessible to the user. No similar exception was made for phthalates.

The CPSIA set other standards and established requirements that created problems for various businesses and resulted in absurd burdens with little or no benefit. The law creates burdensome third party testing, certification and labeling requirements that fall particularly hard on small businesses. Because of the broad sweep of the bill, the requirements of the CPSIA were deemed to be applicable to library books, used products, second-hand and charitable clothing store products.

After the CPSIA was enacted, it soon became apparent that the requirements were so burdensome that it threatened the very existence of a large number of small businesses while at the same time making obsolete billions of dollars of inventory of both small and large businesses alike. The CPSC attempted to address the absurdities through a series of stays of enforcement, exclusions from limits, and other measures. However, the CPSC was limited in the extent to which it could provide relief by the wording of the law, which preempted the Commission from making any exceptions based on risk assessments.

In the face of this quagmire, Congress recognized that technical corrections to the CPSIA were needed and beginning in 2009, work began on a legislative "fix." A comprehensive bill was introduced by the then-majority Democrats in 2010 but failed to pass the Congress. After the Republicans assumed majority status in the House in 2011, the leadership of the House Energy and Commerce Committee introduced its own bill, and the subcommittee of jurisdiction recommended the bill to the full committee in March. A full committee mark-up, however, was postponed from an early-May schedule when the Republicans failed to gather any support for the bill from the Democratic minority. This would have doomed the bill in the Senate, even if it passed the House. Finally, continued negotiations, and the shadow of the looming 100 ppm standard on August 14 created the impetus for the parties to introduce compromise bill H.R. 2715 and pass it through both houses of Congress in one day, August 1, 2011.

PROVISIONS OF THE BILL

H.R. 2715 will provide relief in the following ways:

Changes to the Lead Limit Application

  • The legislation makes the 100 ppm limit prospective rather than retrospective. Thus, product on the shelves with lead content between 100 and 300 ppm will continue to be saleable and the 100 ppm limit will apply only to product "manufactured after the effective date" of the limit.
  • "Functional Purpose Exception" is provided. In essence, the CPSC is granted much greater flexibility to grant exclusions and exemptions from the requirements of the CPSIA when they determine that there is no risk to human health. The CPSC can, on its own initiative, or through a petition by an interested party, grant an exception to the lead limit if it can be shown that it is not practicable or not technologically feasible to manufacture the product by removing the lead or making the lead inaccessible. The potential exception only applies to products that cannot be mouthed or ingested by the child and the CPSC must make a determination that an exception for the product will have no "measurable adverse effect on public health or safety," which is defined as resulting in no measurable increase in blood lead levels. The CPSC decision on an exception, either through its own initiative or a petition by an interested party, shall be made only after notice and a public hearing on the issue.
  • The lead limits will not apply to off-road vehicles, including All-Terrain Vehicles and Snowmobiles, intended for children twelve years and younger.
  • Bicycles will be permitted to have up to 300 ppm in any metal component part.
  • The lead limits will not apply to "used children's products," as defined by the act. This includes products donated to charities and old library books.

Changes to the Third-Party Testing Requirements

  • The act allows manufacturers to use "representative samples" for testing rather than the currently prescribed "random samples."
  • Requires the CPSC to seek, within sixty days of enactment, public comment on opportunities to reduce the cost of third party testing requirements consistent with assuring compliance with consumer product safety rules, and requires the CPSC to review the public comments within one year after the date of enactment of the act and permits the Commission to change the testing requirements if consistent with product safety standards. A report to Congress is required.
  • In an attempt to provide relief to the smallest businesses, the act provides for "Special Rules for Small Batch Manufacturers." The CPSC is required to develop alternative, low-cost testing requirements and if none can be developed, small batch manufacturers are to be exempt from the third party testing requirements. Small batch manufacturer is defined as one having no more than $1,000,000 in gross revenue and a covered product is one produced by a small batch manufacturer in quantities no exceeding 10,000 units the previous year. The alternative testing will not apply to infant or toddler products.
  • The act excludes from third party testing requirements metal components of bicycles and certain printed materials, such as ordinary books, magazines, posters, greeting cards, and similar products.

Changes to Phthalates Requirements

  • Excludes parts that are inaccessible from the phthalate limits. The CPSC is required to adopt the same guidance on accessibility as the one it set for the lead accessibility guidelines or to promulgate a rule setting different guidance.
  • Provides that the phthalate limitations shall apply to any plasticized component part of a children's toy or child care article or any other component part that is made of "other materials that may contain phthalates."
    Changes to the Public Incident Database
  • Provides that the CPSC stay the publication of a report in the database for five additional days if it is informed that a report is materially inaccurate.
  • Requires CPSC to take an additional five days before posting the report to try to determine model and serial number information for reported products.

Changes to Tracking Labels Provision

  • Permits CPSC to exclude specific products, or provide alternative tracking label requirements, when the specified tracking label requirements under the act are determined to be not practicable for those products.

Other Provisions

There are provisions related to the development of an ATV Safety Standards, Durable Nursery Standards, and removing FDA-enforced provisions from the mandatory toy standard.

John Arnett from Kelley Drye's Government Relations team contributed to this post.

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CPSC Announces New Hire as Director of Compliance https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/cpsc-announces-new-hire-as-director-of-compliance https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/cpsc-announces-new-hire-as-director-of-compliance Mon, 25 Jul 2011 14:49:08 -0400 The Consumer Product Safety Commission ("CPSC") has hired Andrew Kameros as Assistant Executive Director of Compliance and Field Operation, the office that oversees product safety recalls and plays a significant role in rulemaking and enforcement proceedings. Prior to joining the CPSC, Mr. Kameros was General Counsel and Director of Compliance at the lobbying firm Cassidy and Associates. He helped clients develop ethics, disclosure and compliance programs and systems regarding lobbying activities.

Mr. Kameros joined Cassidy after nineteen years as a federal prosecutor with the U.S. Department of Justice, dealing with a range of cases including financial fraud, tax issues, and white collar crimes. During his last four years at Justice he served as an assistant chief, supervising a staff of twenty prosecutors. He obtained his undergraduate degree from Colgate University in 1982 and his law degree from American University in 1985. Jay Howell had been the acting head of Compliance and will continue as the head of CPSC's Hazard Identification and Reduction.

Companies that regularly appear before the CPSC should watch carefully as Mr. Kameros begins to leave his mark on the agency.

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