Friday, February 25, 2011

CPSIA - ICPHSO Update on Recall Law and Procedures

This panel discusses technical legal issues. You need to hire a lawyer to explore these issues. This blog is not a substitute for qualified legal representation. As previously noted, I am working off my notes, too. Please proceed with due and appropriate caution.

Panel included
  • Eric Stone, K&L Gates LLP
  • Georgia Ravitz, Arent Fox LLC
  • David Baker, Law Offices of David Baker LLC
Eric Stone: Section 15(a) of CPSA limits the agency's authority to pursue only items presenting a substantial risk of injury or death. The agency has the right to sue for the same thing under Section 15(c) (mandatory recalls, very rare).

The prior law allowed manufacturers to elect the form of recall program. The CPSIA changed that, and gives the CPSC the authority to make those choices now.

Under Section 15(j), the agency can make a "substantial product hazard" findings across an entire product category, essentially by way of rulemaking. There are certain prerequisites to taking this action. The poster child for this is drawstrings in hoodies.

New violations of law INCLUDES reselling recalled items EVEN IF it was wholly voluntary or initiated entirely by the company without CPSC judgment. That recall is also enforceable in 51 jurisdictions. [Something to think about before you climb on the Fast Track Recall freight train . . . .] False statements or "attempting to mislead" the CPSC has dramatic implications under the new law. Don't go there . . . .

New penalty factors include a failure of the violator to respond "in a timely or complete fashion to the CPSC's requests for information and immediate action". Hmmm. Felony penalties now include asset forfeiture. Yep, that baby's raising its head again. In theory, the government can take your assets which it believes you have gotten through ill-gotten gains, like your house, your business, your buildings or plant. Hmmm. Love that CPSIA . . . .

David Baker:
  1. "Substantial Risk of Injury" - no definition in the statute or in the legislative history. CPSC and the courts (Mirama Enterprises case) have interpreted it. Factors include death, grievous bodily injury (mutilation, dismemberment, severe burns, injuries likely to require extensive hospitalization). He asserts that MANY of the recalls initiated last year do NOT meet this standard. [RW: Where have I heard that before???] More than 1/3 of recalls do not involve injury AT ALL and many of the others fall far short of "grievous bodily injuries". DB: Should the CPSC be taking these cases? Should they simply say thanks for the report but no action is required? [Corrected at David Baker's request 4-11-11.]
  2. Fast Track versus Slow Track - Express lane to a press release. No "finding" of a defect, possibly helpful in a product liability case. Fast Track cases aren't always so "fast". Are there cases in FT that because they have no injuries shouldn't be there? Is there still a slow track?
  3. Penalty phase - "NO GOOD DEED GOES UNPUNISHED." Every recall files is reviewed by the General Counsel's office for late reporting, including those without injuries. There are MANY civil penalty cases being prosecuted out there now. [This could be you, baby.] Is the CPSC going after its own constituency? There is a very accomplished ex-U.S. Attorney now on staff at the CPSC (I think he is referring to Mary Murphy).

Last to present is Georgia Ravitz on Section 6(b) (unilateral press releases by the CPSC and their coercive power). Information that manufacturers submit to the CPSC are protected from disclosure to the public. Section 6(b) is the section governing procedures for releasing such information. [This is why Sectionn 6(b) is continually under attack by consumer groups. Their need for information trumps the interest of manufacturers in this confidentiality pledge. . . or at least so they say.]

CPSIA amendments to Section 6(b) gives the agency the right to issue unilateral press releases. The CPSC must "find" that the situation is so urgent that public interest in immediate release of information about a product hazard over the time permitted for review under Section 6(b).

Gives examples of such unilateral releases. The first one related to Simplicity bassinets. [They were already bankrupt and their assets had been auctioned off.] Other examples include the Witco "Recall to Repair" stadium light poles. GR notes that there is some concern that this release evidenced the CPSC acting in a rushed manner.

GR wondered aloud whether the right to preemptively issue press releases is being used "appropriately". [Georgia is very polite.] She quotes from the legislative record to note that Congress wanted to give the CPSC the ability to inform the public about "hazardous products". In other words, there must be certainty that the product is actually hazardous. She quoted from a speech from Chairman Tenenbaum where she indicated that the agency will use its powers to get its way, and then quoted from my December 2010 Senate testimony on coercive incidents at the agency. . . .

GR says that if the new powers under 6(b) are being used to coerce agreement, then the provision is being misused or being used in a way not intended by Congress. [I agree.] Coercion stifles meaningful dialogue. She thinks this provision should be used as a last resort and only use when there is no responsible party left (bankruptcy) or when the violator is clearly abusing the process through foot dragging.

GR calls for a return to "the way it used to be", namely a more open and less coercive deliberation at the agency over disputes. David Baker indicates that he has NEVER overturned a Preliminary Determination letter. [CPSC as judge and jury. That's a tough combo to overcome.]

Eric Stone: How do you overcome the impression that a company is "evil"? Baker - meetings at the agency are much rarer today, most communciations by phone call or email. Leads to more disagreements and makes disputes harder to resolve. Speed leads to this manner of communication. GR: My experience is that expressing a cooperative attitude with CPSC compliance officers will typically be reciprocated.

Gotta go catch my plane . . . .


Ben S said...

Isn't part of the reason there are less meetings the required pre-announcing and public recording of any gathering with more than two commissioners?

Rick Woldenberg, Chairman - Learning Resources Inc. said...

I don't think one thing has to do with the other.