Tag: cpsc

Oh What Fun It Is To Ride . . . A Hoverboard? This Year’s Must-Have Holiday Gift Poses Potential Litigation Risks for Manufacturers

back to the future hoverboardIn 1989, the Back to the Future franchise made several fanciful predictions about 2015.  One prediction may now be coming true: hoverboards have hit the streets — sort of.  The currently-available hoverboards, as opposed to the Hollywood fantasy ones, are more properly described as hands-free, self-balancing scooters.  Fueled by viral videos and celebrity social media posts, these battery-powered scooters are quickly becoming the must-have gift of the holiday season.

As the popularity of these hoverboards increases, however, so too does the potential for claims against manufacturers and sellers.  Over the last three months, the Consumer Product Safety Commission (“CPSC”) has reportedly learned about nearly 20 separate injuries from hoverboard-related accidents, ranging from sprains and contusions to broken bones and at least one head injury.

While the CPSC has not taken any formal action in response to any of these injury reports, that could change based on recent news reports. In the past two weeks, there have been two separate reports of hoverboards spontaneously igniting and causing a fire. This type of potential hazard could capture the attention of consumers, manufacturers, and regulators alike.

In Louisiana, a family reportedly has sued a hoverboard manufacturer claiming that the hoverboard burst into flames while charging, destroying their home.  In Alabama, a man recently posted a video showing his hoverboard engulfed in flames after it allegedly caught fire while in use.   Although the CPSC has said that it has not yet received any reports of injuries due to hoverboard fires, it has reportedly announced that it is investigating the product line based on these fire-related complaints.

Despite these reports, the market for hoverboards shows no signs of slowing, particularly as children make their wish lists for the holiday season.   As manufacturers, distributors, and sellers rise to meet that growing demand, they also should plan to meet the accompanying regulatory and litigation risks that follow.

Article By Stephen M. Copenhaver & Amy M. Rubenstein of Schiff Hardin LLP

© 2015 Schiff Hardin LLP

CPSC & DOJ Sue Michaels Stores for Failing to Report Product Safety Hazard and Filing Misleading Information

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

For the first time in recent memory, the Department of Justice (DOJ) and Consumer Product Safety Commission (CPSC) jointly announced the filing of a lawsuit in federal court for the imposition of a civil penalty and injunctive relief for violation of the Consumer Product Safety Act (CPSA). The lawsuit is against arts and crafts retailer Michaels Stores and its subsidiary Michaels Stores Procurement Co. Inc. (collectively, “Michaels” or “the Company”)  for failing to timely report a potential product safety hazard to the CPSC. Unlike other CPSC civil penalty actions involving DOJ, this penalty does not already have a negotiated consent decree in place and it appears that the case could be fully litigated.

The complaint alleges that Michaels knowingly violated the CPSA by failing to timely report to the CPSC that the glass walls of certain vases were too thin to withstand normal handling, thereby posing a laceration hazard to consumers.  According to the complaint, multiple consumers suffered injuries, including nerve damage and hand surgeries, from 2007 to late 2009.

Michaels allegedly did not report the potential defect to the Commission until February 2010.  Of course, we only know one side of the allegations, and Michaels will respond to those allegations in the coming weeks. The Company did state that “it believes the facts will show it acted promptly and appropriately.”

WaterNotably, the complaint also alleges that when Michaels filed an initial report with the CPSC in 2010, it provided “only the limited information required to be furnished by distributors and retailers” under the CPSA.  However, and critically, as the complaint sets forth in more detail, manufacturers—whose definition under the CPSA includes importers of record—are required to provide more information to the Commission than retailers.

According to the government, Michaels’ report conveyed the false impression that the Company did not import the vases, even though the Company was the importer of record and thus was required to submit significantly more information as themanufacturer of the vases.  The lawsuit alleges that Michaels made this misrepresentation in order to avoid the responsibility of undertaking a product recall.

As for the remedy, the government is seeking a civil penalty (in an unidentified amount) and various forms of injunctive relief, including the enactment of a stringent compliance program to ensure future compliance with CPSC reporting obligations.  This requested relief is similar to what the CPSC has required in almost all civil penalty agreements with other companies over the past few years.

What makes this complaint so newsworthy is that the government and Michaels plan to litigate the imposition of a civil penalty.  As noted above, this is not a frequent occurrence because companies tend to settle civil penalty claims rather than litigate. Given how infrequently civil penalties are litigated and the lack of any legal precedent guiding civil penalty negotiations under the heightened $15 million penalty limits, any judgment likely would have a wide-ranging impact on all future civil penalty negotiations between companies and the CPSC.

As we have previously stated, we expect the Commission to remain active in 2015 in bringing enforcement actions against companies for violations of the CPSA and other safety statutes.

We will watch this case closely and update our readers on any noteworthy developments.

ARTICLE BY

Matthew Cohen
Matthew R. Howsare
Charles A. Samuels
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
Consumer Product Matters Blog

CPSC & DOJ Sue Michaels Stores for Failing to Report Product Safety Hazard and Filing Misleading Information

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

For the first time in recent memory, the Department of Justice (DOJ) and Consumer Product Safety Commission (CPSC) jointly announced the filing of a lawsuit in federal court for the imposition of a civil penalty and injunctive relief for violation of the Consumer Product Safety Act (CPSA). The lawsuit is against arts and crafts retailer Michaels Stores and its subsidiary Michaels Stores Procurement Co. Inc. (collectively, “Michaels” or “the Company”)  for failing to timely report a potential product safety hazard to the CPSC. Unlike other CPSC civil penalty actions involving DOJ, this penalty does not already have a negotiated consent decree in place and it appears that the case could be fully litigated.

The complaint alleges that Michaels knowingly violated the CPSA by failing to timely report to the CPSC that the glass walls of certain vases were too thin to withstand normal handling, thereby posing a laceration hazard to consumers.  According to the complaint, multiple consumers suffered injuries, including nerve damage and hand surgeries, from 2007 to late 2009.

Michaels allegedly did not report the potential defect to the Commission until February 2010.  Of course, we only know one side of the allegations, and Michaels will respond to those allegations in the coming weeks. The Company did state that “it believes the facts will show it acted promptly and appropriately.”

WaterNotably, the complaint also alleges that when Michaels filed an initial report with the CPSC in 2010, it provided “only the limited information required to be furnished by distributors and retailers” under the CPSA.  However, and critically, as the complaint sets forth in more detail, manufacturers—whose definition under the CPSA includes importers of record—are required to provide more information to the Commission than retailers.

According to the government, Michaels’ report conveyed the false impression that the Company did not import the vases, even though the Company was the importer of record and thus was required to submit significantly more information as themanufacturer of the vases.  The lawsuit alleges that Michaels made this misrepresentation in order to avoid the responsibility of undertaking a product recall.

As for the remedy, the government is seeking a civil penalty (in an unidentified amount) and various forms of injunctive relief, including the enactment of a stringent compliance program to ensure future compliance with CPSC reporting obligations.  This requested relief is similar to what the CPSC has required in almost all civil penalty agreements with other companies over the past few years.

What makes this complaint so newsworthy is that the government and Michaels plan to litigate the imposition of a civil penalty.  As noted above, this is not a frequent occurrence because companies tend to settle civil penalty claims rather than litigate. Given how infrequently civil penalties are litigated and the lack of any legal precedent guiding civil penalty negotiations under the heightened $15 million penalty limits, any judgment likely would have a wide-ranging impact on all future civil penalty negotiations between companies and the CPSC.

As we have previously stated, we expect the Commission to remain active in 2015 in bringing enforcement actions against companies for violations of the CPSA and other safety statutes.

We will watch this case closely and update our readers on any noteworthy developments.

ARTICLE BY

Matthew Cohen
Matthew R. Howsare
Charles A. Samuels
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
Consumer Product Matters Blog

US Customs and Border Patrol (CBP) Announces Trusted Trader Program Test

DrinkerBiddle

U.S. Customs and Border Protection (“CBP”) announced today the commencement of its long-anticipated Trusted Trader Program test which will run for 18 months in collaboration with the U.S. Consumer Product Safety Commission (“CPSC”) and theU.S. Food and Drug Administration (“FDA”). In effect, the Trusted Trader Program will combine the current Customs-Trade Partnership Against Terrorism (“C-TPAT”) and Importer Self-Assessment (“ISA”) program with the objective of streamlining the process through which importers can establish that they strive to secure their supply chains and strengthen their internal controls for compliance with the laws and regulations administered or enforced by CBP, including those of other government agencies.

Currently, importing companies can participate in C-TPAT, which focuses on securing supply chains, and ISA, which focuses on strengthening internal controls to comply with Customs laws and regulations in exchange for special benefits. If a company wants to participate in ISA, that company must also be in C-TPAT. By combining the two programs, the Trusted Trader Program will move toward a whole-government approach to supply chain security and trade compliance thereby strengthening government collaboration among different government agencies – CBP, the FDA, and the CPSC. It will also align with the Authorized Economic Operator (“AEO”) programs around the world, which focus on a combined security and compliance model.

Benefits of Participation

To encourage participation in this dual model, CBP is offering the following additional benefits to those currently offered to C-TPAT and ISA members:

  • A reduced FDA targeting/examination risk score;
  • A penalty offset, upon request, as part of a CBP penalty mitigation decision;
  • For Reconciliation program participants, an ability to flag and unflag entries retroactively after the entry summary is filed up until 60 days prior to the date of liquidation;
  • A reduction in Foreign Trade Zone on-site inspections;
  • An exemption from on-site visits from Drawback Specialists, for drawback claimants;
  • A limit of one full desk review per year for drawback claimants;
  • An exemption from random Non-Intrusive Inspections (although the right is reserved to conduct the inspections as appropriate for operational reasons);
  • A quarterly submission of the CAS number, the use, and the description for the chemical compound in advance of the calendar year quarter;
  • A promise from CBP to process Post-Entry Amendments on unliquidated entries within a 90-day timeframe;
  • A choice of exam location when CBP selects an entry for examination;
  • When a single entry contains multiple containers, but only one container is selected for examination, the remaining articles will be released; and
  • Additional incentives for the companies that complete the Product Safety portion of the Trusted Trader application.

Application Process

Importing companies that are interested in participating in the Trusted Trader Program test and meet the eligibility criteria must submit an email; if they are provisionally selected they will be given the Trusted Trader application. CBP will begin accepting emails on Monday June 16, 2014, and plans to begin selecting the initial test participants no later than July 16, 2014. CBP plans to limit the Trusted Trader program test to fewer than 10 participants. Specifically, CBP is looking for test participants to include at least one importer currently participating in C-TPAT, one importer not currently participating in any CBP partnership programs, and one or two participants monitored by CPSC and FDA.

To be eligible to apply for the Trusted Trader Program test, a company must be an active U.S. or Non-Resident Canadian importer with an Importer of Record or CBP-assigned number and at least two years of importing history. The company must also have written policies and procedures pertaining to its import process, a business office staffed in the United States or Canada, and a valid continuous importation bond filed with CBP. A company must also conduct an assessment of its supply chain based on C-TPAT’s security criteria for importers, implement and maintain security measures and supply chain security practices meeting C-TPAT’s security criteria, have a designated company officer responsible for C-TPAT, and create and provide a C-TPAT security profile. Finally, it must maintain books and records to establish compliance with U.S. Customs laws and regulations.

Through the Trusted Trader Program, CBP will: achieve integrated U.S. government collaborations that will result in enhanced efficiencies leading to a reduction in government-wide resource expenditures; expand information sharing between government agencies; reduce administrative costs by streamlining the application and validation processes; and increase efficiencies in the existing trade programs. Just as CBP has done with C-TPAT, ISA, and the Centers of Excellence and Expertise, the Trusted Trader program should strengthen security, identify low-risk trade entities, and increase overall efficiency of trade by segmenting risk and processing by account.

Article By:

Kathleen M. Murphy
Beata K. Spuhler
Mollie D. Sitkowski
Of:
Drinker Biddle & Reath LLP

A New ‘Must-Do’ for Children’s Products Importers and Domestic Manufacturers: A CPSC-Compliant Product Testing and Certification Program

The National Law Review recently featured an article, A New ‘Must-Do’ for Children’s Products Importers and Domestic Manufacturers: A CPSC-Compliant Product Testing and Certification Program, by Ruth A. Bahe-Jachna, David P. Callet, Francis A. Citera, Victoria Davis Lockard, and Gretchen N. Miller of Greenberg Traurig, LLP:

GT Law

Since the 2008 passage of the Consumer Product Safety Improvement Act,importers and domestic manufacturers of children’s products (a consumer product designed or intended primarily for children 12 or under) have been required to issue a certificate of compliance (known as a “General Conformity Certificate” or “GCC”) stating that the product is compliant with all U.S. Consumer Product Safety Commission (“CPSC”) mandated product safety rules. Now, however, children’s products importers and domestic manufacturers will be required to do more. Last year the CPSC issued regulations that require importers and domestic manufacturers to also develop and implement by February 8, 2013 their own Product Testing and Certification Program.

This new Product Testing and Certification Program, previously called a “Reasonable Testing Program,” must include specified elements, the implementation of which will, according to the CPSC’s regulations, provide the issuer of a new type of GCC (a “Children’s Product Certificate”) a “high degree of assurance” that all of its children’s products, not just the products that were tested, are compliant with applicable CPSC product safety rules.

The good news is that developing and implementing the new Product Testing and Certification Program will increase the likelihood that a company’s children’s products are in compliance with applicable CPSC product safety rules. Thus, it will help to protect the company’s brands from adverse publicity and avoid commercial disruption from goods being detained at a port or recalled by the CPSC.

A Company’s CPSC-Compliant Product Testing and Certification Program Must Include and/or Address:

  • Initial product certification which is to be based upon third-party lab testing of “sufficient samples” of the children’s products to provide the company a “high degree of assurance” that all of its children’s products meet applicable product safety rules.
  • A Periodic Testing Plan, which addresses the tests to be conducted, the intervals between tests, the number of samples to be tested and the methods that ensure that the tested samples are “representative” of the entire production population, so that the company can continue to have a “high degree of assurance” that its products remain compliant with all applicable product safety rules.
  • Material change in the product design or manufacturing process, including the sourcing of component parts, which could affect the children’s products’ ability to comply with applicable product safety rules.
  • Procedures to safeguard against a company using undue influence over third-party labs.
  • Records of all Children’s Product Certificates, third-party test results, Periodic Testing Plans, and material change and undue influence policy documents must be maintained for five years and made available to the CPSC on request.

A CPSC-Compliant Product Testing and Certification Program May Include and/or Address:

  • Component part certification and/or testing which a company may rely upon if it has exercised “due care” to ensure that reliance on that component part certificate and/or test was justified.
  • A Production Testing Plan which describes the production management techniques and tests that will be performed to provide the company a “high degree of assurance” that its children’s products continue to comply with applicable product safety rules after issuance of an Initial Product Certification. Although not required, a Production Testing Plan can extend the company’s mandatory third party testing from a minimum of once a year to once every two years.

©2012 Greenberg Traurig, LLP