We are pleased to announce that Nancy Nord, former Acting Chair of the United States Consumer Product Safety Commission, has joined OFW Law as Of Counsel. Nord is a nationally recognized expert on safety regulation and corporate compliance with a wealth of experience in both the public and private sectors.
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By Elliot Belilos
The U.S. Consumer Product Safety Commission (CPSC) recently filed an action in federal court against Michaels Stores, Inc., seeking civil penalties for allegedly untimely reporting injuries from a vase sold in the stores and, notably, for allegedly falsely reporting the incidents as a retailer rather than as the manufacturer of the product. According to the Complaint, Michaels misrepresented to the Agency the company’s role in the distribution chain, allowing another company, The Gerson Company (“Gerson”) to report as the manufacturer even though Michaels was the importer of record (and, as a result, the statutory “manufacturer”).
CSPC asserts that Michaels engaged Gerson to contract to have the vase made overseas exclusively for Michaels, but that Michaels was the importer of record, a fact that CPSC alleges Michaels withheld from the Agency in its 15(b) report. CPSC asserts that Michaels purposefully withheld that information so that Gerson would be the recalling entity, and that the recall would have been more successful had the more well known Michaels been the recalling entity.
This case bears watching as it moves forward. Certainly companies that are importers of record for products manufactured overseas need to understand that they are deemed to be the manufacturer of those products under the Consumer Product Safety Act (CPSA), and that any report to the CPSC should properly reflect their role in the distribution chain.
Elliot Belilos represents companies on consumer product safety compliance issues, including reporting obligations to the CPSC and corrective actions, up to and including recalls. Elliot can be reached at firstname.lastname@example.org.
By Elliot Belilos
On November 13, 2013, the U.S. Consumer Product Safety Commission (CPSC) issued a proposed interpretive rule concerning corrective action plans for “voluntary” recalls that may impact future voluntary consumer product recalls in two significant ways. First, CPSC proposes to make voluntary recall agreements that companies negotiate with CPSC legally binding. Second, CPSC proposes to permit the staff to require ongoing compliance programs as a component of such agreements.
Legally Binding Voluntary Recalls: Under the current regulation (16 C.F.R. § 1115.20(a)), voluntary corrective action plans – which identify the remedial actions a company intends to take, up to and including a product recall – have no legally binding effect. The proposed rule would make such corrective action plans binding, allowing the CPSC to go to federal court to enforce the terms of the agreement.
Compliance Programs: The proposed rule would also allow staff to insist that voluntary recall agreements require companies maintain ongoing compliance programs, defining the terms of such compliance programs such as levels and frequency of internal and third-party testing. The proposed rule provides examples of circumstances that might warrant a compliance program, as well as examples of requirements that may be included in a compliance program. The proposed rule also sets forth enforcement measures CPSC may take to remedy violations, including seeking injunctive relief, specific performance, and sanctions.
Since the proposal was issued, there has been considerable debate in the product safety community as to (1) whether the CPSC has the authority to issue this rule as proposed, and (2) whether the proposal, if implemented, would create a deterrence for companies to come forward and propose a voluntary recall and/or slow down the recall process.
Comments on the proposed rule may be submitted to CPSC by February 4, 2014.
For more information on how this proposal may impact your company, please contact me at 202-518-6358 or email@example.com.