The Consumer Product Safety Commission continues on its path of settling higher civil penalties, announcing on May 27, 2015, that Office Depot agreed to a $3.4 million penalty for failing to report alleged defects in two office desk chair models. The products were sold exclusively at Office Depot’s retail and online stores and were separately recalled in 2009 and 2014 for fall hazards.
While in line with the amount of recent settlements – including $2.6 million for Gerber Legendary Blades in January 2015 and $4.3 million for Baja Inc. in October 2014 – the Commission has not shed any light on how it calculated the appropriate penalty in each case. In a statement, Commissioner Mohorovic called out the Commission’s arbitrariness and lack of transparency in penalty matters, explaining why he voted against the Office Depot settlement despite agreeing that the retailer should be penalized.
Chairman Kaye also issued a statement in connection with the Office Depot penalty, reiterating that the Commission intends to be hard on firms that violate the Consumer Product Safety Act and will seek increasingly higher civil penalties in the process. He noted that the $3.4 million Office Depot penalty falls well short of the current $15 million statutory cap.
There is no explanation as to how the Commission applied the statutory and regulatory penalty factors in this or other cases, despite different facts alleged in each settlement agreement and a general call from industry for guidance. Of course, each case is different, and the CPSC has discretion to settle and seek penalties it deems appropriate, but firms are left with little understanding as to how to assess potential civil penalty risk. For now, it is clear that the Commission’s aggressive enforcement and push for higher civil penalties will continue for the foreseeable future.