CPSC Reaches Civil Penalty Agreement with Viking Range and Middleby Corporation; Firms to Pay $4.65 Million to Resolve Late Reporting Allegations Over Defective Gas Ranges
The U.S. Consumer Product Safety Commission (CPSC) has announced a civil penalty settlement with Viking Range, LLC of Greenwood, Mississippi and its parent company, The Middleby Corporation of Elgin, Illinois. The companies have agreed to pay a civil penalty of $4.65 million to resolve charges that they knowingly failed to immediately report allegedly defective gas ranges to the Commission under Section 15(b) of the Consumer Product Safety Act (CPSA). This civil penalty, the second of 2017, follows the Commission’s $5.8 million civil penalty levied against Keurig Green Mountain in February. Both penalties underscore that the Commission’s general approach to civil penalties, and desire to increase the amount of penalties imposed for violations, will not change overnight with new agency leadership. Indeed, the Acting Chairman actually voted against the settlement agreement, proposing instead an amendment to reduce the amount of the civil penalty to $2 million.
In this case, CPSC staff alleged that Viking/Middleby failed to report immediately to the Commission that it had information which reasonably supported that certain of its gas ranges could turn on spontaneously and could not be turned off using the control knobs. Such a situation, according to staff, could (and allegedly did) create a burn risk to consumers. In response to the CPSC’s allegations, Viking/Middleby asserted that they notified the Commission of the receipt of complaints and incident reports, voluntarily recalled the defective gas ranges, and have since implemented a robust product safety compliance program.
Along with paying the $4.65 million civil penalty, Viking/Middleby have agreed to maintain a product safety compliance program with the common program elements to ensure that they comply with product safety standards and regulations enforced by the Commission.
The Commission voted 4-1 to provisionally accept the settlement with the Commission’s Democratic majority (Commissioners Kaye, Adler, and Robinson) and Republican Commissioner Joe Mohorovic voting to approve the agreement. Acting Chairman Buerkle’s vote to provisionally accept the agreement with an amendment to reduce the penalty amount to $2 million reflects a different philosophy on civil penalties than the majority. Buerkle has previously stated that defect reporting requirements of Section 15 are vague, civil penalties for failure to immediately report are difficult to evaluate and value, and she has concerns with the CPSC’s lack of transparency throughout the civil penalty process. The settlement agreement does not contain sufficient detail to guess as to what may have motivated her decision to reduce the civil penalty amount in this case.
Companies in the consumer products arena should remain mindful of and attentive to their Section 15(b) reporting obligations under the CPSA. The risk of substantial civil penalties for failing to report to the Commission remains significant despite the change in agency leadership.