businesswoman checking the time on watch

Do not assume a government shutdown means that reporting obligations at the CPSC are on hold. While the Commission’s staff designated as essential personnel are dedicated to protecting against substantial, immediate or “imminent threats to human safety” under the Commission’s shutdown directive[1], they will be reviewing reports to make that determination. The obligation to report is not suspended during the shutdown, even if there may be slower than normal response on matters that do not present an immediate threat. The filings are tracked by date and time electronically, and with 15 million in penalties at stake for failure to timely report, it is important not to confuse a partial shutdown of government operations with a stay on statutory obligations. There is no stay of the reporting obligations If you are a manufacturer, importer, distributor, and/or retailer of consumer products, you continue to have a legal obligation under the Consumer Product Safety Act (CPSA) and other statutes administered by the CPSC to report the following types of information to the CPSC:

  • A defective product that could create a substantial risk of injury to consumers;
  • A product that creates an unreasonable risk of serious injury or death;
  • A product that fails to comply with an applicable consumer product safety rule or with any other rule, regulation, standard, or ban under the CPSA or any other statute enforced by the CPSC;
  • An incident in which a child (regardless of age) chokes on a marble, small ball, latex balloon, or other small part contained in a toy or game and that, as a result of the incident, the child dies, suffers serious injury, ceases breathing for any length of time, or is treated by a medical professional; and
  • Certain settlements of lawsuits.

Notably, the government shutdown has no impact on the timely reporting of lawsuit settlements. The New Year brings a new time period for an additional and separate reporting requirement under Section 37 of the Consumer Product Safety Act. It requires manufacturers of consumer products to report information about settled or adjudicated lawsuits during specific 24-month periods. Specifically, companies are required to report when at least three civil actions filed in federal or state court involve the same model of a product and each suit alleges the product was involved in death or grievous bodily injury.  15 U.S.C. § 2084(a). The products at issue in the three cases must involve the same particular model, distinctive as to functional design, construction, warnings, and instructions, i.e. the characteristics that affect the product’s safety related performance.

The CPSC regulations define grievous bodily injury to include certain categories of injury, including, but not limited to:

  • Mutilation or disfigurement including permanent facial disfiguration or non-facial scarring that results in permanent restrictions in motion;
  • Dismemberment or amputation;
  • The loss of important bodily function or debilitating internal disorder such as the permanent injury to the loss of an organ, or blindness or permanent loss, to any degree, of vision.
  • Injuries requiring extended hospitalization, including in-patient care of 30 days in acute care facility or 60 days in a rehabilitation facility;
  • Severe burns or severe electrical shock.[2]

Section 37 sets forth specific statutory time periods within which three settlements involving the same product would trigger reporting. Each of the 24-month statutory periods begin every odd year.  For purposes of this analysis, the applicable statutory periods are:

  • January 1, 2015 – December 31, 2016;
  • January 1, 2017 – December 31, 2018; and starting now
  • January 1, 2019 – December 31, 2021.[3]

In addition to Section 37 reporting, lawsuits should be reviewed with an eye towards whether they contain information reportable under Section 15, such as if the allegations reasonably support the conclusion that a product contains a defect which could create a substantial product hazard or an unreasonable risk of injury. In-house counsel should keep these intersections in mind and make sure they bridge the gap between litigation and this regulatory reporting obligation.

It is a common tendency to think about product safety issues in separate buckets depending on whether they raise litigation or regulatory risks. But each should not be considered in isolation as they can overlap in various ways, including within the Consumer Product Safety Act.

 

[1] Order No. 0921.1

[2] 16 C.F. R. §1116.2

[3] See 15 U.S.C. § 2084(b); see also 16 C.F.R. § 1116.2(a); CPSC Recall Handbook at page 9 (found at https://www.cpsc.gov//PageFiles/106141/8002.pdf).