The U.S. Consumer Product Safety Commission (CPSC) has announced a civil penalty settlement with exercise equipment manufacturer Cybex International (Cybex). Cybex has agreed to pay a civil penalty of $7.95 million to resolve charges that it knowingly failed to immediately report allegedly defectiveto the CPSC under Section 15(b) of the Consumer Product Safety Act. This civil penalty, already the second of 2021, underscores a material change in enforcement approach from the past two years, in which the Commission did not announce a single civil penalty for violations of the product safety laws.
In this case, CPSC staff alleged that Cybex failed to report immediately to the Commission that it had information which reasonably supported the conclusion that components of certain pieces of its gym equipment—arm curl and press machines—could detach or fall causing severe injury to the user, including eye loss, spinal fracture, and in one case paralysis. The Commission voted 3-0-1 to provisionally accept the settlement. We encourage our readers to review the settlement agreement here to learn more about the factual background.
But let’s not bury the lede!
The real story here is that the CPSC has announced two civil penalties in the past five weeks—two more than it had announced in the past two years. It has long been anticipated that civil penalties would “return” under Acting Chairman Bob Adler’s stewardship of the agency. That belief has now been confirmed.
Earlier this year, the agency announced its first civil penalty since 2018. In a statement accompanying that civil penalty, Chairman Adler stated “[t]this penalty is important not only because of its size, but also because it represents the first such penalty by CPSC after an unfortunate hiatus of several years.” That civil penalty came on the heels of an unusual statement, also from Chairman Adler, in which he announced publicly that a civil penalty case had been referred to the DOJ for prosecution.
If there were any doubt as to whether that civil penalty announcement was a one-off, that doubt has been resolved. Now, with this second civil penalty announcement, the regulated community has confirmation that the risk of the imposition of substantial civil penalties for failing to report to the Commission remains significant despite the absence of any such announcements over recent time. And with the incoming Biden Administration, and strong likelihood that the Commission will soon have three Democratic commissioners, civil penalties are one enforcement tool of many that should be here to stay for the years ahead. As such, companies in the consumer products arena should remain mindful of and attentive to their obligations under the federal product safety laws, including the reporting requirement of CPSA Section 15(b).