Product Liability & Torts

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Crowell & Moring has issued its seventh-annual “Litigation Forecast 2019: What Corporate Counsel Need to Know for the Coming Year.” 

The Forecast provides concise, forward-looking perspectives on technological developments that can help corporate counsel identify the many opportunities and challenges ahead as they harness the power of technology. The Forecast further explores the developing legal, regulatory, and technology developments affecting a wide range of companies in twelve areas of law: antitrust, corporate, cybersecurity, e-discovery, environmental, government contracts, health care, intellectual property, international trade, labor and employment, torts, and white collar.

In the article, “AGs: Watching Out For Consumers,” authors examine why state attorneys general are especially focused on consumer protection, bringing increased risk as well as potential opportunities to companies.

Be sure to follow the conversation on social media with #LitigationForecast.

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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).

 

 

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Earlier this summer, President Trump nominated Republican Peter Feldman to serve as the fifth commissioner on the U.S. Consumer Product Safety Commission (CPSC). The Senate has now confirmed Mr. Feldman to both (1) serve out the remainder of former Commissioner Joe Mohorovic’s term, which expires in October 2019; and (2) serve a seven-year term beginning in October 2019.

Significantly, the confirmation of Mr. Feldman gives the Republicans their first majority control of the Commission in nearly twelve years, and presents an opportunity for Acting Chairman Ann Marie Buerkle to further move the agency in a direction that reflects her regulatory priorities, as well as those of the Administration. Notably, the Commission will soon consider its FY 2019 operating plan which sets the agency’s agenda for the coming year.

Interestingly, the Senate voted 80-19 to confirm Mr. Feldman to serve out the remainder of former Commissioner Mohorovic’s term. However, on the following day when it came to vote on Mr. Feldman’s own seven-year term that would start in October 2019, the Senate split along strictly partisan lines confirming Feldman by a slim 51-49 majority. Some had argued that since Mr. Feldman’s “new” term would not begin until 2019, the next Senate should take up the nomination after the midterm elections.

Mr. Feldman is well-known among the product safety community. Having served as legal counsel to Senator John Thune (R-SD) at the Senate Committee on Commerce, Science, and Transportation since 2011, he is experienced and well-versed in consumer product safety law and the activities of the Commission.

The CPSC released the following statement upon Mr. Feldman’s confirmation including this quote from Mr. Feldman himself:

“I believe strongly in the mission of the agency because American consumers have every right to expect that the products they purchase will be safe and will not pose an unreasonable risk of injury to themselves or their families,” Feldman said. “CPSC’s safety work is critical, particularly when it comes to protecting our most vulnerable populations. I look forward to advancing these agency priorities while ensuring fairness in the execution of its duties.”

We look forward to working with Commissioner Feldman in the years ahead and congratulate him on his confirmation.

 

You may have received an e-mail notice this week from the CPSC about the FOIA office’s new “Electronic Manufacturer Notification Collaboration Portal.”  The main purpose of the Portal is to reduce costs by using e-mail instead of snail mail for Section 6(b) and other FOIA-related notifications. 

Generally, automation of this process shouldn’t result in any meaningful changes in the FOIA notification and objection process.  The Commission’s regulations allow firms to submit information with a request for confidential treatment.  If the Commission receives a FOIA request for information previously designated confidential, the person who previously submitted the request for confidentiality is notified of the FOIA request and the need for quick response to protect that information from disclosure.

Given the quick turnaround time on requesting exemption from disclosure under FOIA, it is imperative for all industry players to make sure that the right contact is assigned – including someone in the Legal Department – to receive Portal notifications so your team can make quick decisions and take action if filing an objection with the CPSC is necessary.  The same contact person used for the Clearinghouse or Saferproducts.gov is a good bet.  But requesting an exemption under FOIA takes some analysis of the regulations.  Was the information submitted under section 15?  Is it a trade secret?  And so, companies would be well advised to make sure they have a process in place and conduct a training program to protect confidential data from disclosure.

If you haven’t yet received any notifications about the new automated Portal, you should check in with the CPSC at cpsc-foia@cpsc.gov and provide contact information for the proper registration person.  The full text of the notification recently sent by the CPSC is below:

Continue Reading Check Your Spam Filters!: CPSC Has Automated FOIA Communications

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Ninth Circuit Blocks Sweet Drink Warning Labels Pending Free Speech Lawsuit

The Ninth Circuit dealt a blow to the war on sugar last month, calling the warning labels a San Francisco ordinance would require on sweet drinks “deceptive” and blocking the mandate on free speech grounds. As we have discussed before, cities and counties across the nation have been launching an offensive against sugar for years. Favorite methods of attack include bans on large sugary drinks, taxes on sugar in drinks by volume, and now, warning labels.

While the USDA, FDA, and American Heart Association all have backed policies aimed at limiting sugar consumption, these policies have received mixed reviews from consumers and courts. A state judge knocked down the New York City ban on large sodas in 2013, calling it “arbitrary and capricious.” More recently, sugar taxes have been protested by unions in Philadelphia, sparked class-action litigation in Illinois, and were outright repealed in Cook County after only three months of implementation because residents began crossing state and county lines to avoid them.

Continue Reading Soda Stays Safe in San Francisco

The big takeaways from The Autonomous Vehicle Safety Regulation World Congress centered on the importance of a federal scheme for AV regulation and the reality of the states’ interest in traditional issues such as traffic enforcement, product liability, and insurance coverage. In keeping with those messages, the World Congress kicked off with NHTSA Deputy Administrator and Acting Director, Heidi King, speaking about NHTSA’s goals and interest followed almost immediately with wide participation from the states including California, Michigan, and Pennsylvania, among others.

Deputy Administrator King emphasized NHTSA’s desire to foster an environment of collaboration among all stakeholders, including the states.  Ms. King emphasized that safety remains the top priority at NHTSA.  NHTSA has provided some guidance, and looks forward to hearing from stakeholders about the best way to support and encourage growth in autonomous vehicles.  NHTSA wants to provide a flexible frame work to keep the door open for private sector innovation.  It is necessary to build public trust and confidence in the safety of autonomous vehicles, and that can only accomplished by all stakeholders working together.

Continue Reading Report on the Autonomous Vehicle Safety Regulation World Congress 2017

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Earlier this month, the U.S. Food and Drug Administration announced that it would allow infant food manufacturers to use a qualified health claim on their labeling to characterize the relationship between consumption of ground peanuts by infants beginning between 4 and 10 months of age and a reduced risk of developing peanut allergy by age five. The precise language FDA will allow reads:

For most infants with severe eczema and/or egg allergy who are already eating solid foods, introducing foods containing ground peanuts between 4 and 10 months of age and continuing consumption may reduce the risk of developing peanut allergy by 5 years of age. FDA has determined, however, that the evidence supporting this claim is limited to one study.

If your infant has severe eczema and/or egg allergy, check with your infant’s healthcare provider before feeding foods containing ground peanuts.

Qualified health claims must be supported by credible scientific evidence, a less rigorous standard than the “significant scientific agreement” requirement for authorized health claims. Here, FDA found support for the qualified claim in the same studies that moved the National Institute of Health to issue updated guidelines for the early introduction of peanut-containing foods in infants.

FDA’s decision is notable for several reasons. First, it was the first time the agency approved a health claim aimed at preventing a food allergy. FDA acknowledges that food allergies are an increasing and serious public health issue that requires the agency’s attention. This is one of many tools it has available to address the problem.

Second, it showed the FDA’s willingness to loosen restrictions on allowable disease prevention claims within its existing regulatory framework when presented with sound, scientific evidence demonstrates. In this case, the agency was responding to a manufacturer’s petition.

Third, it showed FDA Commissioner Scott Gottlieb’s willingness to step into the role of the nation’s doctor. FDA’s announcement was accompanied by a statement from Dr. Gottlieb, in which he addressed concerns about food allergies and possible prevention as both a parent and physician. He has spoken similarly on other public health issues, most recently on the opioid addiction crisis, and thus has demonstrated a willingness to encroach on questions traditionally in the realm of the practice of medicine, an area the agency typically avoids.

Achieving regulatory changes in the current political environment is challenging, but this decision demonstrates that FDA will respond to requests based on sound scientific evidence to relax rules that otherwise limit what manufacturers can say about their products. Manufacturers whose products show demonstrable health benefits may thus want to consider similar requests to secure greater marketing flexibility.

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President Trump has nominated Dana Baiocco to be Commissioner of the Consumer Product Safety Commission. The appointment is for a term of seven years beginning on October 27, 2017. Ms. Baiocco is currently a litigator at Jones Day. According to her firm’s bio, she has litigated cases involving “mass torts, consumer and industrial products and medical devices” and has counseled clients on “minimizing risks, regulatory and reporting obligations, warranties, and CPSC product recalls.”

This nomination is significant. With the expiration of Democratic Commissioner Marietta Robinson’s term in late October, Baiocco’s eventual Senate confirmation will shift the Commission’s balance of power. Specifically, it will mark an end to the unusual dynamic of the Commission being led by a “Minority Chair” (Republican Commissioner Ann Marie Buerkle), who does not command a 3-2 voting majority based on political party. Upon Baiocco’s confirmation, Republicans will regain the Commission’s majority.

Our prior blog posts have reflected on Acting Chair Buerkle’s philosophy and priorities for the Commission, which may now start to come into fruition. Assuming Acting Chair Buerkle is confirmed as Chairman later this month, with the new Republican majority, we can now expect the Commission under the Trump Administration to come into focus and likely reflect some of the Administration’s regulatory priorities.

We congratulate Dana Baiocco on her nomination, and expect her confirmation in the coming months.

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The U.S. Department of Justice and Consumer Product Safety Commission recently announced that they had entered into consent decrees with three New York-based toy companies and five individuals for importing and selling products that violate the Federal Hazardous Substances Act and the Consumer Product Safety Act. The consent decrees enter permanent injunctions against the companies from importing and selling toys until certain remedial actions are implemented and monitored by the CPSC. The decrees can be read here and here.

The DOJ and CPSC alleged that the individuals and companies – Everbright Trading Inc., Lily Popular Varieties & Gifts Inc., and Great Great Corporation – imported and sold numerous children’s toys and products that contained high levels lead content, lead paint, and phthalates; contained small parts; and violated the mandatory toy safety standard (ASTM F-963), bicycle helmet safety standard, and labeling of art material (LHAMA) requirements.

Continue Reading Government Blocks Companies from Importing and Selling Children’s Products after Alleged Non-Compliance with Product Safety Laws

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Fuzzy talking toys are no longer the annoying, yet benign Christmas gifts they used to be. Many of today’s toys, like refrigerators, cars, and televisions, are “smart,” and may come gift-wrapped with all of the emerging cybersecurity risks the internet has to offer. And as various government agencies grapple with the regulation and enforcement of smart products, the Federal Trade Commission (“FTC”) may be narrowing in on smart toy manufacturers as a potential target. The FBI and FTC issued separate alerts last week highlighting potential threats posed by cuddly friends that collect children’s voices and other identifying information and putting manufacturers on notice of potential enforcement actions for failure to comply with the Children’s Online Privacy Protection Act (“COPPA”), respectively.

Continue Reading FTC Focusing on Privacy Risks of Interconnected Toys