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Natalia R. Medley is a counsel in the firm’s Washington, D.C. office where she focuses on the Torts and Advertising & Product Risk Management groups. She counsels clients on a wide range of consumer product safety issues involving compliance with laws and regulations administered by federal agencies, including the Consumer Product Safety Commission, National Highway Traffic Safety Administration, and the Federal Trade Commission. She has also worked closely with clients on issues relating to the Consumer Product Safety Improvement Act of 2008. She represents clients in a wide range of tort law cases in state and federal trial and appellate courts. She has experience defending clients in product liability cases, mass tort matters, and toxic tort cases involving environmental contamination claims.

The CPSC announced a civil penalty today against Gree Electrical Appliances that hit the statutory maximum of $15.45 million. CPSC Chairman Elliot Kaye had previously expressed his desire at a recent trade conference for the Commission to hit a “double digit” million dollar civil penalty and to pursue more criminal charges. Today’s announcement achieved one of those goals.

There are many lessons learned here, even based on initial impressions.

Continue Reading CPSC Issues $15.45 Million Penalty at the Statutory Maximum

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.

On December 8 and 9, 2014, the Food and Drug Law Institute (FDLI) held its annual Enforcement, Litigation & Compliance Conference in Washington, D.C. Speakers from the U.S. Food and Drug Administration (FDA), Department of Justice (DOJ), and other federal agencies, as well as representatives from industry and the private bar, discussed recent activity and predictions for federal regulation of food, drugs, medical devices, cosmetics, dietary supplements, and tobacco in 2015.

  • Several speakers talked about FDA’s restructuring efforts and how that will change the way the agency functions.
    • Several FDA representatives explained that this is being driven in part to maximize resources and to re-align the various Centers with the Office of Regulatory Affairs (ORA), to build expertise, create sector-specific groups, and better coordinate inspection and enforcement efforts. It was predicted that generalist FDA inspectors will be a thing of the past and that there will be commodity-specific inspectors who have real time access to scientists during inspections. It was noted that this new approach may pose some challenges for FDA, which has traditionally functioned in silos.
    • Panelists expressed hope that the changes will lead to more uniformity in FDA’s inspections and enforcement and will, for example, result in less strategic port-shopping by importers.

Continue Reading Report from FDLI’s 2014 Enforcement, Litigation and Compliance Conference

At this year’s National Law Journal (NLJ) Regulatory Summit in Washington, DC, held on December 1, 2014, speakers focused on the current and future of the federal regulatory landscape in the United States.  Highlights included:

  • Former Congressional Leaders Speak on Future Trends in Health Care and Other Sectors

The featured speakers included former U.S. Senate Majority Leader Tom Daschle and Former Speaker of the House of Representatives Dennis Hastert.The former congressional leaders spoke of the current political division between what Daschle described as “rugged individualism versus collective action.”  While acknowledging an increased divide between political parties, the speakers hoped to see possible movement in some areas, possibly in the areas of Medicare, Medicaid or tax reform.Much of their discussion focused on health care issues as prominent areas of focus going forward, although they predicted more action in the courts and at the state level than at the federal level.Trends to watch for included a movement away from fee for service, and also continued emphasis on wellness extending beyond the health care sector and into businesses themselves as a way to reduce health care costs.

Continue Reading Highlights from the National Law Journal Regulatory Summit 2014

The Transatlantic Trade and Investment Partnership (TTIP) negotiations formally commenced on July 8, 2013. A little over a year later, the negotiators have held six rounds of negotiations. The most recent round of negotiations was held during the week of July 14-18 in Brussels, and the seventh round is now expected for D.C. in late September.

During July’s discussions, the two sides covered the full range of “market access” issues, including trade in goods, trade in services, investment, and government procurement. Negotiations included greater regulatory cooperation, widely considered to be the greatest value of the TTIP talks, with modest progress made in regards to several product sectors, including textiles and apparel (where they focused on labeling and safety issues), chemicals (where they discuss broad opportunities for cooperation), and automobiles (where talks advanced in areas like equivalence of technical regulations). Food safety also continued to be an important issue during negotiations, particularly with the leak of the EU’s proposed chapter on Sanitary and Phytosantiary Measures (SPS) prior to the start of the latest round.

Continue Reading Sixth Round of TTIP Negotiations Concludes in Brussels

The European Commission has been active this summer in its efforts to advance consumer safety in the European Union. Here are highlights of recent notable events:

In-app Purchases. The EU has moved to address consumer protection related to in-app purchases, particularly those made by children, which follows the announcement of similar enforcement actions in the U.S. This is the first time that the Commission and member states have joined forces to coordinate enforcement, as provided for in the Consumer Protection Cooperation Regulation (No. 2006/2004). The authorities have requested that steps be taken to prevent inadvertent in-app purchases, such as adequately informing consumers about how purchases are made and paid for, and have asked for concrete solutions from industry actors, including Google and Apple.

BPA in Toys. On June 25, 2014, the Commission announced a strict limit for Bisphenol A (BPA) in toys intended for children under 3 years old or toys intended to be placed in the mouth (0.1 mg/l migration limit). This action makes mandatory the BPA limit in the existing toy standard, EN 71.

Continue Reading EU Consumer Product Safety Law Update

The CPSC has proposed a new rule to modernize and streamline the information disclosure process under section 6(b) of the Consumer Product Safety Act.  The rule changes the scope of information protected from disclosure and the confidentiality of manufacturer comments submitted in the process.

Read more about these changes in our legal commentary, “Upsetting The Confidentiality Balance?: CPSC Proposes Revisions To Its § 6(b) Information Disclosure Regime” published by the Washington Legal Foundation.

 

Far too often, we look at each rule an agency issues as a standalone rule impacting the specific stated regulatory objective. With regard to the long-awaited revisions to the U.S. Consumer Product Safety Commission’s Information Disclosure Rules under section 6(b) of the Consumer Product Safety Act, expected to be released shortly, all eyes will be looking to see what consequences the rule may have for confidential treatment of manufacturer self-reporting under section 15(b). Taking a broader view of how a change to one rule may affect agency practices under another statutory provision or rule can be helpful in identifying agency intentions or avoiding unintended consequences.

Such is the case with the CPSC’s currently pending proposed rule on the voluntary recall process. We have previously written an in-depth analysis of how the voluntary recall rule will affect manufacturers and retailers negotiating voluntary corrective action plans with the CPSC. A more nuanced point, however, is how the proposal to require all such plans to be enforceable settlement agreements will impact the section 6(b) confidentiality of materials submitted under section 15(b).

Continue Reading CPSC Voluntary Recall Rule and the Impact on Disclosure of Manufacturer Self-reports Under Section 15(b)

On November 13, 2013, the U.S. Consumer Product Safety Commission (CPSC) voted 3-1 to publish notice of a proposed interpretive rule that would establish standards for voluntary product recalls, revising 16 CFR part 1115. As approved, the proposed rule, which originally focused on the form and content of recall notice, incorporates several substantive amendments introduced by Commissioner Robert Adler during the November 13 meeting. These amendments would eliminate the option to engage in a voluntary recall without entering into a legally binding agreement and would allow the Commission to seek compliance terms as part of a firm’s binding corrective action plan governing the conduct of the recall. Notice of the proposed rulemaking was published in the Federal Register on November 21, 2013. 78 Fed. Reg. 69,793 (Nov. 21, 2013).

Click to read the full client alert on Crowell.com.

On November 12, 2013, Craig Zucker, co-founder of Maxfield & Oberton Holdings, LLC (“M&O”), filed suit in the U.S. District Court in Maryland against the U.S. Consumer Product Safety Commission (CPSC) and CPSC Chairman Inez Tenenbaum. See Zucker v. Consumer Prod. Safety Comm’n, et al., No. 8:13-cv-03355-DKC. Zucker seeks declaratory and injunctive relief to avoid being held personally liable in the Commission’s ongoing administrative action seeking a mandatory recall of high-powered magnet products, including Buckyballs® and Buckycubes™, which were sold by M&O.

M&O was dissolved following the CPSC’s filing of the administrative complaint against the company. On May 3, 2013, the presiding Administrative Law Judge granted the Commission’s motion to amend its complaint, naming Zucker personally as a respondent. On June 19, 2013, the ALJ denied Zucker’s motion to immediately appeal the ruling. If the CPSC prevails, Zucker, in his individual capacity, would be required to pay for all of the costs associated with the recall, which have been estimated to be as much as $57 million. As the Zucker complaint notes, this is the first time the Commission has taken action against “an officer or former officer of a company to personally conduct a recall.” (Compl. at ¶ 62.)

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