CPSC Increased Enforcement In Manufacturing Market

Erik K. Swanholt

Email

213.972.4614

Bio and Articles

Kristin McGaver Sikora

Email

414-297-5022

Bio and Articles

Amanda L. Soler

Email

214-999-4771

Bio and Articles

CPSC Continues Enforcement Push in the First Quarter of 2022

by: Erik K. Swanholt, Kristin McGaver Sikora, Amanda L. Soler of Foley & Lardner LLP - Insights/Publications

Wednesday, July 13, 2022

Print Mail Download

i

This article covers the first quarter of 2022 (Jan. 1, 2022 through March 31, 2022).

As predicted based on agency indications in 2021,¹ the Consumer Product Safety Commission (“CPSC”) has continued its push towards increased enforcement2 in the first quarter of 2022. While recall trends this quarter (and over the past several years) have not been the best indicator of increasing enforcement,³ initial appearances can be deceiving. As recent news in the exercise industry has shown, the CPSC will not shy away from unilateral action even in the case of a voluntary recall.⁴ Additionally, the agency seems to be focusing increased attention on other mechanisms, including fines and administrative actions.

The enforcement push may be attributable to several factors, including the Senate Commerce Committee’s December 2019 conclusion that the CPSC has been too lenient on manufacturers whose products may pose dangers to consumers.⁵ Since then, and after the election of President Biden, the composition of the Commission has changed. Joining Republican-appointed Commissioners Dana Baiocco and Peter Feldman are Democrat-appointed Commissioner Richard Trumka, Jr. and Chair Alexander Hoehn-Saric, confirmed in October 2021.⁶ One commissioner position remains open,⁷ and President Biden has nominated Mary Boyle, the agency’s current executive director, to fill it. (Her nomination remains pending before the Senate Committee on Commerce, Science, and Transportation.⁸) If confirmed, the CPSC would constitute a 3-2 split in favor of Democratic appointees; however, how that will impact the CPSC’s path forward is unclear. What does seem clear, is the Commission’s effort to distance itself from the perception that it is too lenient and to emphasize that it “will use its authority to the fullest to keep American families safe.”⁹ As further described below, this means increased activity.

Statements Signaling Increased Activity

The CPSC has leaned into increased activity, and the agency has allocated funds to initiatives that support this stated goal. Individual commissioners have also expressed support for agency programs and objectives that naturally result in increased enforcement.

For example, on September 28, 2021, Commissioners Dana Baiocco and Peter Feldman released a joint statement announcing the passage of the agency’s fiscal year 2022 operating plan via a 2-to-1 vote.1⁰ The joint statement emphasizes several aspects of the agency’s plan, including the following:

Robust port surveillance by expanding staff (i.e., adding an additional 27 port inspectors), focusing on facilities where low-value eCommerce shipments enter the country and through the development of an eFiling Program to enhance targeting capability;
Vigorous compliance by strengthening agency enforcement operations through a nearly 30% increase in resources for the Office of Compliance and movement to reinstate the Children’s Product Defect Team that was disbanded in 2018, and investing in enforcement technology;
Hazard identification by investing in staff, research, testing capabilities, expanded laboratory facilities, and high-quality data that informs decision making;
Communications by increasing the Office of Communications operating budget by nearly 25% to allow the agency to maintain a robust Internet presence that includes traditional social media, CPSC websites, and apps to track product safety developments;
Security and accountability improvements by taking steps to address the CPSC Inspector General’s recommendations, including those related to the 2019 data breach, and establishing security policies to guard against known cyber risks; and
Diversity and product safety equity by enhancing recruitment efforts, analyzing workforce data, and developing proactive programs that seek to foster inclusion, equity, and diversity and by better serving vulnerable, diverse, and disenfranchised communities through targeted communications and outreach.¹¹

More recently, Chairman Hoehn-Saric stated that it is his “preference to see speedy reporting and remedial action by manufacturers... [but that] the CPSC will not hesitate to move forward on our own when ... [manufacturers] refuse to conduct recalls when our staff finds their product presents a substantial product hazard.”¹²He also affirmed the Commission’s aggressive tack on reporting by stating “failing to report dangerous products puts consumers at an unnecessary risk and will not be tolerated,” which is why “in the last 5 months [the CPSC has announced] close to $100 million in penalties” for failures to report and late reporting.¹³ Commissioner Peter Feldman’s recent tweets echo this same sentiment, as he has expressed support for increased rulemakings to improve the safety of adult portable bed rails¹⁴ and voted to oppose a corrective action plan that did not clearly identify how the proposed remedy would benefit future consumers.¹⁵

Not only is the CPSC increasing activity generally, but it is also specifically considering the racial disparities in injury rates and deaths caused by consumer products. On April 14, 2022, the CPSC announced a public forum for all interested stakeholders to discuss its newly released Equity Action Plan that focuses on improving data collection “to better assess disparities and [the CPSC’s] efforts to reach the communities that are most in need.”¹⁶

CPSC Voluntary Recalls and Notices of Violation

In the first quarter of 2022, the CPSC announced 74 recalls, including several infant and children’s products, recreational vehicles, and novelty items.¹⁷

The CPSC also issued several product violation notices. Data available through February 2022 shows that the CPSC issued 426 Notices of Violations.¹⁸ Most of these violations are “Stop Sale and Correct Future” or “Correct Future Production.”¹⁹

Notably, manufacturers and retailers in the exercise industry were the subject of increased CPSC interest and activity. First, the CPSC recalled certain treadmills due to fire hazard risks.2⁰ Then, on January 31, 2022, the CPSC issued a $6.5 million penalty against an exercise manufacturer for failure to immediately report serious injuries involving its exercise equipment, specifically cable crossover machines and dual adjustable pulley machines.²¹

Continued Rise of Actions Related to Infant and Child Safety

Consistent with its efforts last year,²² the CPSC has maintained its focus on infant and child safety.²³ On January 26, 2022, the CPSC approved a new federal mandatory standard related to crib mattresses that takes effect in the fall of 2022.²⁴ The new federal rule will include marking, labeling, and instructional literature improvement requirements aimed at reducing infant injuries and deaths related to suffocation, entrapment, and laceration hazards.²⁵

Many of the recalls issued so far in 2022 relate to infant and child safety.²⁶ Notably, when an infant products company refused to undertake a voluntary recall following two infant deaths, the CPSC filed an administrative complaint addressing suffocation hazards related to their infant lounger products.²⁷ The CPSC’s complaint asks for an order, among other things, requiring the company to notify all persons who sell or distribute the products to immediately cease distribution, notify state and local public health officials, give prompt public notice (including posting a clear and conspicuous notice on their website and on any third-party website they have a presence on, including social media), and to mail and email a notice to every distributor, retailer, and purchaser.²⁸This case is ongoing.

New Trend: Penalties for Failure to Report

Manufacturers, importers, distributors, and/or retailers of consumer products have a legal obligation to immediately report product safety hazards and defects to the CPSC. This reporting obligation covers: (1) A defective product that could create a substantial risk of injury to consumers; (2) A product that creates an unreasonable risk of serious injury or death; (3) 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; (4) 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 (5) Certain types of lawsuits.²⁹Failure to fully and immediately report this information may lead to civil or criminal penalties.³⁰Generally, CPSC staff advises “when in doubt, report.”³¹

The Chair’s recent statements about failure to report and late reporting, combined with agency actions, signal that the CPSC will be paying increased attention to lax reporting.³² For example, in January 2022, the CPSC resolved a failure to report complaint with a civil penalty of $6.5 million.³³ The CPSC generally issues at least one civil penalty a year, but it issues criminal penalties much more rarely. Indeed, before the agency’s historic corporate criminal enforcement action in 2021, the last criminal penalty was issued in 2013.³⁴ Given the CPSC’s resurrection of the criminal penalty in 2021 and early foray into civil penalties this year, industry should be prepared for increased penalty activity in 2022 and beyond, particularly as it relates to reporting obligations.

Other CPSC Administrative Actions

Of particular significance is a pending recall lawsuit against Amazon. The CPSC filed its complaint against Amazon on July 14, 2021 regarding various products, including children’s sleepwear products that failed to meet flammability requirements, carbon monoxide detectors that failed to detect carbon monoxide, and hair dryers without proper safety immersion protections.³⁵Although Amazon notified customers that the products could present a hazard and offered a refund in the form of an Amazon gift card, the CPSC alleged these actions were insufficient to remediate the hazards posed by the products and did not constitute a fully effectuated mandatory corrective action.³⁶This complaint marks a departure from the CPSC’s custom of seeking enforcement against manufacturers; instead, here the CPSC targeted the distributor by suing the e-marketplace that sells the manufacturers’ items. The CPSC explained that it “must grapple with how to deal with these massive third-party platforms more efficiently, and how best to protect the American consumers who rely on them.”³⁷Distributors like Amazon can expect such increased scrutiny from the CPSC to continue.

Interestingly, the CPSC has also shown that it will not tolerate ex parte communications following the issuance of a complaint. Two days after Amazon received the complaint, representatives for Amazon attempted to “propose a meeting . . . to discuss a path forward . . .” in three separate emails to the CPSC.³⁸ Such ex parte communications are prohibited and are publicly posted on the CPSC’s website. The last time the CPSC posted prohibited ex parte communications was November 28, 2017.³⁹ The Amazon case remains ongoing; the CPSC issued a subpoena to the Government Accountability Office on March 22, 2022.⁴⁰

What Does It All Mean?

If the CPSC’s recent activity is any indicator, the industry can expect to see more aggressive enforcement in the form of the usual voluntary recalls but also fines, forced recalls, and enforcement actions. The CPSC is likely to continue acting independently and publicly sharing its concerns about the safety of particular consumer products without agreement from or cooperation with targeted manufacturers or distributors.

For those companies under the CPSC’s purview, it is important to be proactive both in terms of continued (and, if appropriate, improved) product safety vigilance and in the creation and maintenance of a product safety program, so that responding to and reporting product safety issues occurs as quickly as possible.

ENDNOTES

1 Erik K. Swanholt & Kristin M. Sikora, Consumer Product Companies Beware! CPSC Expected to Ramp up Enforcement of Product Safety Regulations, (Feb. 24, 2021),

2 See Erik K. Swanholt & Kristin M. Sikora, CPSC Takes First Step to Expand Enforcement (Apr. 21, 2021), https://www.foley.com/en/insights/publications/2021/04/cpsc-takes-first-step-expand-enforcement.

3 The CPSC reported 74 recalls in the first quarter of 2022, 256 recalls in 2020, and 219 recalls in 2021. See https://www.cpsc.gov/Recalls.

4 CPSC sharing link to a video of a child being injured by the Peloton Tread+ (Apr. 17, 2021), https://www.cpsc.gov/Newsroom/News-Releases/2021/CPSC-Warns-Consumers-Stop-Using-the-Peloton-Tread.

5 Press Release (Dec. 19, 2019), https://www.commerce.senate.gov/2019/12/senate-commerce-committee-report-details-failures-by-the-u-s-consumer-product-safety-commission-to-protect-consumers.

6 See Chair, https://www.cpsc.gov/About-CPSC/Chairman/Alexander-Hoehn-Saric.

7 See Current Commissioners, https://www.cpsc.gov/About-CPSC/Commissioners.

8 See PN1542, https://www.congress.gov/nomination/117th-congress/1542?s=1&r=16.

9 Remarks of CPSC Chair Alexander Hoehn-Saric, International Consumer Product Health and Safety Organization (ICPHSO) 2022 Annual Meeting, (Feb. 16, 2022), https://www.cpsc.gov/s3fs-public/Hoehn-Saric-Speech-at-ICPHSO-CPSC-50th-anniversary.pdf?VersionId=pQbe_blvNvsJpQ3wNl047026W1x7Vgu8.

10 Joint Statement of Commissioners Dana Baiocco and Peter A. Feldman on the Passage of the Fiscal Year 2022 Operating Plan, Consumer Product Safety Commission (Sept. 28, 2021), https://www.cpsc.gov/s3fs-public/FY22OpPlanJointStatement.pdf?VersionId=vYdSOfbkYTyz.Xpl9UOof1AACeGW3evJ.

11 Id.; see also Memorandum from Mary T. Boyle to the Commission attaching the Consumer Product Safety Commission’s Fiscal Year 2022 Operating Plan (Sept. 15, 2021), https://www.cpsc.gov/s3fs-public/Commission-Briefing-Package-Fiscal-Year-2022-Operating-Plan-Web.pdf?VersionId=CiBFs8Iuv3qhs8jA9HubboRTV2um.BiA

12 Remarks of CPSC Chair Alexander Hoehn-Saric, International Consumer Product Health and Safety Organization (ICPHSO) 2022 Annual Meeting, (Feb. 16, 2022), https://www.cpsc.gov/s3fs-public/Hoehn-Saric-Speech-at-ICPHSO-CPSC-50th-anniversary.pdf?VersionId=pQbe_blvNvsJpQ3wNl047026W1x7Vgu8.

13 Id.

14 Twitter @FeldmanCPSC (Mar. 16, 2022), https://twitter.com/ feldmancpsc.

15 Twitter @FeldmanCPSC (Apr. 7, 2022), https://twitter.com/ feldmancpsc.

16 CPSC Announces Stakeholder Roundtable on May 25, 2022 to Hear from Public on New Equity Action Plan; Joins Over Ninety Federal Agencies Releasing Equity Action Plans (Apr. 14, 2022), https://www.cpsc.gov/Newsroom/News-Releases/2022/CPSC-Announces-Stakeholder-Roundtable-on-May-25-2022-to-Hear-from-Public-on-New-Equity-Action-Plan-Joins-Over-Ninety-Federal-Agencies-Releasing-Equity-Action-Plans.

17 See https://www.cpsc.gov/Recalls.

18 See https://www.cpsc.gov/Recalls/violations.

19 “For all products regulated by the CPSC, the Commission issues a Letter of Noncompliance when there is a violation of a mandatory standard. It advises the company of the violation and of the nature of the necessary corrective action (to correct future production (CFP); to stop sale and CFP; or to recall, stop sale, and CFP).” https://www.cpsc.gov/es/Data.

20 Recall Alert (Jan. 28, 2022), https://www.cpsc.gov/Recalls/2022/Johnson-Health-Tech-Recalls-Matrix-T1-and-T3-Commercial-Treadmills-Due-to-Fire-Hazard-Recall-Alert.

21 Press Release (Jan. 31, 2022), https://www.cpsc.gov/Newsroom/News-Releases/2022/Core-Agrees-to-Pay-6-5-Million-Civil-Penalty-for-Failure-to-Report-Serious-Injuries-Involving-its-Exercise-Equipment.

22 Erik K. Swanholt & Kristin M. Sikora, Recent Activity on Infant and Child Safety (Oct. 7, 2021), https://www.foley.com/en/insights/publications/2021/10/recent-activity-on-infant-and-child-safety.

23 See Press Release (Jan. 26, 2022), https://www.cpsc.gov/Newsroom/News-Releases/2022/CPSC-Approves-New-Federal-Safety-Standard-for-Crib-Mattresses-Rule-to-Provide-a-Safer-Marketplace-for-Parents.

24 Id.

25 Id.

26 See https://www.cpsc.gov/Recalls.

27 Press Release (Feb. 9, 2022), https://www.cpsc.gov/Newsroom/News-Releases/2022/CPSC-Sues-Leachco-Over-Suffocation-Hazard-from-Defective-Infant-Loungers-Seeks-Notice-and-Refund-to-Consumers-from-Company.

28 See Recall Lawsuits: Adjudicative Proceedings, https://www.cpsc.gov/ Recalls/Recall-Lawsuits-Adjudicative-Proceedings.

29 See Duty to Report to CPSC: Rights and Responsibilities of Businesses, https://www.cpsc.gov/Business--Manufacturing/Recall-Guidance/Duty-to-Report-to-the-CPSC-Your-Rights-and-Responsibilities.

30 Id.

31 Id.