Consumer Product Matters

A product safety and consumer related regulation and litigation blog

Battle of the Experts Still Brewin’ in Starbucks Trial

Posted in Distributors, Federal Enforcement, Federal Regulations, Food and Beverage, Importers, Private Labelers, Prop 65, Retailers, State Consumer Protection Laws, State Product Safety Laws, State Regulations

Starbucks and CERTIn April 2010, the Council for Education and Research on Toxics (CERT) sued Starbucks Corp. and other coffee sellers alleging they violated California’s Safe Drinking Water and Toxic Enforcement Act, passed by California voters in 1986 as Proposition 65, by failing to warn consumers about carcinogens in their products as required under the act.  In July 2013, Los Angeles Superior Court Judge Elihu M. Berle denied CERT’s motion for summary adjudication, saying the lawsuit would essentially boil down to a battle of experts.

Since then, the battle of the experts has continued to brew.  We are now a month into the bench trial that will culminate in Judge Berle’s ruling on the three affirmative defenses asserted by Starbucks and several other defendants: Continue Reading

GAO Releases Report on CPSC Response to New and Emerging Hazards

Posted in Consumer Product Safety Commission (CPSC), Consumer Products, Federal Enforcement, Federal Regulations, Importers, Manufacturers, Product Liability, Retailers, Supply Chain Risk Management, U.S. Congress

CPSC new and emerging risksOn October 14, the Government Accountability Office (GAO) published a report entitled “Consumer Product Safety Commission: Challenges and Options for Responding to New and Emerging Risks.”  The report analyzes the timeliness of the Consumer Product Safety Commission’s (CPSC) response to “new and emerging” safety risks from new or existing consumer products.  It is based upon a review of current product safety laws and regulations, related literature and studies, timeliness related to the regulation of specific consumer products, and interviews with CPSC officials, including current and former Commissioners, industry representatives, consumer groups and other subject-matter and legal experts.

According to the report, although the CPSC uses a multifaceted approach to reduce the risk of injury to consumers from immediate and future problems, the CPSC faces hurdles and challenges in responding timely to emerging risks because “the CPSC was established to respond to risks after products have been introduced into the market.”  The report concludes that the timeliness of the agency’s response to new and emerging risks is affected by factors such as:

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The Incredible Shrinking Red Bull Refund: How Should Courts Verify Class Membership?

Posted in Consumer Products, Food and Beverage, Litigation, Product Class Actions

Red bull wingsA recent class action settlement has brought fresh attention to two age-old questions. The first: does Red Bull actually give you wings? The second: how carefully should courts screen out bogus claimants from proposed classes of refund-seeking consumers?

Earlier this month, a federal court in Manhattan conditionally approved a settlement in two related class actions brought against Red Bull North America and Red Bull GmbH, makers of the eponymous–and ubiquitous–energy drink. The class actions allege that Red Bull falsely advertised the energy benefits of its products through advertising claims such as the slogan “Red Bull Gives You Wings.” Continue Reading

CPSC Clarifies Changes to Monthly Recall Report Form

Posted in Consumer Product Safety Commission (CPSC), Consumer Products, Manufacturers, Private Labelers, Product Recalls, Retailers

consumer product recalls and social mediaIn May, we advised readers conducting recalls that the CPSC’s new monthly “recall progress report” form may catch you by surprise. Among other changes, the form included new provisions requesting companies to report recall notification statistics on social media platforms like Facebook and Twitter along with information from the company’s monitoring of online auctions for sale of their recalled product.

The surprise, of course, was that the form was written in a manner that seemingly presumed every company had already agreed to undertake social media outreach and monitor online auctions for recalled products as a component of their “corrective action plan” (CAP) with the CPSC.

In response to the new form, the National Association of Manufacturers (NAM) wrote a letter on behalf of 30+ trade associations arguing that these new obligations would amount to “unilateral retroactive modification” of previously agreed to CAPs. NAM also argued that the CPSC should have proposed any new expectations as part of its notice of proposed rulemaking to modify the agency’s voluntary recall process.

CPSC’s Response

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FDA Announces More Changes to FSMA Implementation Rules

Posted in Food & Drug Administration (FDA), Food and Beverage, Importers, Supply Chain Risk Management

FDA Food Safety and Modernization Act On September 19, 2014, FDA announced potential changes to four rules that the agency proposed in 2013 to implement the Food Safety and Modernization Act (“FSMA”). FSMA was signed into law in January 2011 in response to many reported incidents of food-borne illness during the 2000s.

FSMA’s goal is to ensure that food in the United States is safe by shifting the focus of federal regulators from responding to contamination to preventing contamination from initially occurring.  The law has given FDA new authority to regulate the way foods in the United States are grown, harvested, and processed.  One means through which FDA exercises this authority is rulemaking.

The four rules for which FDA is proposing changes are: Continue Reading

Operation Full Disclosure! FTC’s Frontal Assault on Ads

Posted in Advertising, Consumer Products, Federal Enforcement, Federal Trade Commission (FTC)

FTC Full Disclosure AdvertisementsIn this blog we often discuss products being subjected to a lawsuit based on allegations that a label is false or misleading under California’s consumer protection laws.  The Federal Trade Commission is similarly concerned with the prevention of false and misleading claims, but its focus is also on the product’s advertising, not just its labeling.

Recently, FTC sent warning letters to more than 60 companies – including 20 of the 100 largest advertisers in the country – saying that the companies failed to make adequate disclosures.  The initiative, called Operation Full Disclosure, was brought after the agency reviewed national television and print advertisements.

The inadequate disclosures fell into different categories – from not adequately disclosing the conditions for obtaining a stated price (such as an automatic billing feature or the need to buy an additional product or service), to claiming that a product was unique or superior but not disclosing the narrow definition applied or the basis of the comparison.  Other ads made absolute statements but did not adequately disclose exceptions or limitations, did not adequately disclose issues related to the safety or legality of a product or service, or did not disclose material alterations to a product demonstration.

If you received such a letter, or if you want to review your advertising to make sure it is in compliance with FTC’s standards, you can follow its performance standard of “Clear and Conspicuous” disclosures.  That is, a disclosure is clear and conspicuous if consumers notice it, read it, and understand it.  Instead of dictating the specifics of font size, etc., FTC advises companies to focus on “The 4 Ps”:

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Product Safety Update from Capitol Hill (Part Three)

Posted in Consumer Product Safety Commission (CPSC), Consumer Product Safety Improvement Act (CPSIA), Federal Regulations, U.S. Congress

Product Safety Update from Capitol Hill Earlier this year, we began a series of blog entries to update our readers on legislative efforts on Capitol Hill that affect stakeholders within the product safety arena.  Over the summer, we updated you on an amendment to an appropriations bill passed in the House of Representatives that would halt the U.S. Consumer Product Safety Commission’s (CPSC) ongoing work on finalizing a rule on voluntary recalls.  Since the summer, three additional pieces of legislation have been introduced on the Hill pertaining to product safety, which deserve our attention.

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CPSC Gets it Right: Unanimously Regulates High-Powered Magnet Sets Through New Safety Standard

Posted in Consumer Product Safety Commission (CPSC), Consumer Products, Federal Enforcement, Federal Regulations, Litigation, Manufacturers, Product Recalls, U.S. Congress

rare earth magnets consumer product safetyWe do not typically take positions on product specific issues pending before the U.S. Consumer Product Safety Commission (“CPSC”), but the CPSC’s new safety standard for magnet sets demonstrates both why the agency exists and how it can use its regulatory authority to protect consumers. In enacting the safety standard, the agency did not eradicate what are commonly referred to as “rare earth magnets” from the marketplace. Instead, the CPSC set a minimum level of safety for certain types of magnet sets based on the data necessary to take such action under the Consumer Product Safety Act (CPSA), the CPSC’s organic statute.

The practical effect of the CPSC’s action will be to prohibit the sale of magnet sets composed of small but very powerful magnets that have proven both extremely attractive and hazardous to children. Although these types of magnet sets were marketed to adults to manipulate into various shapes for entertainment or stress relief, the individual magnets found their way into the hands, and ultimately, the mouths of children. When accidentally swallowed, the magnets can bond and become trapped within the digestive system in a manner that can cause severe internal damage.

Summarizing the rationale for his vote, Commissioner Mohorovic said in his closing statement at the CPSC’s decisional meeting: Continue Reading

Guilty Convictions in Salmonella Trial May Signify Landmark in Criminal Food-Safety Prosecutions

Posted in Civil & Criminal Penalties, Federal Enforcement, Federal Regulations, Food & Drug Administration (FDA), Food and Beverage, Litigation, Manufacturers, Product Liability, Product Recalls, State Product Safety Laws, State Regulations, Uncategorized

This space has thoroughly explored the various forms of civil liability food companies face for the mislabeling and/or deceptive marketing of their products.  Last week, a set of landmark convictions in a criminal food-safety prosecution potentially signal increased criminal liability for food companies when matters of public health and safety are at play…

On Friday, September 19, 2014, a federal jury convicted two former executives of a peanut-processing company of conspiracy and other charges in connection with a massive Salmonella outbreak in 2009, which killed nine people, sickened 700 others, and led to one of the largest U.S. recalls ever.  Stewart Parnell, former owner of Peanut Corporation of America (PCA), and other former employees were convicted of conspiracy, mail, and wire fraud in violation of federal anti-fraud and conspiracy statutes, and the introduction of misbranded food into interstate commerce in violation of Sections 331(a) and 333(a)(2) of the Federal Food, Drug, and Cosmetic Act (FDCA). Parnell alone was also convicted of the introduction of adulterated food into interstate commerce in violation of Sections 331(a) and 333(a)(2) of the FDCA; he could face more than three decades in prison. Continue Reading

Do Not Pass Go: Federal Judge Orders Execs Jailed for Contempt of Recall Order

Posted in Advertising, Civil & Criminal Penalties, Consumer Products, Federal Enforcement, Federal Trade Commission (FTC), Litigation, Manufacturers, Product Recalls, Uncategorized

A recent federal decision has made clear that court-ordered recalls can have real teeth, not just for manufacturers but also their officers—especially when the court has reason to suspect a company’s execs are deliberately dragging their feet.

On Tuesday, September 2, the Northern District of Georgia held the CEO and a senior vice president of Hi-Tech Pharmaceuticals in contempt for their repeated delays in carrying out a court-ordered recall.  The court had issued the original recall order in May 2014, finding that Hi-Tech had run afoul of a long-standing injunction by continuing to make unsubstantiated weight loss claims about its dietary supplement products in violation of Sections 5 and 12 of the Federal Trade Commission Act.  Months later—and with the recall far from complete—the court ordered the executives jailed as a sanction.

Expressing concern that the execs were not implementing the recall in good faith, the court emphasized several facts justifying the harsh penalty:

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