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Consumer Product Matters

A product safety and consumer related regulation and litigation blog

BREAKING: COURT RULES POSITIVELY FOR CPSC IN FEDERAL CIVIL PENALTY CASE AGAINST SPECTRUM BRANDS

Posted in Consumer Product Safety, Consumer Product Safety Commission (CPSC), CPSC Civil Penalties, CPSC Enforcement Actions, CPSC Product Recalls, Federal Regulations, Litigation

We do not get many court decisions in the CPSC world, but yesterday we received one.  Last evening, a Wisconsin federal district court essentially held in the Government’s case against Spectrum Brands, Inc. (Spectrum) that (1) Spectrum failed to timely report defective coffee pots in violation of Section 15(b) of the Consumer Product Safety Act (CPSA) because they could create a substantial product hazard, and (2) the Government’s imposition of a civil penalty pursuant to the CPSA was not in violation of Spectrum’s statutory or constitutional due process rights.  In doing so, the Court rejected Spectrum’s procedural and substantive arguments, including that the CPSC’s claims were time barred and that the CPSA’s reporting requirements are unconstitutionally vague.

The Department of Justice and CPSC alleged that a company acquired by Spectrum (Applica Consumer Products) knowingly failed to timely report under Section 15(b) of the CPSA a hazardous defect relating to certain coffee pot handles.  The Complaint alleged that the Company had received approximately 1,600 consumer complaints over a four year period (2008-2012) related to the breakage of the pots’ handle resulting in coffee spillage and burns on consumers.

In response to the filing of the lawsuit, Spectrum asserted, among other arguments, that (1) the Commission’s claims against it were time barred under the so-called Gabelli doctrine; (2) the CPSA’s reporting requirements are unconstitutionally vague; (3) the CPSC failed to provide fair notice that a report was required in light of its finding that other Spectrum coffeemakers with similar issues did not present a substantial product hazard; (4) the CPSC’s late-reporting determination was arbitrary and capricious; (5) Spectrum had no duty to report because the CPSC had already been “adequately informed” of the handle failures and (6) the CPSA did not authorize the CPSC to seek certain forms of injunctive relief including the establishment of a compliance program and prospective liquidated damages in the event of noncompliance.

coffee-pot-cpscThe Court rejected all of these arguments and handed almost a total victory to the CPSC that may have future ramifications in the product safety community.  For example, the decision certainly lends new credence to the CPSC’s common refrain to regulated entities “when in doubt, report” when deciding whether a product defect could present a substantial product hazard.  The Court even went so far as to cite this common CPSC advice in the opinion.  It’s also noteworthy that the Court concluded that the CPSC does not need to articulate its reasoning for a civil penalty amount in writing and provide more transparency in the process generally­­­—a complaint often raised by industry defendants.

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With the passage of Proposition 67, the question is “Would you like paper or…paper?”

Posted in Consumer Product Safety, Food and Beverage, State Regulations

On November 8, 2016, California voters approved Proposition 67, the statewide ban on carry-out plastic bags, by 52 percent. At the same time, California voters rejected Proposition 65 by 55 percent–a measure that would have sent the proceeds from sales of paper bags and reusable bags to environmental causes.

Plastic Bage Seagull

Main Provisions of Proposition 67

  • Prohibits most grocery stores, convenience stores, large pharmacies, and liquor stores from providing single-use plastic carry-out bags. The provision excludes plastic bags used for certain purposes, such as those used for unwrapped produce.
  • Creates new standards for the material content and durability of reusable plastic carryout bags. The California Department of Resources Recovery and Recycling (CalRecycle) would be responsible for ensuring that bag manufacturers meet these requirements. The measure also defines standards for other types of carryout bags.
  • Requires a store to charge at least 10 cents for any carryout bag that it provides to consumers at checkout. Certain low-income would not have to pay the charge.

Main Provisions of Proposition 65

  • Redirects carryout bag revenue to a new state environmental fund called the Environmental Protection and Enhancement Fund.
  • Allows funds to be used for grants to support programs and projects related to  (1) drought mitigation; (2) recycling; (3) clean drinking water supplies; (4) state, regional, and local parks; (5) beach cleanup; (6) litter removal; and (7) wildlife habitat restoration.
  • Takes effect only if both propositions pass and Proposition 65 gets more “yes” votes than Proposition 67.

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FTC Issues Long-Awaited Enforcement Policy on OTC Homeopathic Drugs

Posted in Advertising, Children's Products, Consumer Product Safety, Drugs & Cosmetics, Federal Regulations, Federal Trade Commission (FTC), Manufacturer Product Safety, Product Liability

We reported a few weeks ago about a new warning from FDA related to the safety of certain teething-related, non-prescription homeopathic drug products, and in that post we mentioned that both FDA and the Federal Trade Commission (FTC) held public workshops in 2015 to gather information about this uniquely-regulated class of consumer products.  Today, FTC released an Enforcement Policy Statement on Marketing Claims for OTC Homeopathic Drugs  (available here); a Staff Report on the discussions held during the September 2015 workshop (available here); and an FTC blog post summarizing these actions.

For readers who are not familiar with homeopathy, the practice dates back to the 1700s and posits that disease symptoms can be treated by tiny doses of substances that produce similar symptoms if given in larger doses to healthy people (“like cures like”).  Accordingly, modern-day homeopathic remedies that we find ubiquitously in drug stores today are highly diluted formulations, which some people consider to be no more effective than placebo.  The FTC Staff Report provides an excellent overview of how this OTC industry has grown over the past 50 years and the viewpoints presented by both supporters and skeptics of homeopathy.

 The upshot to the new FTC Enforcement Policy is this:
 “No convincing reasons have been advanced either in the comments or the workshop as to why efficacy and safety claims for OTC homeopathic drugs should not be held to the same truth-in-advertising standards as other products claiming health benefits.”

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CPSC in a Post-Election Government: Restraint and Moderation Are Required by All Sides

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

We have had a huge election result, perhaps the most significant in our lifetime, potentially even exceeding what was called the Reagan Revolution.  It is critical, particularly for anybody from Washington DC, to have a great deal of modesty and humility in prognosticating the future under the Trump administration even in the CPSC world.  We assume, but really do not know, what the attitudes of the new Trump administration and the Republican-led Congress will be in our parochial, but critical, little product safety world.

We can understandably assume that within a year or less there will be a new CPSC Chairman and a new Republican majority on the Commission. We can also assume that this will change the direction and substance of many regulatory initiatives and maybe even some of the approaches to compliance and civil penalties.
Though we may be unsure about the future, I can say confidently that what we badly need from the outgoing Democratic majority and the yet to be defined incoming Republican majority is some perspective, restraint, and Aristotelian moderation.  I hope that the current majority commissioners will not take advantage of their present but fleeting power to push through ill-conceived regulatory or compliance and enforcement initiatives.  Such actions will be bitterly opposed and this Commission’s reign will end on a sour note and be subject to regulatory and congressional reversal.

vote-pins-CPSC-Post-Election On the other hand, all five of the current commissioners swore to uphold the Constitution and the laws of the United States.  Those laws absolutely include CPSIA and other governing statutes of the CPSC.  So the Commissioners need to, and I am confident that they will, continue to do their jobs.

There are some very important initiatives which will enhance safety and not be politically controversial.  For example, I welcome Chairman Kaye’s interest in a comprehensive and interagency review of the lithium ion battery problem.  We do not need to have any more spectacular safety problems to recognize that even without hoverboards and cell phones catching on fire, the increasing use and push-the-envelope application of products which use lithium ion batteries is causing lots of problems.

Indeed, the situation with respect to lithium ion batteries is even worse for smaller companies which don’t have vertical integration, don’t design batteries or battery packs, don’t have much control over their vendors, and basically have to take solutions off the shelf.  Everybody in the product safety community will benefit from figuring out what combination of standards, practices, and designs we need to protect the public and thousands of businesses.

Nevertheless, the business community and the future leaders of the CPSC need to show some restraint as well.  It would be a mistake to take advantage of the present politics to fundamentally reverse the key elements of the Consumer Product Safety Act, to strangle the agency with inadequate funding, or tie the agency up in knots so it cannot adequately function.  This is a formula for exponentially increasing an already problematic patchwork of state and local government regulation of consumer products.  It would also potentially allow for cheap, unsafe imports to flood our country and undermine significant product safety investments already made by U.S. companies.

This does not mean that nothing should be done or that the statute shouldn’t be revisited in some regards.  There are plenty of ways the business community can achieve meaningful regulatory improvements and burden relief that would not cause larger issues.

I do not support crippling the CPSC.  No members of industry that I have spoken with support such drastic action either.  It will not be in the long term benefit of the business community and it leaves American consumers, our families and friends, less protected.

I’ve been involved in the product safety world for 30-plus years and have seen the political pendulum swing on multiple occasions. One constant is that most reasonable, informed people, whether business executives or consumer advocates, agree that a well-functioning CPSC is a critical part of a vibrant economy for consumer products in this country.

 

Counterfeit Products Are Often Unsafe Products – More Reasons to Aggressively Police Infringement of Your Trademarks and Trade Dress

Posted in Consumer Product Safety, Manufacturer Product Safety, Private Labeler Product Safety, Product Liability, Retailer Product Safety, Supply Chain Risk Management

Our colleagues in Mintz Levin’s Intellectual Property Practice, Aarti Shah and James Wodarski, recently authored an expert analysis piece in Law360 that examined the use of the U.S. International Trade Commission (ITC) to combat a rising tide of counterfeits and knockoffs in all kinds of consumer product industries.  Aarti tells us that, in addition to the potential for reputational harms to the targeted Brand, many of the counterfeits often are poorly made.  Sometimes they even bear completely false UL or Energy Star certifications.  Accordingly, they can raise a host of serious safety concerns that can directly and adversely affect the Brand through no fault of its own.

Examples of poor quality counterfeit products that actually harmed consumers and tarnished the Brand name are described in Aarti and James’s article.  In one illustrative case, Farouk Systems, Inc., owner of the CHI™ mark used for high-end hair irons and hair products, faced with a flood of counterfeits and knockoffs that were entering the market through websites, distributors, and eBay.  Farouk filed over 21 lawsuits in the U.S. district courts; hired a company to monitor Internet websites selling unauthorized Farouk products; and worked with eBay to prevent sales of knockoffs on that site – and it was still unable to slow down the influx of infringing products, thus leading it to seek protections through the ITC process.  Even worse from the perspective of those of us who worry about consumer product safety and products liability, Farouk was receiving daily calls from customers regarding poorly made, faulty products – which in most cases turned out to be counterfeits.

Aarti and James’s full article can be viewed here.  We recommend it as a quick read for  every manufacturer, private-labeler, and retailer of consumer products who faces counterfeiting or other forms of serious Brand dilution.

Coming Soon to a Lawbook Near You – New Cosmetic Requirements

Posted in Consumer Product Safety, Drugs & Cosmetics, Federal Regulations, Food & Drug Administration (FDA), Manufacturer Product Safety, Private Labeler Product Safety, U.S. Congress

Back in April 2015, Senators Dianne Feinstein (D-CA) and Susan Collins (R-ME) introduced the Personal Care Products Safety Act (S.1014).  More recently, on September 22, 2016, the Senate Health, Education, Labor, and Pensions Committee received testimony from Senators Feinstein and Collins in support of this bipartisan legislation.  The HELP Committee also heard from experts in the cosmetics industry about product developments and health standards.

Witnesses in favor of the Personal Care Products Safety Act stated that the FDA has not done enough to ban endocrine-disrupting chemicals in cosmetic products and that industry-financed review programs should not substitute government regulatory programs in collecting chemical toxicity data.  They contrasted FDA’s inability to ban products unless they are “adulterated” with the more expansive authorities of similar regulatory agencies in Canada, Japan, and the European Union. Continue Reading

Stuck in the Middle with the FTC

Posted in Advertising, Federal Regulations, Federal Trade Commission (FTC), Litigation, State Consumer Protection Laws, State Unfair Competition Laws, Supply Chain Risk Management

“…Clowns to the right of me, jokers to the left, here I am…”

-Stealers Wheel (1972)


Legal actions regarding “Made in the USA” claims, whether prosecuted by the Federal Trade Commission (FTC) or through various state unfair trade practices acts, often settle early in the proceedings.  For example, in 2014, the FTC issued 16 “closing letters” wherein the target company agreed to revise its “Made in the USA”  claim to clarify that its products, even those assembled in the United States, included imported components. In 2015, the FTC issued 28 such “closing letters”; and in 2016, to date, the FTC has issued 18.

Earlier this month, Chemence, Inc., the Ohio maker of Kwikfix, Hammer-Tite and Flash Glue, entered into a settlement with the FTC.  Chemence was the third glue company that has resolved its claims issues with the FTC since 2015.   Toagosei America, Inc., makers of the Crazy Glue brand, and Gorilla Glue both previously reached agreement with the FTC, with FTC issuing closing letters after both companies agreed to make clear that their products included some imported materials.

Chemence’s path to resolution with the FTC was different.  Continue Reading

Homeopathic Products Under Renewed Scrutiny Following FDA’s Consumer Warnings

Posted in Children's Products, Consumer Product Safety, Drugs & Cosmetics, Federal Regulations, Food & Drug Administration (FDA), Manufacturer Product Safety, Private Labeler Product Safety

Last week, following up on a more general warning issued on September 30, FDA alerted the public that it had received at least 10 reports of baby deaths associated with the use of homeopathic teething products, as well as over 400 other adverse event reports over the past six years (since a 2010 consumer alert about certain ingredients in the same products).  The Agency is warning parents and caregivers to seek medical care immediately if an infant or child experiences seizures, difficulty breathing, lethargy, excessive sleepiness, muscle weakness, skin flushing, constipation, difficulty urinating, or agitation after using homeopathic teething tablets or gels. It is also advising consumers to dispose of any such products they may have in their possession. Continue Reading

Moving on From “Natural,” FDA Seeks Comments on What It Means to Be a “Healthy” Food

Posted in Federal Regulations, Food & Drug Administration (FDA), Food and Beverage

As it signaled it would be doing earlier this year, FDA has initiated a public process to redefine the implied nutrient content claim “healthy” when it is used on food labels and labeling.  In addition, while the process is underway, the Agency intends to exercise enforcement discretion for (meaning it will not take action against) foods labeled with the term “healthy” as long as they meet the conditions in the regulatory definition at  21 CFR 101.65(d) and other criteria laid out in a newly issued guidance document.

FDA explained in announcing this initiative late last month that:   Continue Reading

California Prop 65: More Unintended Consequences

Posted in Litigation, Prop 65, State Consumer Protection Laws, State Product Safety Laws, State Regulations, Supply Chain Risk Management

Last month, the California Office of Environmental Health Hazard Assessment (“OEHHA”) adopted new Proposition 65 warning regulations.  Much of the discussions regarding these new regulations have centered on the warning requirements that become effective, after an approximately two-year phase-in period, in August 2018.

There were, however, amendments to Prop 65 settlement terms, penalty amounts and attorney’s fees in civil actions filed by private persons that became effective on October 1, 2016.  These amendments have “flown under the radar” but actually may be more problematic than the proposed new warnings.

Proposition 65 permits private citizens (known by the plaintiff’s bar as “citizen enforcers”) to initiate enforcement actions, and, when they do, they are entitled to 25% of any penalties assessed by the courts and attorney’s fees.  Continue Reading