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Consumer Product Matters

A product safety and consumer related regulation and litigation blog

Mark Your Calendars: BPA Prop 65 Warnings Required as of May 11, 2016; Styrene Also Added to the Prop 65 List

Posted in Distributors, Food and Beverage, Prop 65, State Consumer Protection Laws, State Regulations

Earlier this month, California’s Office of Environmental Health Hazard Assessment (“OEHHA”) issued a Notice of Emergency Action to allow temporary use of a standard point-of-sale warning message for bisphenol A (“BPA”) exposures from canned and bottled foods and beverages. This emergency rulemaking came only three weeks before California’s Safe Drinking Water and Toxic Enforcement Act of 1986 (“Proposition 65”) warning requirements for BPA becomes effective on May 11, 2016. Several days later, OEHHA also added styrene to the Proposition 65 list as a known carcinogen.

BPA

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“GMO” Labeling Food Fight: How Vermont’s Act 120 Is Pressuring An Entire Industry

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

On July 1, 2016, Vermont’s Act 120 will require food manufacturers to indicate in the labeling of all products regulated by FDA when the food has been produced with the use of genetic engineering (GE).  Unless Congress acts with unusual swiftness to pass federal legislation regarding GE or “GMO” food labeling that preempts conflicting state or local laws, Vermont’s law will result in the beginning of patchwork legislation among the states on this issue.  The effect of such legal patchwork will likely lead to confusion among consumers and manufacturers alike – and has forced food manufacturers to grapple with the question of whether to change the labeling for all their nationally distributed products to comply with Vermont’s law or to switch to non-GE food ingredients to avoid having to comply at all.  Among other things, manufacturers are concerned that compliance will significantly increase the costs of production, which will be passed on to consumers.

Law360 recently featured an article written by my colleagues Joanne Hawana and Benjamin Zegarelli  regarding the sudden urgency surrounding GE labeling.  The article provides a great overview of the current GE labeling state of affairs.  You can check it out here.

What is CPSC’s Statute of Limitations for Civil Penalties? That’s a Gabelli Question

Posted in Consumer Product Safety Commission (CPSC), CPSC Civil Penalties, CPSC Enforcement Actions, Manufacturer Product Safety, Retailer Product Safety

Time Expired Statute of LimitationsAfter filing a Section 15(b) report and conducting a recall with the Consumer Product Safety Commission (“CPSC”), it is not uncommon for a company to wonder whether it timely filed its report under the Consumer Product Safety Act (“CPSA”). A question sometimes asked of us is how much time must pass before the company can feel confident that the agency is not going to initiate a timeliness investigation or civil penalty action.

CPSC’s Statute of Limitations

The CPSA does not contain an explicit statute of limitations that answers this question. Instead, the CPSC operates under the general statute of limitations for the government to bring an enforcement action for a civil penalty, 28 U.S.C. § 2462, which states the following: Continue Reading

Maple Syrup Trade Organization Seeks FDA Regulation of “Maple” Products

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

maple syrupI haven’t met many people who don’t love maple syrup. Its versatility knows few bounds – traditional pancake or waffle topper, lemonade, salad, and doughnuts come to mind. As you might imagine, the maple syrup industry actively works to protect its product, especially when it comes to alleged imposters.

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Zen Magnets Claims “90% Victory” Against CPSC in Magnet Recall Litigation

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

On March 25, 2016, Administrative Law Judge Dean Metry found that the U.S. Consumer Product Safety Commission (“CPSC”) case counsel did not prove that high powered, small rare earth magnets (“SREMs”) (1) are defective as sold by Zen Magnets (“Zen”); and (2) constitute a substantial product hazard when sold with appropriate warnings, including proper age recommendations (click here for decision and order).  Judge Metry concluded that because the SREMs are not designed, manufactured, or marketed for play to children under fourteen, the proper and intended use of Zen creates no exposure to danger, such as ingestion by small children.  Judge Metry did rule, however, that Zen needed to recall a small number of magnets that did not contain sufficient warnings or were marketed for ages twelve years and older.

In response to the decision, Shihan Qu, Zen’s founder said:

“The outcome of the administrative adjudication . . . is in, and common sense has prevailed. This represents first and only administrative review of the merits of the CPSC’s claims regarding SREMs. [This] represents 90% victory, and 10% recall. For the CPSC, this is a huge loss: it’s the first time a CPSC administrative action has been challenged in court since 2001.”

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A Decade Later, Rules for the Sanitary Transportation of Food Finally Finalized by FDA

Posted in Distributors, Federal Regulations, Food & Drug Administration (FDA), Food and Beverage, Retailer Product Safety, Supply Chain Risk Management

Last week, FDA finalized new food safety regulations seeking to ensure the sanitary transport of human and animal food, as required under the Food Safety Modernization Act (FSMA). The final Sanitary Transportation of Human and Animal Food Rule will affect shippers, loaders, carriers, and receivers of food transported by rail or motor vehicle in the United States. Among other sanitary controls, the rules will require that vehicles are adequately cleaned, designed to maintain safe temperatures, and operated by personnel trained in sanitary transportation practices and documentation.  Most affected entities will have a one-year compliance deadline, with smaller businesses getting an additional year.

As our readers may know, this Final Rule is the sixth of seven “foundational” rules being promulgated by the Agency under FSMA, the massive food safety overhaul law enacted in 2011.  Interestingly, unlike the other major FSMA rules, this one originated in a 2005 law called the Sanitary Food Transportation Act – Congress reminded the Agency to follow through on those mandates through a provision in FSMA.  Continue Reading

“Multi-Agency Interactive Tool” Available for Developers of Health Apps

Posted in Advertising, Federal Regulations, Federal Trade Commission (FTC), Food & Drug Administration (FDA)

It seems as though 2016 may become the year that industry receives a plethora of helpful interactive portals from Federal Agencies.  My colleague Matt Cohen recently reported on the existence of a new CPSC tool called The Regulatory Robot that’s helping businesses identify the product safety rules that might apply to a new product.  This week, the Federal Trade Commission (FTC) — in conjunction with the Food and Drug Administration (FDA), the Office of Civil Rights (OCR), and the Office of the National Coordinator for Health Information Technology (ONC), all agencies housed within the Department of Health and Human Services — launched a similar portal for mobile app developers.

FTC Health App toolThe FTC’s interactive tool walks developers of health-related mobile apps through a series of ten questions and then points them to critical Federal laws that may apply to their product.  Mobile apps often collect, create, or share consumer information, thus implicating the FTC Act, which prohibits unfair or deceptive trade practices in or affecting commerce, including practices that relate to data security and consumer privacy.  The FTC Act also prohibits false or misleading claims about the performance of a mobile app product or about its potential safety, if relevant to the app’s function.  FTC also enforces a breach notification rule that requires certain businesses to notify consumers following breaches to their personal health information.  The Commission also released a new guidance, “Mobile Health App Developers: FTC Best Practices,” at the same time as the interactive tool in order to provide additional compliance tips to businesses who are covered by the FTC Act.

Next, the interactive tool asks questions to determine whether the mobile app is intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment or prevention of disease – an affirmative answer will likely render the product a medical device under the Food, Drug, and Cosmetic Act.  FDA has focused its regulatory oversight on what it calls “mobile medical apps” that have the potential to pose risks to consumers, but there may be situations in which lower-risk medical apps are subject to certain medical device requirements as well.

Finally, if a wellness or other health-related app is developed by or on behalf of an entity covered by the Health Insurance Portability and Accountability Act (HIPAA), then HIPAA rules on privacy and security will probably apply.  OCR is responsible for enforcing HIPAA and separately released a guidance earlier this year that provided examples of when a mobile app developer may become subject to the law (as discussed recently in a post on our sister blog, Health Law & Policy Matters).

An April 5th FTC press release includes comments from each of the agencies involved in enforcing these various laws and their application to mobile app products.  In our view, the agencies should be applauded for this effort at transparency and facilitating compliance by small businesses who may be overwhelmed with the various legal analyses they need to undertake before releasing a new mobile app product.  The only other comment from us is that having the Mobile Health Apps Interactive Tool running slows down your other computer programs a lot, so be forewarned if you plan to use it!

Post-Senate Vote, Major Food Manufacturers Choose to Label Genetically Engineered Foods

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

In the wake of the Senate’s defeat of legislation that would have preempted state-mandated GE ingredient labeling on food products, a new trend is emerging, as one food manufacturer after another announces that they will voluntarily label bioengineered ingredients contained in their national food product lines.  The chain reaction began less than two weeks ago, with General Mills’s announcement that it will label all its products in compliance with Vermont’s law.  That announcement was followed by similar statements from Mars and Kellogg’s last Monday and by ConAgra Foods the following day. Continue Reading

National Retailer Settles FTC Native Advertising Complaint

Posted in Advertising, Federal Regulations, Federal Trade Commission (FTC)

The potential pitfalls of native advertising were on display this month at the Federal Trade Commission (FTC). The agency reported that national retailer Lord & Taylor settled with it on charges that the company improperly paid for native advertisements. Lord & Taylor allegedly did not disclose that an article in the online publication Nylon, as well as a Nylon Instagram post, were paid promotions for one of the company’s clothing collections. In addition, the company allegedly gave fashion “influencers” dresses and then paid them to post photos wearing them on social media. The company’s contracts with the influencers obligated them to use the “@lordandtaylor” Instagram user designation and hashtag “#DesignLab” in the captions of their photos. The FTC charged that Lord & Taylor did not require the influencers to disclose that they were compensated by the company (none did).

The FTC unanimously voted to issue a complaint and approve a proposed consent agreement. The agreement:

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Breaking: CPSC Obtains Record $15.45 Million Civil Penalty in Settlement Agreement with Gree

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

This morning, the U.S. Consumer Product Safety Commission (CPSC) announced that it has obtained a record-breaking $15.45 million civil penalty in a settlement agreement with Gree Electric Appliances of China, Hong Kong Gree Electric Appliances Sales Co. of Hong Kong, and Gree USA Sales of California (Gree) over dehumidifiers sold under 13 different brand names.  This civil penalty amount shatters the largest previous amount levied by the CPSC against a company, $4.3 million.

The amount of this civil penalty—the maximum permitted under the Consumer Product Safety Act (CPSA)—is consistent with a series of recent remarks made by CPSC Chairman Elliot Kaye.  In 2015, Kaye remarked at the annual ICPHSO product safety conference that he was directing staff to seek significantly higher civil penalties against companies for violations of the CPSA.  Earlier this month, at the 2016 ICPHSO conference in Washington, D.C., Kaye doubled down (literally) by stating that he wanted to see “double digit” civil penalties based on certain fact patterns as that is what Congress intended when it increased the civil penalty ceiling in the Consumer Product Safety Improvement Act of 2008 (CPSIA).

According to the settlement agreement, the CPSC alleged that Gree did the following: (1) knowingly failed to report a defect and unreasonable risk of serious injury to the CPSC immediately with dehumidifiers sold under thirteen brand names; (2) knowingly made misrepresentations to the CPSC;   (3) sold dehumidifiers bearing the UL safety certification mark knowing that the dehumidifiers did not meet UL flammability standards.  The CPSC alleged further that Gree’s subject dehumidifiers had a defect that caused them to overheat, and, on occasion, catch fire, causing a purported $4.5 million in property damage.

Gree did not admit to the CPSC’s allegations and also set forth in the settlement agreement that it voluntarily notified the Commission in connection with the dehumidifiers, carried out a voluntary recall in cooperation with the Commission and acted to reduce the potential risk of injury.

In addition to paying the $15.4 million civil penalty to settle the CPSC’s charges, Gree has agreed to implement a stringent compliance program to ensure future compliance with the CPSA.  Such compliance programs have become common elements in civil penalty settlement agreements.

The vote to approve the settlement agreement was 4-1 in favor, with Commissioner Ann Marie Buerkle voting against.   Although voting in favor of the agreement, Commissioner Joe Mohorovic issued a statement expressing reservation that the public facing documents do not reveal enough detail (in Mohorovic’s words the “compelling facts”) for the regulated community to draw lessons.   Mohorovic has expressed these same concerns previously.