Today, President Trump announced his nomination of Dana Baiocco to be a Republican Commissioner on the Consumer Product Safety Commission. If confirmed, Ms. Baiocco would take the seat of Commissioner Robinson, whose term expires on October 26, 2017.

Baiocco is a well-known litigator and partner at Jones Day in Boston, Massachusetts. She is also familiar with the world of product safety. Baiocco’s product safety experience includes extensive product-liability litigation, having defended many major consumer product companies. Ms. Baiocco’s biography can be found here.

The nomination is surely a welcome one for Acting Chairman Ann Marie Buerkle, who is currently operating with a Democratic majority and, until today, uncertainty surrounding when that would change. The nomination signals the White House’s intent to achieve a Republican majority at the CPSC and curtail the agency’s steady push of Democratic initiatives along 3-2 party line votes.

Notably, the nomination comes at the same time the Senate Committee on Commerce, Science, and Transportation announced that it will hold a confirmation hearing on September 27, 2017 for Acting Chairman Buerkle to become the permanent Chairman of the CPSC. If both Buerkle and Baiocco are confirmed, the agency would reflect the composition of the current executive and legislative landscape, with a Republican Chairman and a Republican majority of Commissioners.

Below is more information from the White House Press Release:

 

In the wake of two tragic amusement park ride accidents in Kansas and Tennessee, and the ongoing political debate in America over gun safety issues, we felt it timely to help answer a question that continues to be asked in the media: does the U.S. Consumer Product Safety Commission (CPSC) have the authority to address the safety of amusement park rides and guns?

amusement-park-guns-cpscAmusement Park Rides.  Every time there is a tragedy on a ride at an amusement park, the nation turns its attention and scrutiny on the CPSC as the nation’s safe products regulator.  However, and crucially, the CPSC does not have jurisdiction over the safety of “fixed site” amusement park rides.  In 1981, the Congress stripped the CPSC of its jurisdiction over these rides through an amendment to the Consumer Product Safety Act (CPSA).  As a result, rides that are “permanently fixed to a site” (such as the ones at the Kansas and Tennessee parks) are subject to voluntary standards written by the ASTM F-24 Committee on Amusement Rides and Devices and state and local regulations.

The CPSC does have jurisdiction over “mobile” amusement rides (those transported from location to location).  The agency also acts as a clearinghouse for safety information on ride incidents identified by Commission investigators and state and local ride officials.  The following 2012 CPSC Directory of State Amusement Ride Safety Officials provides a helpful introductory overview of the CPSC’s activities with respect to amusement park rides and a directly of the relevant state and local officials dedicated to ride safety.

Read our previous post about this jurisdictional issue here.

Gun Safety.  Like fixed amusement park rides, firearms and ammunition are excluded from the definition of a “consumer product” in the CPSA.  As a result, the CPSC does not regulate the safety of guns, shells and cartridges (the Bureau of Alcohol, Tobacco, and Firearms does).

guns-amusement-park-cpscNote: CPSC Commissioner Marietta Robinson recently issued a thoughtful perspective describing how she believes the CPSC can make guns safer and help bring down the number of accidental incidents involving firearms.  According to Robinson, “guns should be defined as the consumer products they are so that we may do our job of protecting the American consumer.”

Despite its lack of jurisdiction to regulate the safety of guns and ammunition at present, the CPSC does have authority to regulate the safety of some products and accessories related to gun use.  For example, the CPSC has asserted its jurisdiction over separate firearm trigger locking devices.  Additionally, the CPSC has recalled previously gun storage boxes, handgun vaults, and gun holsters, thus all squarely falling within the regulatory authority of the agency.  In fact, as recently as 2013, the White House requested the CPSC to “review and enhance as warranted safety standards for gun locks and safes” as a measure to improve gun safety.

Without a further act of Congress, the CPSC’s activities with respect to fixed amusement park rides and gun safety will not likely change.

 

This article originally appeared on Law360 on June 14, 2016 and provides additional analysis to our prior posts on civil penalties.

This past March, while speaking at a Consumer Federation of America luncheon, U.S. Consumer Product Safety Commission Chairman Elliot Kaye stated that he “was pleased to announce” that the agency had secured a $15.45 million civil penalty. Commissioner Joe Mohorovic, who voted in favor of the penalty, issued a statement expressing reservations that “too few of the compelling facts” were reflected in the public facing settlement documents for the regulated community to draw conclusions and lessons.

He has since issued two strongly worded dissents raising concerns about the overall transparency of the civil penalty demand process (here and here).  Commissioner Ann Marie Buerkle has recently stated that “consumers will be safer if we help companies prevent violations rather than celebrate marquee penalties,” while Commissioner Marietta Robinson has defended the CPSC’s approach to civil penalties against such criticisms calling them “unwarranted” and “misguided.”

These four perspectives represent some of the dueling philosophies within the CPSC leadership about the role and purpose of civil penalties.  The differences of opinion as to the commission’s approach to civil penalties have never been more pronounced.  Over the past two weeks, the CPSC announced civil penalty settlement agreements with Teavana Corporation and Sunbeam Products (d/b/a Jarden Consumer Solutions) for $3.75 million and $4.5 million, respectively.  These recent penalties come on the heels of the CPSC’s obtainment in March of the record-breaking $15.45 million civil penalty referred to above against various Gree Electric Appliances entities.

It is no secret that over the past two years the CPSC has sought higher civil penalties against companies for alleged violations of the requirement to report product safety issues to the agency in a timely manner — and has notably achieved that goal as announced penalties creep higher and higher into the millions of dollars.  However, in pursuing such civil penalties, the commission’s approach has increasingly divided along partisan lines.

Since last May, the commission has accepted nine civil penalty settlement agreements presented to it by the agency’s professional staff that ranged from $2 million to $15.45 million.  Five of those penalties received a 4-1 vote with Commissioner Buerkle dissenting, while four penalties received a 3-2 vote with Commissioners Mohorovic and Buerkle dissenting.

Approach of the Chairman and Commission’s Democratic Majority 

Chairman Elliot Kaye

Last year, CPSC Chairman Elliot Kaye made waves in the product safety world when he remarked at the 2015 annual International Consumer Product Health and Safety Organization product safety conference that he was directing staff to seek significantly higher civil penalties against companies for violations of the CPSC’s product safety statutes.  Chairman Kaye doubled down — literally — on those remarks earlier this year when, at the same conference, he stated that he wanted to see “double digit” civil penalties based on certain fact patterns that he was seeing.  Kaye reasoned that Congress had intended such increases when it significantly raised the civil penalty ceiling in the Consumer Product Safety Improvement Act of 2008 (CPSIA) from $1.825 million to $15 million.  A few weeks later, Chairman Kaye announced the $15.45 million civil penalty against the Gree entities.

Most recently, after the CPSC announced the Teavana civil penalty, Chairman Kaye made the following remarks regarding Section 15(b) reporting obligations and civil penalties:

All companies who do business before the CPSC must understand that they cannot withhold information from the commission that impacts public safety.  If consumers are suffering product-associated cuts by broken glass and burns by hot liquid then that type of information needs to be reported to the CPSC — immediately.  The $3.75 million penalty agreed to by Teavana is appropriate and is another sign that the CPSC will consistently hold companies accountable when they do not comply with the law …

In short, it is evident from his remarks that Chairman Kaye believes that companies have a heightened duty to report potential defects to the commission, intends to pursue higher civil penalties against companies who violate their obligations and responsibilities under the product safety laws, and supports the general process and procedures currently followed by the Commission and its staff in prosecuting civil penalty demands.

Commissioner Marietta Robinson

One of Chairman Kaye’s Democratic colleagues, Marietta Robinson, has supported the commission’s general approach to civil penalties and has voted in favor of all of the recent civil penalties levied against companies.  In a recent statement, Robinson stated that the following criticisms against the commission’s current approach — the settlement was too high, the CPSC is penalizing a company that made an honest mistake, and too little information was provided to the public on precisely how the CPSC calculated the civil penalty demand — are “unwarranted, misguided and belied by the facts.”  According to Robinson, the commission is using an important tool given to it by Congress to do something about those “rare occasions” when the agency determines that a company has failed to report a potentially hazardous product in a timely manner, and is “hardly pursuing an overzealous enforcement agenda.” Commissioner Robinson’s full statement can be found here.

Commissioner Robert Adler

Although Commissioner Adler has not made any official statements regarding civil penalties recently, he has shared some insight of his thinking on civil penalties in prior years.  For example, in 2012, Adler voted against a civil penalty agreement with Hewlett-Packard.  In a dissenting opinion, Adler stated that the size of the penalty ($425,000) was “infinitesimal” in relation to the size and revenues of the company.  He also rejected the idea that the amount of the penalty could serve as precedent in future cases, specifically citing the new $15 million civil penalty ceiling authorized in the CPSIA.

Approach of the Agency’s Republican Commissioners

While the Commission’s Republican members, Joe Mohorovic and Ann Marie Buerkle, have some differences in their respective approaches to civil penalties, both have expressed concerns over how the agency calculates, imposes and settles civil penalty demands for alleged violations of CPSC statutes, such as Section 15(b) of the CPSA.

Commissioner Joe Mohorovic

Commissioner Mohorovic has voted for some civil penalties in the past, including Gree, although he has consistently and repeatedly expressed concerns over the way by which the commission seeks and then publicizes such penalties.  Recently, Mohorovic voted against the Teavana and Sunbeam civil penalties and issued strongly worded dissents setting forth his perspective on civil penalties in greater detail (see Teavana statement here and Sunbeam statement here).

In the Teavana case, for example, Mohorovic stated that he is “unpersuaded by any of the facts … that [the] settlement amount is appropriate or that a penalty is justified at all,” and that he believes the commission is “failing in [its] duty to tell people why [it is] imposing the penalty [it is] imposing.”  Mohorovic’s perspective could be summarized as follows: settlements of civil penalty demands are teachable moments to educate the regulated community, yet that can only be accomplished through public facing settlement documents that provide sufficient case facts and the commission’s analysis of how those facts are applied to its civil penalty framework.  The commission, according to Mohorovic, is not doing so and missing an important opportunity.

Most recently, Mohorovic has asked the commission to add to its annual agenda and priorities hearing some potential elements of a way forward on “what should be our highest priority: the fair, just, and orderly calculation and imposition of civil penalties for alleged violations of our rules.”  Such steps include, among others, directing the CPSC’s Office of General Counsel to produce a publicly available report comparing the CPSC’s statutory and regulatory penalty constructs with those of peer agencies and holding one or more open meetings or workshops on “CPSC penalties, their purposes and their ideal function and present dysfunction.”  This statement can be found here.

Commissioner Anne Marie Buerkle

Finally, Commissioner Buerkle has been, perhaps, the most strident critic of civil penalties generally and the commission’s approach to pursuing such penalties against companies.  According to Buerkle, she does not oppose civil penalties as a “matter of course;” rather, her opposition has “been for a variety of reasons.”  From Buerkle’s viewpoint, the defect reporting requirements of Section 15 are vague, civil penalties for failure to immediately report are difficult to evaluate and value, and, like Mohorovic, Buerkle has concerns with the CPSC’s lack of transparency throughout the civil penalty process.  Commissioner Buerkle’s recent statement on civil penalties can be found here.

Conclusion

These recent civil penalty settlement agreements illustrate the commission’s desire to increase the amount of penalties assessed against companies for late reporting violations.  But they also illustrate another trend: a commission increasingly divided along party lines with respect to civil penalties. This division, however, is not focused on “whether” the agency will impose multi-million dollar civil penalties.  At least four commissioners have recently supported multi-million dollar civil penalties in cases where they thought a penalty was warranted.  Rather, the major policy divide on civil penalties relates to the role of such penalties in CPSC enforcement, how they are calculated, and the ability of stakeholders to be guided by previous settlements.

Based on the current dynamic, it seems that a robust public debate on the role of civil penalties will continue to unfold at the commission over the next few months.  Although this commission has found middle ground more consistently than in recent years, it remains to be seen whether the various sides of the debate will reach a middle ground on these questions.  In the meantime, companies should expect the CPSC’s current practices for civil penalties to remain much of the same.

USCPSC RecallThe U.S. Consumer Product Safety Commission (CPSC) is set to announce yet another civil penalty settlement.  Sunbeam Products d/b/a Jarden Consumer Solutions (Sunbeam or the Company) has agreed to pay a $4.5 million civil penalty to resolve charges that it knowingly failed to immediately report certain defects and an unreasonably risk of serious injury involving some of the company’s coffeemakers.  The monetary amount of this civil penalty continues to illustrate the Commission’s desire to increase the amount penalties levied against companies for late reporting violations of product safety statutes.

In this case, CPSC staff alleged that Sunbeam failed to report immediately to the Commission that it had information which reasonably supported that certain of its coffeemakers could experience a build-up of steam pressure forcing the brewing chamber to open and expel hot water and coffee.  Such a situation, according to staff, could (and allegedly did) create a burn risk to consumers.  In response to the CPSC’s allegations, Sunbeam asserted that after an extensive investigation, the Company determined that these incidents were related to circumstances that it had not anticipated and not within the subject product’s instructions, and that it did voluntarily report to the Commission after its investigation.

Along with paying the $4.5 million civil penalty, Sunbeam has agreed to “maintain” a product safety compliance program with the common program elements to ensure that the Company complies with product safety standards and regulations enforced by the Commission.  Interestingly, it appears from Paragraphs 20 and 21 of the agreement that the Company already has such a program in place.

As has been the case recently, the Commission voted 3-2 to provisionally accept the settlement with the Commission’s Democratic majority (Kaye, Adler, and Robinson) voting to approve the agreement and Republican Commissioners Mohorovic and Buerkle voting against it.  As he did last week in the Teavana case, Commissioner Joe Mohorovic filed a statement explaining his dissent stating “[w]here I fail to agree is in the calculation of the amount the company will pay in punishment for its tardiness.  That amount, in my view, is far too high.”

Companies in the consumer products arena should remain mindful of and attentive to their Section 15(b) reporting obligations under the Consumer Product Safety Act.  This is particularly true after CPSC Chairman Kaye’s most recent statements on Section 15(b) reporting and civil penalties.  Last week, in connection with the CPSC-Teavana civil penalty settlement, the Product Safety Letter and BNA reported the following Kaye statement:

“All companies who do business before CPSC must understand that they cannot withhold information from us that impacts the safety of the public.  If consumers are suffering product-associated cuts by broken glass and burns by hot liquid then that type of information needs to be reported to CPSC – immediately.  The $3.75 million penalty agreed to by Teavana is appropriate and is another sign that CPSC will consistently hold companies accountable when they do not comply with the law – a law intended to minimize harm to consumers.”

Former CPSC Chairman Ann Brown recently sent a letter to the leaders of the CPSC’s congressional oversight committee asking for them to “urge the Commission to consider its proposed [voluntary recalls] rule carefully and to assure that it does not adversely affect CPSC’s Fast Track Recall Program.” As we’ve previously written, some aspects of the proposed amendments to CPSC’s voluntary recalls rule are considerable departures from longstanding agency practice and resulted in nearly 50 stakeholder comments that criticized the same aspects of the rule that Brown calls out in her letter.

Former Chairman Brown identified two of the proposed changes as potential threats to the “Fast Track” voluntary recall program initiated during her administration. The Fast Track recall program is a program that allows companies to fulfill their product safety reporting obligations to the CPSC and conduct a voluntary recall without the agency making a “preliminary determination” (or PD) about the safety of the recalled product that could later be used against the company in product liability litigation. After describing the virtues of the Fast Track recall program and the praise it has received since its implementation in 1997, she states: Continue Reading Former CPSC Chairman Brown Expresses Concern over CPSC’s Voluntary Recalls Rule

The long awaited announcement of a new CPSC Chairman is finally here. After more than a year of speculation and intrigue, the search ended right where it started today when President Obama announced that Elliot Kaye is his nominee to become the next Chairman of the CPSC.

Having previously served with Elliot in former Chairman Inez Tenenbaum’s office, I am not the least bit surprised that the President chose him to lead the agency. If you have ever had the chance to meet Elliot, you understand why. Elliot’s results-oriented and innovative leadership style over his years at the CPSC has served as the driving force behind many of the agency’s most collaborative and successful initiatives.

One of the best examples was his ability to coalesce the leading organizations and companies in football around a common goal: to address the serious issue of brain safety by creating a culture change in youth football through education and training. Here’s the CPSC’s description of a program that is emblematic of Elliot’s leadership style: Continue Reading Elliot Kaye Nominated as New Chairman of the CPSC

In February of this year, CPSC Chairman Inez Tenenbaum announced that she would not seek a second term as Chairman of the agency. This morning she announced that she would be leaving the CPSC at the end of November. In addition, Commissioner Nancy Nord will end her term as a Commissioner on October 26th. The CPSC will therefore have four Commissioners during the month of November and be down to three Commissioners starting in December of this year.

As Vice-Chairman of the agency, Commissioner Robert (Bob) Adler will take over as Acting Chairman of the CPSC. The Commission will retain a Democratic majority and consist of Commissioners Bob Adler, Marietta Robinson, and Ann Marie Buerkle.

We’ve been hearing for quite some time that the announcement of the Democratic Chairman and Republican Commissioner nominees could come from the White House at any moment. Given the potential delay in the selection process caused by the government shutdown and uncertainty of how long the Senate hearing and confirmation for the two nominees could take, it appears that Commissioner Adler could remain the Acting Chairman of a three member Commission for at least the next few months.

Continue Reading Chairman Tenenbaum Departing CPSC — Commissioner Adler Will Serve as Acting Chairman

On June 27th, the U.S. Senate confirmed Marietta Robinson and Ann Marie Buerkle as new CPSC Commissioners. Robinson was first nominated in 2012 and participated in a hearing before the Senate Committee on Commerce, Science, and Transportation on May 10, 2012. Buerkle was nominated in late May of this year and confirmed by the Senate one month later without having a Senate hearing. With the addition of Robinson and Buerkle, the current Commissioners’ terms expire as follows:

Commissioner Nancy Nord — October 26, 2012 (currently holding over until Oct. 26, 2013)

Chairman Inez Tenenbaum — October 26, 2013

Commissioner Robert (Bob) Adler — October 26, 2014

Commissioner Marietta Robinson — October 26, 2017

Commissioner Ann Marie Buerkle — October 26, 2018

What does a full five member Commission mean for the new Commissioners, CPSC staff, and CPSC’s stakeholders? Continue Reading Senate Confirms Two New CPSC Commissioners—What it Means for Them, You, and CPSC