Don’t Blame Chinese Imported Products!

In his  recent article, "Made in China: Consumer Product Lawsuits Imported to the United States", Seattle defense lawyer and IADC member Gregory Shelton offers American importers several good suggestions for avoiding potential liability from imported products.  These include: (1) requiring the exporter to comply with all applicable U.S. product quality standards and product safety regulations; (2) obtaining legal counsel in the exporter’s home jurisdiction; (3) requiring the exporter to obtain appropriate insurance coverage from an American or international insurer that will protect the importer in the event of a recall or lawsuit; and (4) retaining good legal counsel early.  I would add to Greg’s checklist: (5) having an independent U.S. consultant available to test, if necessary, the components of imported products, particularly if an American consumer reports a complaint to the company or to the CPSC.  Early independent product evaluation can be critical for an importer in planning its next steps, such as whether to perform a recall or halt future shipments until an issue can be addressed.  There are many good consultant firms to chose from. One excellent consultant up-to-speed on the new CPSC requirements is Exponent.

However, we disagree with Mr. Shelton when he argues that Chinese imports are more likely to result in lawsuits or recalls than imports from other countries.  There is simply no empirical evidence to support this assertion.  To the contrary, China has made enormous progress, particularly over the last year, to police its domestic suppliers.  To blame China for the spate of recalls over the last couple of years is to ignore the past lack of adequate funding for the CPSC, the agency that provides regulatory oversight of consumer products.  Moreover, blaming China results in Americans turning a blind eye to problems in our domestic product supply chain. 

CPSC’s New Database: An Opportunity for Abuse?

The Consumer Product Safety Improvement Act of 2008 (“CPSIA”) provides that the Consumer Product Safety Commission (“CPSC”) will establish and maintain an Internet database on the safety of consumer products.  The CPSIA Section 212 requires that the database be: (1) available to the public; (2)  searchable; and (3) accessible on the CPSC’s website.  Reports of harm caused by consumer products may be reported by consumers; local, state or federal govenment agencies; health care professionals; child service providers; and public safety entities. Ideally, the database will encourage the sharing of information and direct communications among consumers, consumer advocacy groups and state attorneys general, who have been given an important new role under the CPSIA.  For the first time, consumers will have direct instant access on the Agency’s website to potentially important product safety information.

The CPSIA of 2008 is much needed legislation to upgrade the level of  protection provided to the American consumer by the federal government.  The law represents the Congress’ response to a year of multiple, embarrassing consumer product scandal after another during what some commentators have termed the “Year of the Recall”.  In the past, information vital to the public welfare concerning defective consumer products has not been promptly provided to the American people.  At times, this delay may have been responsible for what may have been preventable injuries or deaths —  hence, the legislative mandate for the database.

In light of these public benefits, can there be any dark side to this new era of governmental transparency?  Are consumer product companies justified in fearing that the database has the potential to  spread disinformation and unfairly tarnish reputations?

The statute requires that a report submitted for inclusion on the database: (1) describe the consumer product; (2) identify the manufacturer or private labeler; (3) describe the harm related to the use of the product; (4) provide contact information; and (5) contain a verification that the report is true and accurate. Based upon informal Commission staffer comments, the CPSC is not required to perform an independent investigation to determine the veracity of a report or whether the incident that is the subject of the report occurred in the manner claimed or occurred at all.  For this reason, there is a risk that the database may morph into a  consumer Wikipedia, but with the imprimatur of United States approval and the gloss that comes from being hosted on a federal regulatory agency website.  What opportunity will  manufacturers have to comment on a report that one of their products may have triggered a fire in a home or caused a child to suffocate before the report is posted?  Unfortunately, not a whole lot!  The statute requires that within five days of receiving a report the Commission shall “to the extent practicable” transmit the report to the manufacturer identified in the report prior to the report being posted on the database.   Because the person making the report need not be identified to the manufacturer unless he or she explicitly consents, there may not be much the manufacturer can do, within the 10 day window provided before the report is posted, to determine whether the report is accurate. Certainly, this narrow window does not permit a manufacturer to obtain the product from a consumer, assuming the consumer can be identified, and inspect it.  The manufacturer can request that proprietary or trade secret information not be posted on the database, but that request, if granted, will result only in the sensitive information being redacted, not in a delay in posting the report on the database.  The statute permits a manufacturer to request that its own comments also be included in the database, but in the absence of a realistic time frame to perform an investigation of the underlying report, what would be an appropriate comment to make?  Moreover, the manufacturer may be at a disadvantage if reporters call seeking comment after the consumer’s report is posted by the Commission.

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