CPSC Regulatory Issues Often Impact Product Liability

Regulatory enforcement by the Consumer Products Safety Commission (“CPSC”) is on the upswing. As product liability litigation and regulatory activities often become entwined, it is all the more important to appreciate the interconnection between litigation and regulatory compliance.  In a personal injury action, defending a product that has been subjected to the harsh glare of regulatory scrutiny can be challenging.

Plaintiffs in product liability litigation will routinely seek evidence of any civil penalty investigation by CPSC, including any assessment of  penalties. If the CPSC has sent a letter to a manufacturer to advise that it has made a preliminary determination that the product contains a substantial product hazard, to what extent is this evidence admissible in a product liability suit against the manufacturer?

In a well-written article, Kenneth Ross explores the interplay between CPSC concerns and product liability litigation in “The Intersection of Product Liability and Regulatory Compliance,” an article that appeared in “Strictly Speaking,” the newsletter of DRI’s Product Liability Committee (Vol. 10, Issue 3, Nov 15, 2013).

Ross observes that correspondence in the manufacturer’s files between the CPSC and the manufacturer, which may contain reports made under Section 15 and Section 37, or discuss subsequent corrective action, is discoverable. Although CPSC’s employees are not permitted by CPSC rule  to testify in litigation about anything done or not done by the Agency in connection with a report and subsequent corrective action, former CPSC employees are frequently recruited to testify. Moreover, as Ross reminds us, there is certainly no prohibition on plaintiff’s expert being able to render an opinion concerning defect and causation, based in part on what is contained in CPSC’s files.

But if  plaintiff seeks to use CPSC’s actions to support their case, can a manufacturer use CPSC’s inaction to support its contention that the product did not violate CPSC’s rules and regulations? According to 15 U.S.C. ¶ 2074(b), the failure of the CPSC to take any action or commence a proceeding with respect to the safety of a consumer product is not inadmissible in evidence at a civil trial.

This rule is not always followed in practice. The Sixth Circuit recently admitted evidence of CPSC inaction, despite the regulation, as evidence that the manufacturer did not violate safety rules. See, Cummins v. BIC USA, Inc., — F.3d —, 2013 WL 4082013 (8/14/13).  In Cummins, the Sixth Circuit distinguished a situation where the CPSC had completely failed to take any action and the situation, such as in the case at bar, where the CPSC had engaged in substantial activity in regulating the BIC lighter at issue. 

Is evidence of a CPSC-mandated product recall admissible? Ross correctly observes that defending a product liability case involving a product that has been subject to a recall can be difficult, although hardly impossible. A plaintiff should be required to prove that his or her injury was caused by the bad aspect of the product that caused the recall before testimony concerning the recall is admitted. 

It is bad enough for a jury to hear during opening statements that the product at issue in the case was recalled.  At a minimum, a plaintiff should be required to demonstrate during argument on motions in limine that the alleged defect at issue in the recall was the defect alleged in the pleadings to be the proximate cause of plaintiff’s injury and is, in fact, the proximate cause of plaintiff’s injury.  To permit evidence of the recall otherwise potentially  taints the proceedings with unfair prejudice.  It may also be argued that evidence of the recall is barred as a “subsequent remedial measure” and therefore not admissible to prove a defect.

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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