CPSIA – How to Know if the CPSC is Going to Pull a "Daiso" on You

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CPSIA – How to Know if the CPSC is Going to Pull a "Daiso" on You

CPSIA – How to Know if the CPSC is Going to Pull a "Daiso" on You

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CPSIA – How to Know if the CPSC is Going to Pull a "Daiso" on You

CPSIA – Anyone Care about Penalties Yet?

Cassandra here . . . .

Let me try you out on a hypothetical. What would you recommend as “consequences” for the following fact pattern? A company exhibits a pattern of safety incompetence over a period of time. Owing to agency vigilance, they are told multiple times to shape up, which they never get around to doing. No one is injured, but several minor recalls result. As we live in a time of political correctness and hyper-concern over trivial matters, the recalls not surprisingly involve only a few units of numerous products (less than 1000 units over two years). No injuries are reported. Numerous letters go back and forth, and theoretically, some of the culprit’s safety violations could have resulted in injuries.

So what penalty do you hit them with to get your message across?

For perspective, Mattel paid a fine of $2.3 million for about 2 million units recalled. This was national headline news. Mattel also recalled many millions more in other recalls in the same time period. RC2 paid $1.25 million for their recalls of 1.7 million units of Thomas the Tank Engine, a series of recalls that included an embarrassing recall of “thank you” gifts sent to people returning lead-laden Thomases. Target paid $600,000 for its “sins” in three relatively large scale recalls (545,500 total units). And I fully agree, respect and attentiveness to the details of the law are mandatory. Everybody needs to take these issues seriously.

And the answer is . . . . Try $2.05 million. Cash.

You wonder why I say that the CPSC leadership has blood lust . . . .

Oh yeah, I forgot, the CPSC also sicced the U.S. Attorney on ‘em, hitting the company with an injunction, a cease importation order and a mandatory plan of remediation.

Of course, I am alluding to the case of Daiso, the Japanese dollar store chain with a small U.S. presence. I have written about this company in the past, noting that they recalled 40 inflatable baseball bats for phthalates violations. For this and other unpardonable sins, this company was subjected to regulatory horrors on an incomprehensible scale. Here are their five recalls for your consideration:

May 12, 2008: 48 units, two skus
June 3, 2008: 50 units, two skus
July 25, 2008: 40 units, two skus
October 6, 2009: 430 units, four skus
October 6, 2009: 130 units, nine skus

Total over two years: five recalls, 698 units, 19 skus.

I have no personal knowledge of these people or this case. I also agree that the facts suggest that this company was recalcitrant or possibly incompetent. In any event, it’s their responsibility to take our laws seriously. Nevertheless the CPSC press release and the injunction both portray a far more serious situation than the facts seem to demonstrate. This is hardly a case of ingested super-magnets and millions of units in circulation. And the penalty, of course, is so far beyond the pale that I consider it incomprehensible. It is also extremely worrisome.

Today’s CPSC is about sound bites and putting you “on notice”. Whether their tactics are fair or appropriate seem to be a secondary concern. Note this quote from Japan Today: “‘This landmark agreement for an injunction sets a precedent for any firm attempting to distribute hazardous products to our nation’s children,’ commission Chairwoman Inez Tenenbaum said. ‘We are committed to the safety of children’s products, and we will use the full force of our enforcement powers to prevent the sale of harmful products.’ . . . CPSC spokesman Scott Wolfson said the company had been warned several times about violating safety standards.” In other words, this is entirely justified because the company had been warned and laws had been broken. I see.

There is a concept in Anglo-American jurisprudence of a punishment to fit the crime. I wish the CPSC knew something about proportionality in administering justice. Unfortunately, this CPSC seems to think that the importance of public messaging allows them to justify whatever they want to do. There seems to be no constraints, whatsoever. As Mr. Wolfson intones, after all, Daiso had been warned several times. Ergo, it’s fair to whack them with a penalty almost as great as imposed on Mattel. For less than 1,000 units sold.

Have you ever sold less than 1,000 units of something? Has anything ever gone wrong in your business? Uh-oh. Start saving up!

If you are having trouble grasping the point, consider the recent case of the man caught stealing a $3.99 bag of cheese in California. The judge went easy on him, only sentencing him to 7.7 years in jail. Nothing wrong with that, right? As the defendant’s lawyer noted in her closing remarks, “She concluded that his most recent thefts were petty. ‘We’re talking about a pack of cheese,’ she said.” Good thing the judge was listening . . . . This kind of justice brings to mind Midnight Express, the nightmarish story about Turkish jails. We’re not that kind of country, right? Right???

But in this environment, with the pack of jackal consumer groups egging them on, this CPSC is prepared to lower the boom to squish anyone who dares be incompetent. Here’s Consumer Reports on the case: “Our take: This is more evidence that the CPSC has been reinvigorated and that the new leadership at the Commission, plus the new powers under the CPSIA, mean good things for consumers.” In other words, it’s not only okay, it’s a sign of returning “health” in our U.S. government. Yippee.

I agree some sort of penalty may be merited in a case involving a pattern of violations. A large company like this one might need a large-ish penalty to “get the message”. [I wonder about that. Is it certain that this company would not have changed its behavior for a penalty of $50,000 or $150,000? The CPSC never tried smaller penalties first, as escalation seems to not be part of their vocabulary.] Nevertheless, this penalty lacks any rational relationship to the trivial problems cited in the recalls. In other words, it is completely arbitrary.

And for those of us destined to have to deal with the CPSC on resolving problems in the future, the Daiso case in your warning. Under this Commission, the agency has no apparent intention or need to be reasonable. They are unfettered in their ability to punish and exhibit no self-restraint. You won’t be able to fight them, they print their own money. It must be nice to be both judge and jury.

This is what our country has turned into. I CAN’T WAIT TO VOTE AGAIN. November can’t come fast enough for me.

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CPSIA – Anyone Care about Penalties Yet?

CPSIA – You Can Add 43 Pages to the Heap

The CPSC published its Civil Penalty Factors today. It’s only 43 pages long. Get reading . . . .

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CPSIA – You Can Add 43 Pages to the Heap

CPSIA – Video Blog – Understanding the CPSIA!

I get calls all the time from my readers – “what do I need to read to understand the CPSIA?” Well, you gotta read, read, read! Unfortunately, the CPSC has not provide a list of documents for you to read. To help out, I prepared a little document list for you, and explained it in this video blog:

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CPSIA – Video Blog – Understanding the CPSIA!

CPSIA – CPSC Commission to Vote on Civil Penalty Factors

According to the latest CPSC Calendar, the Commission is due to vote on the Civil Penalty Factors “final rule” at their weekly meeting on Wednesday, March 3 at 9 AM EST. [The webcast can be found at this link.] This long-awaited rule has been the subject of comments on two occasions (once before any rule was produced and one after the first draft was released). The most recent draft was the subject of considerable controversy and created the potential for great unfairness to anyone subject to the awful CPSIA.

It’s worth noting that the CPSC has yet to assess a single penalty under the CPSIA. The whoppers assessed against Mattel, RC2, Target and Schylling, among others, all reflect prior law. I rather doubt they are done knocking on doors and waking up the occupants with news of penalties for long-ago infractions. When they’re finished with that task, the agency can begin assessing penalties under the CPSIA. The new penalty section became effective on August 14, 2009 and increased the maximum penalty per violation from $8,000 to $100,000 and the maximum penalty for a related series of violations from $1.825 million to $15 million (see Section 20 of the CPSA). Gets your attention, right?

There is a considerable risk of abuse of the penalty assessment process without procedural protections. The penalties being assessed today are substantially larger than in the past, and seem (to this observer) to follow no clear pattern or bear any relationship to the infractions. Arbitrary penalties will depress trade as manufacturers reassess risk or find that they cannot bear the increased cost of insurance (self-insurance or commercially-available insurance). The cost will come to rest somewhere and like any tax, will reduce the incentive to innovate or compete.

It is also debatable how negotiable the agency has been or will be on penalties, amplifying the risk of arbitrary penalties. After all, how are you supposed to use leverage against the CPSC – no one has enough money to fight the federal government in court. Nor the time or energy. As someone said, never sue someone who has access to a printing press. This lack of a level playing field raises questions of due process in CPSC penalty assessment. The dilemmas presented by the current version of the civil penalty factors prompted many comment letters, including one from me.

Nothing scares me more than the populist blood lust we continue to see from the agency. The penalty factors need to restrain efforts to please politicians then in power. The urge to “cut [the agency's] conscience to fit this year’s fashions” may be overwhelming at times. It is worth noting that Gib Mullan, head of enforcement at the agency, is signalling more sensitivity to this issue in his recent speeches. This is much appreciated and is a much-needed change. That said, to restore trust and confidence, the agency MUST tie its hands in important ways. The unfettered ability to whack manufacturers however they arbitrarily feel on a given day is too much power for the CPSC and places too much risk on businesses.

The agency received many comments giving this advice. Let’s hope they had an open mind as they read the comments.

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CPSIA – CPSC Commission to Vote on Civil Penalty Factors

CPSIA – Science, It’s Really Overrated. So Is Knowing What You are Talking About.

From New Jersey Newsroom:

“Amid continued concern about children’s jewelry tainted with toxic materials, the [New Jersey] Assembly will also consider legislation targeting unsafe jewelry. The bill comes after 55,000 “Princess and the Frog” necklaces were recalled because they may contain high levels of the toxic heavy metal cadmium. Under the bill (A-2076), no one may sell, distribute, import or manufacture jewelry in New Jersey that contains materials classified as unsafe. The bill also includes stricter restrictions on materials used in children’s jewelry and body piercing jewelry. ‘Buying a necklace or a charm bracelet shouldn’t bring about fears of lead and mercury poisoning, yet the health and safety of New Jerseyans are at risk,’ said Assemblyman Patrick J. Diegnan (D-Middlesex), a co-sponsor. ‘It’s time these harmful products are taken down from store shelves for good.’” [Emphasis added]

Assemblyman Diegnan, noble Democrat of Middlesex, I am getting sick of listening to headline-seeking politicians who have absolutely NO idea what they are talking about. The January 11 AP story you refer to found a small handful of jewelry with cadmium present. There was no mention of mercury or lead . . . . As to cadmium, the CPSC says they have little or no data on ingestion of cadmium in children and can’t even say (based on available data) that cadmium is a carcinogen through ingestion in children (the current evidence on cadmium involves workplace exposure or inhalation, a horse of a different color). Where did you come up with lead and mercury poisoning from jewelry? Was cadmium not scary enough to get you reelected? Do you have any idea if the presence of cadmium in jewelry is even an issue? Science be damned.

This kind of idiocy brings to mind one of the most memorable of our nation’s discarded political parties, the Know-Nothings of the 1840’s and 50’s. This aptly-named party died a well-deserved slow death . . . but seems to have risen from the dead in the form of today’s Democrats.

Know-Nothings, we can’t let them take over!

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CPSIA – Science, It’s Really Overrated. So Is Knowing What You are Talking About.

CPSIA – Redesign the Dog!

I hope you didn’t miss the hubbub today from the American Academy of Pediatrics over dangerous hot dogs. Apparently, you can choke on hot dogs. This shocking revelation stimulated an outpouring of news articles, including this one: “Pediatricians call for hot dogs to be redesigned“. I guess the bun would have be altered, too. Readers, submit your suggestions as comments! I am looking for something very “Space Age” but also exquisitely safe.

Pundits across the blogosphere couldn’t let this pass, like our friends Walter Olson (”Cut grapes into pea-sized portions?“) and Lenora Skenazy (”Surely You Must Be Choking!“). Many newspapers repeated the AAP’s call for warning labels on items like nuts, certain hard fruits and hot dogs. “Back away from the peanut slowly, Tommy, I don’t want you to choke!”

Any of this ring a bell? The AAP remains among the most ardent of the CPSIA advocates. They are in regular contact with the Waxmanis and advise on which scraps of relief we might be allowed. In fact, my spies point to the AAP as the big rabble rouser on rhinestones (sooooooo dangerous!) Having succeeded in gutting the children’s products industry, the AAP have turned their attention to that symbol of America, the hot dog. Parents cannot possibly deal with hot dogs without government intervention – individual responsibility is so passe. The AAP will make us all so safe . . . .

This seems to be a theme of this space – the world seems to have lost its moorings. Redesign the dog, indeed. Spare me.

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CPSIA – Redesign the Dog!

CPSIA – Redesign the Dog!

I hope you didn’t miss the hubbub today from the American Academy of Pediatrics over dangerous hot dogs. Apparently, you can choke on hot dogs. This shocking revelation stimulated an outpouring of news articles, including this one: “Pediatricians call for hot dogs to be redesigned“. I guess the bun would have be altered, too. Readers, submit your suggestions as comments! I am looking for something very “Space Age” but also exquisitely safe.

Pundits across the blogosphere couldn’t let this pass, like our friends Walter Olson (”Cut grapes into pea-sized portions?“) and Lenora Skenazy (”Surely You Must Be Choking!“). Many newspapers repeated the AAP’s call for warning labels on items like nuts, certain hard fruits and hot dogs. “Back away from the peanut slowly, Tommy, I don’t want you to choke!”

Any of this ring a bell? The AAP remains among the most ardent of the CPSIA advocates. They are in regular contact with the Waxmanis and advise on which scraps of relief we might be allowed. In fact, my spies point to the AAP as the big rabble rouser on rhinestones (sooooooo dangerous!) Having succeeded in gutting the children’s products industry, the AAP have turned their attention to that symbol of America, the hot dog. Parents cannot possibly deal with hot dogs without government intervention – individual responsibility is so passe. The AAP will make us all so safe . . . .

This seems to be a theme of this space – the world seems to have lost its moorings. Redesign the dog, indeed. Spare me.

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CPSIA – Redesign the Dog!

CPSIA – Game Playing with Phthalates

Last Wednesday during ICPHSO, CPSC General Counsel Cheri Falvey made a direct statement about phthalates testing: You only need to test plasticized parts and paints for phthalates. She also noted that internal components still need to be tested, ridiculous (and expensive) as that may be.

In my post of February 17, I admitted that I hadn’t seen this in writing previously and asked for citations. A reader who knows more than me sent me this link. We think she is refering to this language:

“Not all plastics, however, contain phthalates. Certain plastics, such as polyethylene and polypropylene, generally do not require plasticizers. However, surface coatings and adhesives may contain phthalates. In addition, phthalates could be used in some plastics even though they are not required. Phthalates might also be used in some elastomers or synthetic rubbers. . . .

Manufacturers either know or should know what materials and components go into the products they make, and if the product or its components contain one of the plasticizers specified in section 108 of the CPSIA, the manufacturer or importer certifying the product must test the component or product to ensure that it complies with the CPSIA. Failure to comply with section 108 of the CPSIA is a prohibited act under section 19 of the Consumer Product Safety Act (CPSA) and can result in civil and criminal penalties. Likewise, failure to have a product subject to section 108 of the CPSIA tested by an accredited third-party laboratory and have the appropriate certification for that product is also a prohibited act under section 19 (CPSA).” [Emphasis added]

Aha, that’s it! Or is it? Here’s some more from this document:

“Examples of materials that do not normally contain phthalates and, therefore, might not require testing or certification are:
• Unfinished metal.
• Natural wood, except for coatings and adhesives added to wood. . .
• Mineral products such as play sand, glass, and crystal.”

I wrote about this provision in my comment letter on the second proposed phthalates standard (see paragraph 7). All the risk is on the manufacturer, there are no safe harbors other than comprehensive testing (even for wood, metals, sand and crystals), and there is no way to assure a dealer of the validity of an “incomplete” test report.. This rule remains an utterly unworkable and confusing standard – nowhere near as simple as Ms. Falvey implies. Although few wars are raging with test labs over this provision (since testing isn’t mandatory yet, “anything” goes), the possibility or probability of chaos remains profound.

I feel strongly that it is wrong of CPSC General Counsel Falvey to make light of this risky situation with an unsupported blanket statement, particularly since she is prone to “tisk tisk” you if you ignore one of her many oral warnings. If her words have the power of law, which they certainly don’t, then presumably they also provide cover. Are you ready to make that bet? In this case, if anyone relies on her statement, they are risking civil penalties or criminal charges according to Falvey’s own written policy.

Oops- that’ll teach you to listen to the General Counsel!

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CPSIA – Game Playing with Phthalates

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