Government Sues Company for Delayed Reporting of Defective Product
"Hundreds of consumers complained to the company about this dangerous defect over the years," said Benjamin C. Mizer, principal deputy assistant attorney general of the Justice Department's Civil Division. "We rely on companies to report these safety issues immediately, as the law requires, to prevent unnecessary injuries. The Department of Justice will continue to protect the public against companies that put profits over safety."
The government claims the company violated the Consumer Product Safety Act and is seeking civil penalties and inductive relief. The government filed a similar suit against Michaels stores in April. This shows a trend of increased CPSC enforcement, according to a Lexology article by three Morrison & Foerster LLP lawyers. Prior to this year's two cases, there were only three lawsuits and one administrative complaint in the CPSC's history.
"This lawsuit is likely the result of settlement negotiations that have fallen through," the article noted. "Most civil penalties investigations brought by CPSC end in settlement. The alternative isn’t great. CPSC carries a big stick and isn’t afraid to wield it, as seen with the litigation and publicity surrounding rare-earth magnets."
The CPSC may become more aggressive in referring civil suits to the Department of Justice, and even may consider raising penalty demands, which could result in pressuring companies to settle in the future.
"To avoid this pressure, we advise manufacturers, distributors and retailers of products to maintain clear and well-understood policies for evaluating and reporting on potential product hazards," the article's authors advised. "These policies should be up-to-date and clearly communicated to company employees.
"Additionally, recalling companies should implement safeguards and procedures to avoid distributing recalled products into the stream of commerce. Once in CPSC’s crosshairs, careful negotiation with a healthy dose of cooperation may be the best solution for companies fearful of the high costs, adverse publicity, and the uncertainty that comes with litigation."