United States: A Changing Of The Guard: Same Enforcement Trend Under New CPSC Leadership?

Last Updated: March 16 2017
Article by Erin M. Bosman, Julie Y. Park and Austin Marsh

Republican Ann Marie Buerkle was named Acting Chairman of the Consumer Product Safety Commission (CPSC) on February 9, 2017, replacing former Chairman and Democrat Elliott Kaye. This transition has many wondering whether the trend of increased CPSC enforcement, and its pledge to issue increased civil penalties, will continue under Buerkle's leadership.

CPSC Enforcement Under Former Chairman Kaye

As we have previously reported, over the last few years CPSC has stepped up its enforcement actions against retailers, distributors, and manufacturers for unsafe products and associated reporting violations. Under former Chairman Kaye's leadership, the agency also pledged to, and did, increase the monetary amount of civil penalties issued against companies for failure to report potentially hazardous products.

CPSC's increased focus on fines is backstopped by the Consumer Product Safety Improvement Act of 2008, which increased the maximum penalties from $8,000 to $100,000 per occurrence for failure to report a product safety hazard, and increased the maximum penalty amounts for a related series of violations from $1.8 million to $15 million. Recently, CPSC has used its authority to impose higher penalties on manufacturers, distributors, and retailers to reach settlements with significant price tags for settling companies.[1] In 2016, the average reported CPSC penalty was over $6 million, more than double the average in 2015.[2] Under Kaye, CPSC escalated its enforcement efforts by filing litigation against companies for failing to report product safety hazards.[3] Former Chairman Kaye spoke out often about using increased civil penalties and frequently released press statements to highlight fines, enforcement actions, and recalls. Kaye viewed higher civil penalties as a "real deterrent" aimed at forcing manufacturers, retailers and distributors into reporting potential product safety issues early.[4]

Outlook: Will The Trend Of Increased Enforcement Continue?

Acting Chairman Buerkle is a former New York Congresswoman who was nominated to serve as a CPSC commissioner by President Barack Obama in 2013. Buerkle's ascension to acting chairman has many wondering whether the trend of increased enforcement will continue, particularly in light of the fact that Buerkle has been a vocal critic of the trend of seeking increased penalties. Under Kaye's leadership, Buerkle was "deeply troubled by recent pronouncements that the Commission will seek higher civil penalties."[5]As acting chairman, Buerkle has instead emphasized a collaborative approach that brings all stakeholders together to forge new solutions that work for all. Buerkle has stated that she is committed to working "to enhance relationships so that CPSC can leverage the knowledge, insight, and expertise of the entire consumer product safety community." At the same time, she has emphasized that "[w]hile we are experiencing a change in leadership, CPSC's mission remains the same and I look forward to continuing to work closely with all stakeholders in my new position." Although Buerkle's position as acting chairman may not be set in stone, the partisan balance of CPSC will very likely shift towards Republicans this year. Three Democrat and two Republican commissioners currently head CPSC.[6]  Democrat commissioners Kaye, Robert Adler,[7] and Marietta Robinson[8] have all been outspoken in their support of the trend of increased penalties. The term of Democrat Commissioner Marietta Robinson, however, expires in October 2017. At that time, President Trump will have the opportunity to appoint a new commissioner that aligns with his vision of the agency. Given this shift under the new administration, CPSC will almost certainly back away from the rhetoric of severe penalties and enforcement that prevailed under Chairman Kaye's leadership. We will continue to monitor CPSC's enforcement approach as it unfolds in the coming months.

Footnotes

[1] "CPSC Penalties to Increase Beyond 'Cost of Doing Business,'" Morrison & Foerster LLP Client Alert, Mar. 3, 2015, available at https://media2.mofo.com/documents/150303cpscpenaltiestoincrease.pdf.

[2] See Civil and Criminal Penalties Database, Consumer Product Safety Commission, available at https://www.cpsc.gov/Business–Manufacturing/Civil-and-Criminal-Penalties.

[3] "Recall, Enforce, Repeat! CPSCP and DOJ Team Up for Another Enforcement Action," Morrison & Foerster LLP Class Dismissed Blog, June 22, 2015, available at http://classdismissed.mofo.com/consumer-products/recall-enforce-repeat-cpsc-and-doj-team-up-for-another-enforcement-action/.

[4] See, e.g., "Joint Statement of Chairman Elliot F. Kaye and Commissioner Robert S. Adler on Civil Penalties," Consumer Product Safety Commission Statements, July 20, 2016, available at https://www.cpsc.gov/about-cpsc/chairman/elliot-f-kaye/statements/joint-statement-of-chairman-elliot-f-kaye-and.

[5] "Overseeing the Consumer Product Safety Commission": Testimony Before the S. Comm. on Commerce, Science, and Transportation and Subcomm. on Consumer Protection, Product Safety, Insurance, and Data Security, (June 17, 2015) (testimony of Ann Marie Beurkle, Consumer Product Safety Commission), available at https://www.cpsc.gov/s3fs-public/Buerkle-Senate-Testimony.pdf.

[6] See "Commissioner Biographies," Consumer Product Safety Commission, available at https://cpsc.gov/About-CPSC/Commissioners.

[7] See, e.g., "Joint Statement of Chairman Elliot F. Kaye and Commissioner Robert S. Adler on Civil Penalties," Consumer Product Safety Commission Statements, July 20, 2016, available at https://www.cpsc.gov/about-cpsc/chairman/elliot-f-kaye/statements/joint-statement-of-chairman-elliot-f-kaye-and.

[8] See, e.g., "Statement of Commissioner Marietta S. Robinson on the Appropriateness of Civil Monetary Penalties Generally and The Recent Settlements with Teavana Corporation and Jarden Consumer Solutions," Consumer Product Safety Commission Statements, June 10, 2016, available at https://www.cpsc.gov/about-cpsc/commissioner/marietta-s-robinson/statements/statement-of-commissioner-marietta-s-robinson.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

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