Morrison Foerster’s Class Dismissed blog provides insights, recommendations, and timely reports on the latest defense news, developments, and trends in the most current class actions lawsuits and product liability issues that affect consumer-facing companies. Through Class Dismissed, attorneys from our nationally recognized Consumer Class Action and Products Liability practices offer a real-time assessment of the developments in matters that are shaping the industry. This blog examines the full spectrum of consumer-related class action and product liability lawsuits ranging from false advertising, privacy, consumer product safety, ADA, food misbranding, TCPA, environment, retail, and government actions as well as nationwide and multidistrict litigation class actions.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

Social

Search

Editors

park_julie_blog_150x150.png

park_julie_common_640x280.jpg

park_julie_heroretina_2700x1160.jpg

park_julie_mobileretina_750x1040.jpg

park_julie_social_600x600.jpg

Partner

Julie Park protects her clients’ products no matter what kind of product issue they face—whether it is planning for new product development, recalling an existing product, or defending clients against product liability or consumer class actions. Drawing on her deep technical and legal expertise, Julie counsels clients on consumer product safety regulation and pharmaceutical and medical device preemption while also managing complex and multijurisdictional litigation both in state and federal court.

Julie Y. Park

<div class="videoWrapper"><iframe frameborder="0" class="sticky-video" allowfullscreen="1" title="Meet Penny Preovolos, Litigation Partner" src="https://www.youtube-nocookie.com/embed/hv7hYn-Bl7c?rel=0&showinfo=0;vq=hd1080" title="iframe"></iframe></div>Penelope has served as lead counsel in major consumer class actions and antitrust cases for more than 35 years, successfully representing high-profile defendants in antitrust, consumer fraud, and product defect matters. Her clients span a range of industries, including consumer electronics, technology, retail, publishing, food and beverage, cosmetics, and household products. According to Chambers USA, Penelope has a “great reputation for antitrust and product liability work” and is a “superb all-around antitrust lawyer.”Penelope was named the 2019 Antitrust Lawyer of the Year by the Antitrust, UCL, and Privacy Section of the California Lawyers Association. She was co-chair of MoFo’s antitrust practice for 14 years. She has served as chair of the Antitrust and Trade Regulation Section of the State Bar of California and as a member of the Ninth Circuit Advisory Committee on Local Rules and Operations. She is an editor of and frequent contributor to Morrison & Foerster’s <a href="https://classdismissed.mofo.com/">Class Dismissed blog</a>, as well as a frequent speaker about class action and antitrust issues.More About PenelopePenelope clerked for the Honorable Charles M. Merrill, United States Court of Appeals for the Ninth Circuit. She graduated cum laude from Harvard Law School, where she was executive editor of the Harvard Civil Rights – Civil Liberties Law Review. Penelope was a member of Phi Beta Kappa at the University of California, Berkeley. She was awarded the University Medal, the highest undergraduate honor at the university, as well as the English Departmental Citation (awarded to the outstanding graduate in that department).

preovolos_penelope_blog_150x150.png

preovolos_penelope_common_640x280.jpg

preovolos_penelope_heroretina_2700x1160.jpg

preovolos_penelope_mobileretina_750x1040.jpg

preovolos_penelope_social_600x600.jpg

Senior Counsel

Penelope has served as lead counsel in major consumer class actions and antitrust cases for more than 35 years, successfully representing high-profile defendants in antitrust, consumer fraud, and product defect matters. Her clients span a range of industries, including consumer electronics, technology, retail, publishing, food and beverage, cosmetics, and household products.

Penelope A. Preovolos

Claudia focuses her practice on the defense of consumer class actions and on complex commercial litigation, including unfair business competition, false advertising, product liability, and privacy matters. She is currently representing numerous consumer goods manufacturers and retailers in false advertising and mislabeling class action lawsuits. Claudia also regularly counsels clients in the food, cosmetics, retail, and technology industries. She represents companies in false advertising disputes before the National Advertising Division (NAD) of the Council of Better Business Bureaus, Inc.<h5>More about Claudia</h5>Claudia is active in MoFo’s pro bono efforts, and recently traveled to El Paso, Texas, to work with families separated and detained at the border. She is also supervising a pro bono collaboration with Equal Rights Advocates, a nonprofit fighting for gender justice in work places and schools across the country. The initiative will help students who have been victims of sexual assault, attempted assault, or harassment find support and seek justice. Claudia is also a board member of Bay Area Legal Aid and a former board member of Equal Rights Advocates. Claudia is an editor and frequent contributor to MoFo’s <a href="https://classdismissed.mofo.com/">Class Dismissed</a> blog, which provides reports about the latest defense news, developments, and trends in class action lawsuits and product liability issues that affect consumer-facing companies. Her perspectives are also respected in the larger legal community: Claudia has published articles about class action and false advertising issues, and is a co-author of Chapter 7 — “Unfair Competition in California Business Litigation 2016” — of The Recorder. She also regularly speaks at conferences on class action and advertising trends. Claudia is currently serving as a Lawyer Representative for the Northern District of California. She received her J.D. degree in 2004 from Berkeley Law (Boalt Hall School of Law), where she was an associate editor of the Berkeley Technology Law Journal.

vetesi_claudia_blog_150x150.png

vetesi_claudia_common_640x280.jpg

vetesi_claudia_heroretina_2700x1160.jpg

vetesi_claudia_mobileretina_750x1040.jpg

vetesi_claudia_social_600x600.jpg

Claudia focuses her practice on the defense of consumer class actions and on complex commercial litigation, including unfair business competition, false advertising, product liability, and privacy matters. She is currently representing numerous consumer goods manufacturers and retailers in false advertising and mislabeling class actions.

Claudia M. Vetesi

Alexandra Barlow is a partner in the Litigation Department of Morrison Foerster’s San Diego office.Alexandra litigates product liability matters involving medical devices, pharmaceuticals, consumer products, automobiles, and AI. Alexandra's litigation expertise spans the entire case life cycle in both state and federal courts. She handles all phases of discovery, including fact investigation and expert discovery. Alexandra has taken over twenty-five depositions, including experts, plaintiffs, treating physicians, and third-party witnesses. She drafts and argues motions of all types, including motions for summary judgment, motions to quash, and motions for preliminary injunction.Alexandra has significant trial experience. She has first-chaired a one-week jury trial and second-chaired a five‑week jury trial, both involving multiple claims and witnesses. She also has extensive experience in alternative dispute resolution, representing clients at mediations, mandatory settlement conferences, and early neutral evaluations.Alexandra enjoys tracking developments and keeping her clients updated on product liability and personal injury claims, frequently writing or presenting on emerging areas such as autonomous vehicles and smart devices. Alexandra’s experience also extends to professional liability, warranty claims, eminent domain, and construction law.Alexandra earned her J.D. from the University of San Diego School of Law. While in law school, the San Diego Law Review published her comment on the recovery of damages by plaintiffs in a persistent vegetative state, and she also served as a comment editor. She received her B.A. from the University of California, Los Angeles, where she majored in Political Science and minored in Spanish. A San Diego native, she attended a Spanish immersion school through the eighth grade. Alexandra is active in the San Diego community, advising students at a local college. She is also a member of several legal organizations in San Diego, including Lawyer’s Club, the Association of Business Trial Lawyers, and Wallace Inn of Court.

preece_alex_blog_150x150.png

preece_alex_common_640x280.jpg

preece_alex_heroretina_2700x1160.jpg

preece_alex_mobileretina_750x1040.jpg

preece_alex_social_600x600.jpg

Alexandra Barlow is a partner in the Litigation Department of Morrison Foerster’s San Diego office. Alexandra litigates product liability matters involving medical devices, pharmaceuticals, consumer products, automobiles, and AI. Alexandra’s litigation expertise spans the entire case life cycle in both state and federal courts. She handles all phases of discovery, including fact investigation and expert discovery. Alexandra has taken over twenty-five depositions, including experts, plaintiffs, treating physicians, and third-party witnesses. She drafts and argues motions of all types, including motions for summary judgment, motions to quash, and motions for preliminary injunction.

Alexandra Barlow is a partner in the Litigation Department of Morrison Foerster’s San Diego office. Alexandra litigates product liability matters involving medical devices, pharmaceuticals, automobiles, AI, and robotics. Alexandra's litigation expertise spans the entire case life cycle in both state and federal courts. She handles all phases of discovery, including fact investigation and expert discovery. Alexandra has taken over twenty-five depositions, including experts, plaintiffs, treating physicians, and third-party witnesses. She drafts and argues motions of all types, including motions for summary judgment, motions to quash, and motions for preliminary injunction.

Alexandra Barlow

Adam J. Hunt is a partner in the Litigation Department of Morrison Foerster’s New York office. His practice focuses on complex litigation, with an emphasis on class action and commercial litigation.Mr. Hunt has extensive experience representing consumer products companies, financial institutions, and technology firms in class action cases and complex commercial disputes before state and federal trial courts, as well as in arbitrations. Clients seek Mr. Hunt’s counsel for his creative, strategic thinking in high-stakes, high-profile matters. He has represented clients facing claims under false advertising, antitrust, and privacy laws throughout the country, securing wins at the pleading stage, summary judgment, and trial, in addition to negotiating favorable settlements, often early in the case. Representative experience includes successfully securing rulings dismissing two putative false advertising class action cases against one of the best-known consumer electronics companies in the world; obtaining a complete win on summary judgment for a major shipping and logistics company in a multimillion-dollar commercial dispute; appearing as counsel at trial for a leading financial institution in a $100 million commercial dispute, winning a bench trial verdict; and prevailing on motions to dismiss false advertising class actions against a leading Greek yogurt company.Mr. Hunt is also an editor of the firm’s <a href="https://classdismissed.mofo.com/" target="_self">Class Dismissed blog</a>, which provides insights, recommendations, and timely reports on the latest defense news, developments, and trends in the most current class action lawsuits that affect consumer-facing companies.Mr. Hunt maintains an active pro bono practice and is the recipient of the New York State Bar Association’s 2017 President’s Pro Bono Service Award for the First Judicial Department, the 2018 Public Service Award from New York University School of Law, and Morrison Foerster’s Kathi Pugh Award for Pro Bono Services.Mr. Hunt received his B.A. with honors from Swarthmore College and his J.D. cum laude from New York University.

hunt_adam_blog_150x150.png

hunt_adam_common_640x280.jpg

hunt_adam_heroretina_2700x1160.jpg

hunt_adam_mobileretina_750x1040.jpg

hunt_adam_social_600x600.jpg

Adam Hunt is a partner in the Litigation Department of Morrison Foerster’s New York office. His practice focuses on complex litigation, with an emphasis on class action and commercial litigation.

Adam Hunt

favicon.ico

favicon-16x16.png

favicon-32x32.png

apple-touch-icon.png

MoFo Favicons

Morrison Foerster’s Class Dismissed blog provides insights and reports on the latest news, developments, and trends that affect consumer-facing companies. Subscribe to receive the latest updates by attorneys from our nationally recognized Consumer Class Action and Product Liability practices.

Welcome to Class Dismissed

class-dismissed-welcome-image.jpeg

class-dismissed-welcome-image

Morrison Foerster’s Class Dismissed blog provides insights and reports on the latest news, developments, and trends that affect consumer-facing companies. 

Class Action

Blog - Terms of Use

Blog - Privacy Policy

Blog - Blog Disclaimer

Blog - Attorney Advertising

morrison-foerster-blog-logo.png

Brings together legal insights and in-depth analyses on trends and complex issues shaping the global technology industry.

MoFo Tech

Equips our clients with the most up-to-date and relevant information on employment and labor law issues.

Employment Law Commentary

Stay on top of emerging issues and stay informed of developments related to the law and business of social media.

Socially Aware

In-depth analysis of developments and trends impacting government contracting.

Government Contracts Insight

The latest news and insights from the nationally recognized Consumer Class Action and Product Liability practices of Morrison & Foerster.

Class Dismissed

  Linkedin

MoFo LinkedIN

Class Dismissed Blog - RSS

Stay Connected

By submitting your data to subscribe to this blog, you approved Morrison & Foerster LLP to email you future information about MoFo news and events. You may opt-out at any time by sending a request to <a href="mailto:mofonews@mofo.com">mofonews@mofo.com</a>. To learn more about how Morrison & Foerster LLP uses and protects your personal data, please view our <a href="https://www.mofo.com/about/privacy-policy.html">Privacy Policy</a> at <a href="https://www.mofo.com/">www.mofo.com</a>.

Never miss a post from Class Dismissed. Enter your email below to stay up-to-date.

Subscribe

Class Action and Product Insights for Your Business

Morrison Foerster - Footer

Blogs -  Home Button

Home

Blog - Topics

TCPA

Announcements & Press

Antitrust

Appellate & Supreme Court

Arbitration

Autonomous Vehicles & Robotics

Aviation & Drones

Class Certification

Consumer Products

Coronavirus (COVID-19)

CPSC

Drug & Medical Device

Emergency Use Authorization (EUA)

Environmental Law

False Advertising

FCRA

Food Misbranding

Government Actions

Internet of Things

Mass Torts

Pharmaceutical & Medical Devices

Privacy

Product Liability

Public Readiness and Emergency Preparedness Act (PREP Act)

Retail

Trials

Topics

Blog - Editors

Blog - About

About

Blog - Subscribe

More

Alexandra Preece Barlow

Adam J. Hunt

The Future of Section 230: Protection Against Product Liability Claims?

New Wave of PFAS Legislation Aimed at Consumer Products

CPSC Releases Annual Report on Deaths and Injuries Involving Nursery Products

CPSC Proposes New Safety Rules for Infant Rockers

CPSC Commissioners Abstain from Retracting Infant Sleep Product Statements

With the holidays and end of the year quickly approaching, here is what food and beverage manufacturers and sellers need to know before the temporary Proposition 65 safe harbor warning for Bisphenol A (BPA) exposures expires on December 30, 2017.Read our <a href="https://media2.mofo.com/v3/assets/blt5775cc69c999c255/bltb25a3161dc0c3b74/627315568e09542a15b7de57/171128-prop-65-safe-harbor.pdf" target="_blank" rel="noopener noreferrer">Law360 article</a>.

gettyimages-95060931_small_thumbnail.jpg

Expiring Soon: Temporary BPA Warning Regs Under Prop. 65

Expiring Soon: Temporary BPA Warning Regs Under Prop. 65

gettyimages-95060931_small_image.jpg

With the holidays and end of the year quickly approaching, here is what food and beverage manufacturers and sellers need to know before the temporary Propositio

On October 15, 2017, California Governor Jerry Brown signed into law Senate Bill 258, known as the Cleaning Product Right to Know Act of 2017. The Act requires manufacturers of most cleaning products sold in California to disclose detailed information regarding their chemical content on the product label and on the manufacturers’ websites. While several California laws—such as Proposition 65 and the Green Chemistry Initiative—require some degree of product ingredient transparency, no prior California law has gone this far.Companies that manufacture or sell cleaning products in California should begin to familiarize themselves with these new requirements as soon as possible, as the Act requires major changes to current labeling and disclosure practices, which may prove to be costly and time-consuming to implement. This client alert provides an overview of the Cleaning Product Right to Know Act’s key requirements.

In re Lumber Liquidators Chinese Laminate Litigation

Maxus Energy Corporation

In re Hydroxycut Personal Injury and Class Action Litigation

Los Angeles World Airport (LAWA)

Environmental Law Foundation v. Beech-Nut Nutrition Corp., et al

Fitbit Force Recall 

People of the State of California v. The Coca-Cola Company

Seagate Technology LLC

Clif Bar, Inc.

tarantino_william_blog_150x150.png

tarantino_william_common_640x280.jpg

tarantino_william_heroretina_2700x1160.jpg

tarantino_william_mobileretina_750x1040.jpg

tarantino_william_social_600x600.jpg

Drawing on his considerable experience in environmental health, William (Bill) focuses his practice on environmental and consumer protection law, with an emphasis on climate-related goals and claims, hazardous substances, mass torts, and consumer product safety.

William Tarantino

Drawing on his considerable experience in environmental health, William (Bill) focuses his practice on environmental and consumer protection law, with an emphasis on hazardous substances, mass torts, and consumer product safety.

William F. Tarantino

istock_000007359444_600px_thumbnail.jpg

Full Disclosure: New Labeling for Cleaning Products

Full Disclosure: New Labeling for Cleaning Products

istock_000007359444_600px_image.jpg

On October 15, 2017, California Governor Jerry Brown signed into law Senate Bill 258, known as the Cleaning Product Right to Know Act of 2017. The Act requires 

In the coming years, we expect to see an explosion in the number of interoperable medical devices. These are connected medical devices that have the ability to connect to different technologies and devices, even from other manufacturers. The U.S. Food and Drug Administration also recognizes the growing importance of these connected devices and issued final guidance on Sept. 6, 2017, relating to their safety.Interoperable medical devices can provide incredibly valuable data to health care providers and patients. Health information that may have taken several doctors’ visits to gather could literally be at a patient’s fingertips with a tap on their smartphone.At the same time, these devices often have highly sensitive applications, such as pacemakers and blood pressure monitors, that give rise to unique safety risks. The guidance urges safety and transparency in developing and designing interoperable medical devices, and highlights information that manufacturers should include in premarket submissions and device labeling. This final guidance follows a draft guidance issued by the FDA in January 2016.Please see our full article as published on <a href="https://media2.mofo.com/v3/assets/blt5775cc69c999c255/blt3b19f144a7fc88a1/627310c6b5ad5f2863c59400/171016-fda-guidance-medical-devices.pdf" target="_blank" rel="noopener">Law360</a>.

Fertility Center Litigation

Fitbit

MicroPort

Leading Healthcare, Pharmaceutical, and Medical Device Company

Lethal Injection Matters – Major Pharmaceutical Company

Pain Pump Matters – Large Pharmaceutical Company

Major Technology Company

Leading Chemical Company

Security Device Company

In re Air Crash Near Peixoto de Azevedo, Brazil

bosman_erin_blog_150x150.png

bosman_erin_common_640x280.jpg

bosman_erin_heroretina_2700x1160.jpg

bosman_erin_mobileretina_750x1040.jpg

bosman_erin_social_600x600.jpg

Erin Bosman is chair of MoFo’s Class Actions and Mass Torts Practice Group and is a founder and co-head of the Artificial Intelligence Group. Clients value her business strategy, seeking her comprehensive counsel throughout the product life cycle, especially in high-stakes litigation and product recalls.

Erin M. Bosman

Erin Bosman is chair of MoFo’s Class Actions and Mass Torts Practice Group and is a founder and co-head of the Artificial Intelligence Group. Clients value her business strategy, seeking her comprehensive counsel throughout the product life cycle, especially in high-stakes litigation and product recalls.

Erin Bosman

An orthopedic implant company

A children&rsquo;s monthly subscription service product

A fertility company

A major technology company

A smart fitness equipment company

Julie Park provides analytic and strategic counsel for issues in product life cycle, product liability and defective products, consumer class actions, and more.

Julie Park

Julie Park | Product Liability Lawyer

scheinok_brittany_blog_150x150.png

scheinok_brittany_common_640x280.jpg

scheinok_brittany_heroretina_2700x1160.jpg

scheinok_brittany_mobileretina_750x1040.jpg

scheinok_brittany_social_600x600.jpg

Associate

Brittany Scheinok is an associate in the Litigation Department of the firm’s San Diego office.

Brittany Scheinok

gettyimages-682158022_small_thumbnail.jpg

Understanding FDA Guidance On Connected Medical Devices

Understanding FDA Guidance On Connected Medical Devices

gettyimages-682158022_small_image.jpg

In the coming years, we expect to see an explosion in the number of interoperable medical devices. These are connected medical devices that have the ability to 

A federal district court in Wisconsin recently hit Spectrum Brands Inc. (Spectrum) with civil penalties of $1.9 million for violations of the Consumer Products Safety Act (CPSA).<a href="#_ftn1" name="_ftnref1">[1]</a>  The court’s 23-page opinion is a strong reminder of how devastating the impact can be for waiting to report violations and also shows the consequences of failing to implement robust CPSA compliance and recall programs.This judgment provides insight into the costs and benefits of litigation versus settlement following a CPSC civil penalties investigation.  Companies may benefit from the court’s analysis of effective compliance programs when attempting to shore up their own product safety compliance and product recall procedures.  And for companies looking to acquire another company or its product line, this decision also provides strong incentives to double down on CPSA due diligence to make sure they are not acquiring a significant liability.Case BackgroundIn November 2014, Spectrum, a consumer products company, merged with Applica Consumer Products, Inc., which owned and sold a Black & Decker SpaceMaker line of coffee machines.  Applica began selling the SpaceMaker in 2008.  About a year later, customers started complaining to Applica that the SpaceMaker’s carafe handle was suddenly cracking and breaking.  By May 2009, Applica had received 60 reports of broken handles and 4 reports of burns.  CPSC contended that this triggered Applica’s obligation to “immediately” report a product hazard to CPSC within 24 hours.  16 C.F.R. § 1115.14(e).  Applica did not report for almost three years, until April 2012.  By that time, they had been sued in a consumer class action and had received over five dozen reports of injury.  In addition, Applica inadvertently sold an additional 641 units after recalling the SpaceMakers.So where does Spectrum fit into all of this?  In the 2014 merger, Spectrum assumed all of Applica’s assets and liabilities.  So when CPSC and DOJ teamed up in 2015 to file an enforcement action against Applica, Spectrum was on the hook.During the enforcement litigation, Spectrum admitted liability for the sale of recalled products but contested liability for failure to report timely. As we <a href="http://classdismissed.mofo.com/consumer-products/court-decision-cpsc-enforcement-action">reported previously</a>, the court ruled against Spectrum on the government’s failure-to-report claim, holding it liable for failing to submit a timely report to CPSC.  On September 29, 2017, after holding a hearing to determine the appropriate amount of civil penalties and injunctive relief for these reporting and sale violations, the Wisconsin federal court ordered Spectrum to pay the government $1.9 million in civil penalties and granted the government injunctive relief.  Here we walk through the court’s penalty calculation for key takeaways.Penalty CalculationPenalty Cap: $15 Million, Post-CPSIA Statutory Maximum AppliedThe CPSA’s current statutory maximum penalty for “any related series of violations” is $15 million.  15 U.S.C. § 2069(a)(1).  And because Spectrum’s violations (late reporting to CPSC and sale of recalled products) counted as two separate “related series of violations,” the court held that the maximum penalty could not exceed $30 million (adjusted for inflation).Notably, Spectrum did not persuade the court that the much lower $1.25 million penalty cap—which existed before the Consumer Product Safety Improvement Act of 2008 (CPSIA), and was in effect when Spectrum’s obligation to report arose—applied to the reporting violation.  The court dismissed this as a “thinly recast version of [Spectrum’s] unsuccessful argument” (<a href="http://classdismissed.mofo.com/consumer-products/statute-of-limitations-taking-the-steam-out-of-cpsc-backed-enforcement-action/" target="_blank" rel="noopener">which we covered previously</a>) that the government’s claims were time barred.  Because Spectrum did not actually report until 2012, long after CPSIA was enacted, the post-CPSIA $15 million penalty cap applied.Art, Not Science: CPSA and Regulatory Factors AppliedThe court next considered the CPSA’s guidance to CPSC regarding an appropriate civil penalty.  Those congressionally identified factors are:  the nature, circumstances, extent, and gravity of the violation, including the nature of the product defect; the severity of the risk of injury; the occurrence or absence of injury; the number of defective products distributed; and the appropriateness of such penalty in relation to the size of the business.The court also looked to the CPSA’s regulatory guidance about civil penalties, which exist to promote policies of deterring violations, providing just punishment, promoting respect for the law, and protecting the public, among others.Finally, the court considered four specific regulatory factors:  (1) safety/compliance program and/or system relating to a violation; (2) history of noncompliance; (3) economic gain from noncompliance, and (4) failure to timely respond to CPSC’s requests for information or remedial action.Limited Evidence on Penalty Factors Mitigated DamagesInterestingly, the court found that most of the factors weighed in Spectrum’s favor, due to the lack of sufficient evidence to substantiate the government’s position.For example, although the carafe handles were clearly defective, the severity of the defect was unclear.  The government did not show how far the broken handles separated from the carafe, making it difficult to assess the risk of “catastrophic failure” that could lead to severe injuries from broken glass or hot coffee.On injury, the government also provided “no evidence regarding any injuries that a customer actually sustained by virtue of a failed handle (as opposed to those self-reported by customers),” and the court pointed out that only “one customer indicated receipt of medical attention.”Similarly, the government provided “no evidence” on whether Spectrum had a history of failing to comply with the CPSA or whether it responded appropriately to CPSC correspondence.No Robust Compliance Program a Big Factor in the Penalty PhaseThe biggest  issue for Spectrum related to its safety and CPSA compliance programs.  The court found that although Spectrum had systems in place, they were inadequate.  The court noted that those systems failed to (a) flag the defect, (b) prompt Spectrum to report timely that information was accumulating on failed coffee makers, and (c) identify “the dangerous trend emerging from the sale of the defective carafes over time.”The court specifically pointed out the disconnect between information being gathered by Spectrum’s engineers about quality, and the information being gathered by consumer complaint specialists about safety.Penalties for Selling Recalled Products Exceed Those for Untimely ReportingFor untimely reporting, the court imposed a graduated penalty scale, with higher penalties per complaint received as time went on and complaints mounted.  For each complaint received in the first six months after Spectrum’s reporting obligation arose, the court set the per-complaint penalty at $10, which represented the “rough profit on the sale of [each of] those defective products.”  For complaints received in the next six months, the court increased the per-complaint penalty to $75, representing the defective product’s purchase price.  And for each six-month period after that, the per-complaint penalty doubled ($150 per complaint, then $300, then $600, and so on) to reflect the “increasingly egregious failure to report.” All told, the final penalty for the reporting violation was $821,675.For selling recalled products—which the court found to be the more egregious violation—the court imposed a $1,000 and $2,000 per-unit-sold penalty (the more expensive one for later shipments).  The final penalty for selling recalled products was $1,115,000, or 56% of the total penalty.  This more punitive per-unit amount was justified, the court said, given “Spectrum’s size and sophistication,” its lack of “defined procedures for executing the recall,” lack of “pro-active material oversight on recalled product,” and lack of “automation to prevent outbound shipments” of recalled coffee makers.Injunctive Relief Focused on Compliance Programs and Education Spectrum was also ordered by the court to maintain “sufficient systems, programs, and internal controls to ensure compliance with the CPSA” and its regulations, including reporting requirements.  Spectrum was required to file a notice with the court indicating the improvements implemented.Additionally, the court ordered Spectrum to send a copy of its civil penalty and summary judgment opinions and orders to its directors, officers, management-level employees, and in-house attorneys involved in the sale, manufacture, distribution, or importation of consumer products.ConclusionSpectrum’s $1.9 million penalty and injunctive order highlight the need for consumer products companies to regularly audit their safety, compliance, and recall procedures to ensure they quickly identify, escalate, report, and remediate potential consumer hazards.  This case also underscores the need for high-level company management and in-house counsel to be familiar and comfortable with CPSA requirements so they can quickly mobilize if the company identifies a product hazard, triggering a reporting obligation or recall.  Finally, Spectrum serves as a warning to consumer products companies involved in mergers or product line acquisitions.  Performing robust due diligence on a target product or company regarding CPSA compliance can prevent acquisition of a significant liability down the road in the event of a CPSC investigation and increasingly common enforcement action.<a href="#_ftnref1" name="_ftn1">[1]</a> United States v. Spectrum Brands, Inc., No. 15-CV-371-WMC, 2017 WL 4339677, at *9 (W.D. Wis. Sept. 29, 2017).

gettyimages-155556909_small_thumbnail.jpg

Fortune Favors the Quick (to Report): Judge Slaps Spectrum Brands with $1.9 Million Penalty in DOJ/CPSC Tag-Team Enforcement Action

Fortune Favors the Quick (to Report): Judge Slaps Spectrum Brands with $1.9 Million Penalty in DOJ/CPSC Tag-Team Enforcement Action

gettyimages-155556909_small_image.jpg