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.

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Partner

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

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.

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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

<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).

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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

Zak is an associate in the Litigation Department in Morrison Foerster’s New York office.Zak’s practice focuses on class actions, commercial litigation, white collar defense, government investigations, and antitrust litigation and counseling. He has represented clients before federal and state courts in complex commercial matters, as well as in arbitration tribunals.Zak received his J.D. from New York University School of Law in 2018, where he was inducted into the Order of the Barristers. During law school, Zak also served as the Marden executive editor for the NYU Law Moot Court Board. In 2013, Zak received his B.A. and M.A. in political science from Yale University, receiving honors in his major and the Ellsworth Prize for Best Senior Essay in the Social Sciences.

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Associate

Zak Newman

Mitchell A. Hokanson is an associate in the Litigation Department of Morrison Foerster’s San Diego office.Mitchell’s practice focuses on commercial litigation and consumer class actions. He has extensive experience with civil litigation, including managing day-to-day strategy, propounding and responding to discovery, taking and defending depositions, and engaging in motion practice. He also has experience providing regulatory advice to clients, including pro bono partners and multinational corporations. Mitchell maintains an active pro bono practice.After law school, Mitchell worked as a judicial clerk for Justice Susan M. Carney of the Alaska Supreme Court, where he drafted bench memoranda and opinions on a wide range of state and federal law topics. Prior to joining MoFo, Mitchell worked for another international law firm, where he was a member of the Complex Civil Litigation practice group, in Los Angeles, California.Mitchell received his J.D. from Columbia Law School, where he was honored as a James Kent Scholar and Harlan Fiske Stone Scholar. While in law school he was the senior executive editor of the Columbia Journal of Environmental Law and worked as a judicial intern for Judge Sandra S. Ikuta of the United States Court of Appeals for the Ninth Circuit and Judge George B. Daniels of the United States District Court, Southern District of New York. Prior to that, Mitchell earned his B.A. from Stanford University.

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Mitchell Hokanson

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Software Gains New Status as a Product Under Strict Liability Law

MAHA Commission Publishes Report to Highlight Childhood Chronic Disease Drivers

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On April 13, 2017, United States District Judge Beverly Reid O’Connell for the Central District of California granted a motion to dismiss a class action complaint alleging that Hyundai sold cars with an alleged latent paint defect that caused the “self-healing” paint to bubble, peel, and flake.  Resnick et al. v. Hyundai Motor Am., Inc. et al., No. 8:16-cv-00593-BRO (PJWx), Dkt. No. 80.  The court dismissed plaintiffs’ warranty, negligent misrepresentation, fraudulent concealment, and state consumer protection claims without prejudice, with the exception of a Massachusetts Unfair and Deceptive Trade Practice Act claim, which was dismissed with prejudice.Consumers Challenge Alleged Paint Defect Under State Consumer Protection Laws.In March 2016, 15 individuals from 10 different states sued defendants Hyundai Motor America, Inc. and Hyundai Motor Co., Ltd.  Plaintiffs are current owners of 2006-2016 Hyundai Santa Fe, Sonata, and Elantra automobiles manufactured in the United States that have an alleged paint defect that manifests itself over time and causes the paint to bubble, peel, and flake.  Plaintiffs claim that Hyundai fraudulently concealed the alleged paint defect when plaintiffs purchased their vehicles and refused to offer plaintiffs or the putative class any relief.In November 2016, the court granted defendants’ motion to dismiss plaintiffs’ First Amended Complaint.  (Dkt. No. 57.)  Plaintiffs filed a Second Amended Complaint in November 2016, and stipulated to consolidate two cases against defendants in January 2017.  In February 2017, plaintiffs filed a Consolidated Class Action Complaint, alleging fourteen causes of action, including for breach of warranty, negligent misrepresentation, fraudulent concealment, and violations of various state consumer protection laws.Court Dismisses Express and Implied Warranty Claims.For the majority of plaintiffs, the court dismissed without prejudice the breach of express warranty claims because the alleged defect occurred outside Hyundai’s warranty period.  The court rejected plaintiffs’ argument that an exception should apply to hold Hyundai liable for latent defects outside the warranty period.  The court also dismissed plaintiffs’ warranty claims based on representations on Hyundai’s corporate website and advertising campaigns regarding the quality of the paint as outside the warranty period, which the court limited to the express warranty period.  The court granted leave to amend for two plaintiffs who may have experienced the alleged defect during the warranty period, but did not clearly allege those facts.The court dismissed without prejudice claims for breach of implied warranty of merchantability under California’s Song-Beverly Consumer Warranty Act.  The court held that the implied warranty of merchantability requires “something beyond mere aesthetic concerns,” and that plaintiffs only allege that the paint defect affected their vehicles’ aesthetics.  The court rejected plaintiffs’ argument that a breach of implied warranty of merchantability arises whenever a vehicle’s behavior fails to comport with industry standards.Court Dismisses Negligent Misrepresentation Claims Under the Economic Loss Rule.The court dismissed without prejudice plaintiffs’ negligent misrepresentation claims as barred under the economic loss rule.  Plaintiffs alleged that the paint defect caused “out of pocket losses associated with the paint defect, corrosion repairs and diminished value of [their] vehicle[s].”  Under the economic loss rule, the court held that these alleged damages were insufficient to support a negligent misrepresentation claim because they arose from harm to the product itself (i.e., the body of the car).  The court rejected plaintiffs’ argument that the economic loss rule did not apply because of the “special relationship” exception, which does not apply to those who have a direct contractual relationship with the defendants (like plaintiffs).Court Dismisses State Consumer Protection and Fraudulent Concealment Claims. Plaintiffs also brought claims based on fraudulent concealment and violations of California’s Unfair Competition Law, False Advertising Law, and Consumers Legal Remedies Act based on the allegations that:  (1) defendants made affirmative misrepresentations of fact, and (2) defendants fraudulently concealed their knowledge of the alleged paint defect.  The court dismissed these claims without prejudice based on plaintiffs’ failure to allege facts indicating that defendants knew or should have known of the alleged defect at the time of sale.  Plaintiffs’ general allegations that there were “concerns” regarding the possibility of self-healing paints peeling were insufficient to establish presale knowledge.  Plaintiffs failed to allege “who had these concerns, the substance of the concerns, or whether the concerns were ever communicated to Hyundai.”  The court also found that allegations regarding anonymous online complaints were not sufficient to establish defendants’ knowledge of the alleged defect.  The court further emphasized that, even if plaintiffs’ sufficiently pleaded knowledge, plaintiffs did not adequately plead specific reliance on the alleged affirmative misrepresentations.  The court dismissed plaintiffs’ non-California state consumer protection law claims without prejudice on similar grounds.Hyundai Takeaway.The opinion is quite rigorous in holding plaintiffs to their pleading burden.  As was done here, courts typically allow plaintiffs an opportunity to amend.

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Court Dismisses Peeling Paint Class Action Against Hyundai, But Grants Third Opportunity to Amend

Court Dismisses Peeling Paint Class Action Against Hyundai, But Grants Third Opportunity to Amend

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On April 13, 2017, United States District Judge Beverly Reid O’Connell for the Central District of California granted a motion to dismiss a class action complai

Product Liability

Consumer Products

California’s innovative Safer Consumer Products regulations, also known as the Green Chemistry Initiative, are ready for another step forward with the proposed inclusion of Spray Polyurethane Foam (SPF) Systems containing Unreacted Methylene Diphenyl Diisocyanates (MDI) as a Priority Product. These SPF systems are used for insulation, roofing, or sealants and raise safety concerns because of their widespread use by both professional contractors and “do-it-yourself” users for home repairs. This is the second Priority Product proposed for listing, following the inclusion of children’s foam-padded sleeping products with fire retardants.

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California Adds New Priority Consumer Product for Green Chemistry Regulation

California Proposes Next Group of Priority Products Under Its Green Chemistry Initiative

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California’s innovative Safer Consumer Products regulations, also known as the Green Chemistry Initiative, are ready for another step forward with the proposed 

California Adds New Priority Consumer Product for Green Chemistry Regulation

Environmental Law

Retail

Last month, the Sixth Circuit affirmed a complete defense verdict for Abbott Laboratories Inc. which was based in part on branded drug preemption. Rheinfrank v. Abbott Laboratories Inc., Case No. 16-3347, 2017 WL 680349 (6th Cir. Feb. 21, 2017). This defense decision is another step toward limiting liability for manufacturers that could not prevent these types of claims even if they endeavored to.Please see our full article as published on <a href="https://media2.mofo.com/v3/assets/blt5775cc69c999c255/bltd2eccee2c43452d8/62731588b5ad5f2863c59560/170403-preemption-case-law.pdf">Law360</a>.

Co-Chair, Litigation Department

Erin Bosman is the global co-chair of Morrison Foerster’s litigation department. Erin is also the founder and co-head of the Artificial Intelligence group and former chair of the Complex Litigation + Advisement practice 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 the Global Co-Chair of Morrison Foerster’s Litigation Department. Erin is also the founder and co-head of the Artificial Intelligence Group and former chair of the Complex Litigation + Advisement Practice 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

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

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

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Another Step Toward Reasonable Preemption Case Law

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Last month, the Sixth Circuit affirmed a complete defense verdict for Abbott Laboratories Inc. which was based in part on branded drug preemption. Rheinfrank v.

Another Step Toward Reasonable Preemption Case Law

Drug & Medical Device

President Trump recently announced his intent to nominate a new commissioner of the U.S. Food and Drug Administration (FDA), likely sealing the fate of FDA’s proposed generic drug labeling rule.  The proposed rule would give generic drug manufacturers responsibility for maintaining the accuracy of their abbreviated new drug application (ANDA) labels, allowing them to make changes that differ from the product’s reference listed drug label and without obtaining prior FDA approval.  While proponents of the rule argue that it promotes patient health and safety, those in the industry have strongly opposed the rule, recognizing that it would result in conflicting labels, thereby likely opening the floodgates to failure to warn litigation based on conflicting labels.The proposed rule, which has received enormous pushback and delay, appears even less likely to survive in light of Trump’s nominee for FDA commissioner, Scott Gottlieb.  Gottlieb previously served as a deputy commissioner at the FDA and has been vocal in opposing the proposed labeling rule.  He argues that the rule would increase healthcare costs and expose generic drug manufacturers to failure to warn lawsuits.  The rule has faced numerous delays since it was first proposed in 2013, and is unlikely to be finalized in April as currently scheduled.  If confirmed by the Senate, Gottlieb will almost certainly attempt to halt the rule.

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

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An orthopedic implant company

A children&rsquo;s monthly subscription service product

A fertility company

A major technology company

A smart fitness equipment company

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Brittany Scheinok is a partner in the Litigation Department of the firm’s San Diego office.

Brittany Scheinok

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Trump’s Nominee for FDA Commissioner Likely Dooms Generic Drug Labeling Rule

Trump’s Nominee for FDA Commissioner Likely Dooms Generic Drug Labeling Rule

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President Trump recently announced his intent to nominate a new commissioner of the U.S. Food and Drug Administration (FDA), likely sealing the fate of FDA’s pr

The Big Picture:  On Tuesday, Judge Koh granted Kellogg’s Motion to Dismiss in its entirety in Hadley v. Kellogg Sales Company, No. 5:16-cv-04955-LHK (N.D. Cal.).  Hadley is one of three cases<a href="#_ftn1" name="_ftnref1">[1]</a> against well-known cereal makers pending in the Northern District of California.  All three actions challenge various factually true “health” representations on the cereal packaging as misleading due to the amount of “added sugars” in the products.  FDA requires the total amount of sugars to be included on the Nutrition Facts Panel but does not yet require the amount of “added sugars” be broken out of the sugar category.<a href="#_ftn2" name="_ftnref2">[2]</a>While Judge Koh granted the motion in its entirety, she did not address several key arguments (e.g. preemption) and gave plaintiff leave to amend on several causes of action.  Thus, before we can play the funeral march for these “added sugars” cases, we need to see how one more round of pleadings shakes out and whether Judges Orrick and White follow Judge Koh’s lead.Key Holdings:<ul><li>“Added Sugars”—Plaintiff’s claims as to the amount of “added sugars” were dismissed with leave to amend for failing to satisfy 9(b).  Plaintiff did not plausibly allege that the various health claims were misleading because he failed to allege the amount of added sugar versus the total amount of sugar in each product and whether the amount of added sugar exceeded plaintiff’s own alleged “healthy” threshold.</li><li>Trans Fats—Plaintiff’s label challenges based on the fact that some products contained trans fats were dismissed with prejudice.  It was simply not plausible that the inclusion of trans fats made the factually true (and seemly unrelated) phrase “MADE WITH Real Fruit” misleading.</li><li>Miscellaneous Violations of FDA Regulations<a href="#_ftn3" name="_ftnref3">[3]</a>—Plaintiff’s claims based on alleged violations of FDA regulations were dismissed because plaintiff failed to plausibly plead that consumers would have been misled by the violations.  While the court generally granted leave to amend on these claims, a few were dismissed with prejudice based on futility or waiver.</li><li>Warranty Claims—Plaintiff’s express and implied warranty claims were dismissed with leave to amend because plaintiff provided a litany of statements but did not match them to the respective products.</li><li>Injunctive relief—The court found that while a willingness to consider repurchasing the product was likely sufficient to establish standing, here plaintiff’s willingness to repurchase was dependent on the products being “appropriately” priced.  Since any injunctive relief would not affect the price of the product, plaintiff lacked standing to seek such relief.</li></ul><a href="#_ftnref1" name="_ftn1">[1]</a> The other two cases are Krommenhock v. Post Foods, LLC, No. 3:16-cv-04958 (N.D. Cal. Filed Aug. 29, 2016); Truxel v. Gen. Mills Sales, Inc., No. 4:16-cv-04957 (N.D. Cal. Filed Aug. 29, 2016).<a href="#_ftnref2" name="_ftn2">[2]</a> On May 27, 2016, FDA issued a final rule on how “added sugars” should be listed on the Nutrition Facts Panel (“NFP Final Rule”).   Food Labeling: Revision of the Nutrition and Supplement Facts Panel, 81 Fed. Reg. 33,741 (May 27, 2016).  The NFP Final Rule revises the Nutrition Facts label by, among other things, “requiring the declaration of the gram amount of ‘added sugars’ in a serving of a product, establishing a Daily Reference Value (DRV), and requiring the percent Daily Value (DV) declaration for added sugars.”  Id. at 33,744.  The NFP Rule, which went into effect on July 26, 2016, does not require manufacturer compliance with the new labeling requirements until July 26, 2018.<a href="#_ftnref3" name="_ftn3">[3]</a> 21 C.F.R. §§ 101.13(e) (prohibition on the use of “free” or “low” unless product contains an altered amount of nutrient), (f) (type size of nutrient content claim), (i) (misleading nutrient content claim), 101.14(d) (limits on intervening material between health claims and required disclosures), 101.60 (calorie content claims), and 1.21 (material omissions)

Nature's Path Foods

Suja Juices

Unilever USA Inc.

Nature’s Path Foods and Sprouts Farmers Market

Iovate Health Sciences, International

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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 mat

Claudia Vetesi

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

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Judge Koh Issues First Blow to “Added Sugars” Plaintiffs

Judge Koh Issues First Blow to “Added Sugars” Plaintiffs

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The Big Picture:  On Tuesday, Judge Koh granted Kellogg’s Motion to Dismiss in its entirety in Hadley v. Kellogg Sales Company, No. 5:16-cv-04955-LHK (N.D. Cal.

False Advertising

Appellate & Supreme Court

Food Misbranding

We have entered the next chapter in the ongoing saga of the Consumer Product Safety Commission’s (“CPSC”) regulation of high-powered, small, rare earth magnet sets (“SREMS”).<a href="#_ftn1" name="_ftnref1">[1]</a>  On March 1, 2017, CPSC met and unanimously approved removing the Magnet Sets Safety Standard from the Code of Federal Regulations.<a href="#_ftn2" name="_ftnref2">[2]</a>  On separate motion, the Commissioners split 3-2 along partisan lines in favor of revisiting rulemaking for magnet sets.  This decision follows the United States Court of Appeals for the Tenth Circuit’s November 2016 decision to vacate and remand to the Commission its earlier standard that effectively banned SREMS from sale in the U.S.<a href="#_ftn3" name="_ftnref3">[3]</a>Fight Over Safety Standard for Magnet SetsAs defined by CPSC, magnet sets are “[a]ny aggregation of separable magnetic objects that is a consumer product intended, marketed or commonly used as a manipulative or construction item for entertainment, such as puzzle working, sculpture building, mental stimulation, or stress relief.”  16 C.F.R. § 1240.2.  In 2014, CPSC issued a Final Rule on Safety Standard for Magnet Sets restricting the size and strength of the individual magnets in these sets.  Id. §§ 1240.1-1240.5.  While not categorically banned under the 2014 Safety Standard, SREMS could not be sold due to the standard’s severe size and strength restrictions.<a href="#_ftn4" name="_ftnref4">[4]</a>  Last November, Zen Magnets, LLC (“Zen”)<a href="#_ftn5" name="_ftnref5">[5]</a> successfully challenged CPSC’s regulation in the Tenth Circuit.  Zen Magnets, LLC v. Consumer Prod. Safety Comm’n, 841 F.3d 1141, 1155 (10th Cir. 2016).  The Tenth Circuit vacated and remanded CPSC’s 2014 Safety Standard for further proceedings consistent with the court’s finding that CPSC failed to meet the Consumer Product Safety Act’s requirements.  The court based its ruling on CPSC’s incomplete and inadequately explained factual findings.  Id. at 1144.Removal of Standard Following Court’s Vacatur CPSC’s vote to remove the 2014 Safety Standard was a procedural formality needed to remove the vacated magnet set standard from the Federal Register.  82 Fed. Reg. 12716-01 (Mar. 7, 2017).Regardless of CPSC’s action or response, the Tenth Circuit’s decision vacating the standard had the force of law immediately after the court filed its order on November 22, 2016.  Id.Motion to Revisit Magnet Set Safety Standard RulemakingDuring the March 1st decisional meeting, Commissioner Elliot Kaye separately moved to direct staff to prepare a draft notice of proposed rulemaking addressing the issues raised in the Tenth Circuit’s holding.<a href="#_ftn6" name="_ftnref6">[6]</a>  Commissioner Kaye’s motion directed CPSC staff to utilize CPSC’s existing data, as opposed to conducting further fact-finding.<a href="#_ftn7" name="_ftnref7">[7]</a>  During questions on the motion, Commissioner Robert Adler identified the issues in the Tenth Circuit opinion that needed to be addressed in the draft notice:  (1) CPSC’s use of an incorrect time frame for the data set in its cost-benefit analysis, Zen Magnets, 841 F.3d at 1149; (2) CPSC’s reliance on injury reports that only “possibly” involved magnet sets, id. at 1152; and (3) CPSC’s failure to consider the utility of magnet sets, id. at 1152-53.<a href="#_ftn8" name="_ftnref8">[8]</a>  CPSC estimated that it will take 11 staff months to prepare the draft notice.<a href="#_ftn9" name="_ftnref9">[9]</a>The Future of SREMS Regulation in Light of Shifting Tides at CPSCThis reshaping of magnet set regulation comes during an interesting time at CPSC.  As <a href="http://classdismissed.mofo.com/consumer-products/same-enforcement-trend-new-cpsc-leadership/">previously reported</a>, CPSC’s political makeup has recently shifted following CPSC’s February 9, 2017 announcement of Republican Ann Marie Buerkle as Acting Chairman.  Although the partisan balance of CPSC is likely to shift to the Republicans later this year, Acting Chairman Buerkle currently heads a Commission with three Democrat Commissioners.  At the March 1st meeting, the two Republicans, Acting Chairman Buerkle and Commissioner Joseph Mohorovic, cast the two votes against revisiting rulemaking for magnet sets.  Commissioner Mohorovic strongly opposed new safety standards, stating:I think this has gotten so personal with this agency of having a rule being . . . thrown out that we are ready to hurl ourselves headlong back into rulemaking. . . . We’re doing this without taking the time to either learn the lessons about why we failed the first time or to figure out if there’s still any need for the rule. . . . I think this is a factor of pure ego and this agency has taken the thoughtful opinion of the Tenth Circuit personally and we just want to win for winning’s sake.<a href="#_ftn10" name="_ftnref10">[10]</a>When Democrat Commissioner Marietta Robinson’s term ends in October 2017, President Trump will appoint a new commissioner, and Acting Chairman Buerkle and Commissioner Mohorovic’s position on magnet sets likely will become the majority view at CPSC.We will continue to monitor CPSC’s actions with regard to magnet sets and provide updates on any new proposed standards in light of the Tenth Circuit opinion in Zen Magnets and the shifting roster at CPSC.<a href="#_ftnref1" name="_ftn1">[1]</a>  For background regarding CPSC’s prior enforcement activity regarding SREMS, see our prior post.<a href="#_ftnref2" name="_ftn2">[2]</a>See 82 Fed. Reg. 11347-02 (Feb. 22, 2017) (notice of meeting).<a href="#_ftnref3" name="_ftn3">[3]</a>  Reported in full in our prior post.<a href="#_ftnref4" name="_ftn4">[4]</a>  Under the safety standard, SREMS that fell within the size sold by companies like Zen had to have a flux index of 50 kG2mm2 or less.  See 16 C.F.R. § 1240.3.  The SREMS in Zen Magnets had a magnetic flux index of 400 to 500 kG2mm2.  Zen Magnets, 841 F.3d at 1144.<a href="#_ftnref5" name="_ftn5">[5]</a>  Zen was the last remaining importer and distributor of SREMS by the time CPSC issued its 2014 Safety Standard.  See id. at 1146.<a href="#_ftnref6" name="_ftn6">[6]</a>  Video, Commission Meeting: Decisional Matter: Magnet Sets Safety Standard – Removal from the Code of Federal Regulations, Consumer Product Safety Commission (posted Mar. 2, 2017), <a href="https://cpsc.gov/Newsroom/Video/commission-meeting-decisional-matter-magnet-sets-safety-standard-removal-from-the">https://cpsc.gov/Newsroom/Video/commission-meeting-decisional-matter-magnet-sets-safety-standard-removal-from-the</a>.<a href="#_ftnref7" name="_ftn7">[7]</a>  Commission Meeting Video (posted Mar. 2, 2017).<a href="#_ftnref8" name="_ftn8">[8]</a>Id.<a href="#_ftnref9" name="_ftn9">[9]</a>Id.<a href="#_ftnref10" name="_ftn10">[10]</a>Id.

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CPSC to Consider New Magnet Set Safety Standards Following 10th Circuit Decision in Zen Magnets

CPSC to Consider New Magnet Set Safety Standards Following 10th Circuit Decision in Zen Magnets