On May 27th, the Consumer Product Safety Commission (“CPSC”) announced that Office Depot agreed to pay a $3.4 million civil penalty for allegedly failing to report potential safety issues for two models of office chairs. According to the CPSC, Office Depot received 33 reports concerning the Quantum model and 153 concerning the Gibson model, with reports alleging that the backs of the chairs would break off. There were a total of 39 reported injuries, some of which required medical attention. Office Depot sold roughly 150,000 units of the Quantum chairs and 1.4 million units of the Gibson chairs during the relevant period. The CPSC alleges that Office Depot never reported any issues with the Quantum model and only reported issues with the Gibson model after receiving a request for such information from CPSC staff, although the Consumer Product Safety Act requires companies to report product defects that could create a substantial product hazard or serious risk of injury within 24 hours.
In a colorful dissenting statement, Commissioner Mohorovic took issue with the civil penalty amount. The Commissioner referenced the 2008 Consumer Product Safety Improvement Act (“CPSIA”), which provided a ten-fold increase in the size of the maximum penalties the CPSC can impose. Paraphrasing the Spider-Man comics, he observed that “[W]ith great power comes great responsibility. The CPSIA gave us more power, but we have not fulfilled our responsibility to use it prudently… [which] led to … an inappropriate penalty demand, resulting in an excessive settlement.” Commissioner Mohorovic believed that the penalty was disproportionately large in light of the relatively small number of reported injuries, the lack of severity of most of the reported injuries, and the general audience that uses the product (the chairs are not specifically used by vulnerable populations such as children or the elderly). He also noted that “there is little coherence in our approach to penalties.”
This settlement is the latest in a series of CPSC settlements imposing significantly higher penalty amounts. Although Commissioner Mohorovic’s statement indicates some recognition at the Commission of disparities among those amounts, companies should expect the trend of higher amounts to continue and consider reviewing existing compliance programs and reporting policies.