While many today returned to work after the Holiday season, things remained quieter than usual here in the nation’s capital – with many federal workers furloughed until further notice as the federal government continues to be in a partial shutdown.  President Trump is reportedly meeting with congressional leaders today ahead of Thursday’s start to a new congressional session but, at least for now, there’s no immediate end to the shutdown in sight.

Here’s how the shutdown is affecting federal agencies responsible for overseeing and enforcing advertising and privacy laws:

  • The FTC closed as of midnight December 28, 2018.  All events are postponed and website information and social media will not be updated until further notice.  While some FTC online services are available, others are not.  More information here.
  • The CPSC is also closed, although a December 18, 2018 CPSC memorandum summarizing shutdown procedures indicates that certain employees “necessary to protect against imminent threats to human safety” will be excepted employees and continue work during the shutdown.  The CPSC consumer hotline also continues to operate. Companies should remember that obligations to report potential safety hazards are not furloughed, so the mantra of “when in doubt, report” still applies, even if public announcement of a recall may be delayed.
  • Roughly 40% of FDA is furloughed according to numbers released by its parent agency, the Department of Health and Human Services.  In a post on its website, the agency explained that it will be continuing vital activities, to the extent permitted by law, including monitoring for and responding to public health issues related to the food and medical product supply.  The agency is also continuing work on activities funded by carryover user fee balances, although it is unable to accept any regulatory submissions for FY 2019 that require a fee payment.
  • Because the CFPB is funded through the Federal Reserve and not Congress, it remains in operation.

On Tuesday, in an 80 to 19 vote, the Senate confirmed Peter Feldman as CPSC Commissioner – to finish Commissioner Mohorovic’s term ending October 26, 2019. Today, in a narrow 51 to 49 vote, the Senate confirmed him to a full, seven-year term. As we discussed here, Mr. Feldman previously served as Senior Counsel to the Senate Commerce Committee, which has oversight of the CPSC. During his June confirmation hearing, he indicated that his focus as Commissioner would be on modernizing the agency and its increasing its transparency.

Once Mr. Feldman is sworn in, the five-member Commission will have a Republican majority for the first time since 2006, although Acting Chairman Ann Marie Buerkle’s (R) nomination to become Chairman is still pending. Despite this delay, with the Commission back to full strength, we will watch for policy and enforcement developments, particularly as the Commission votes on the FY 2019 Operating Plan next month.

Last Friday, the CPSC voted to sue Britax Child Safety, Inc. to force the company to recall various models of single and double B.O.B. jogging strollers. The one-count administrative complaint alleges that the strollers present a substantial product hazard under Section 15(a)(2) of the Consumer Product Safety Act because they contain a product defect that presents a substantial risk of injury to the public.

The CPSC claims that the three-wheel strollers’ quick release mechanism can fail to secure the front wheel to the fork, allowing that front wheel to detach during use. Furthermore, due to the design of the stroller, consumers are allegedly likely to believe that the wheel is secured when it is not. The CPSC states that it has received over 200 reports of incidents since January 2012 – 97 of which resulted in injuries, some severe, to 50 children and 47 adults. In a press release on the B.O.B. website, Britax counters that the strollers are safe when used as instructed and do not contain a defect. The company points out that the QR mechanism is “widely-used” in bicycles and strollers, and front wheel detachments only occur when wheels are installed improperly – and contrary to available written and video instructions.

The complaint requests a finding that the strollers present a “substantial product hazard” under the CPSA and an order Britax that implement a corrective action plan that includes initiating a stop-sale, notifying consumers and the public of the recall, and providing a remedy. The Commissioners voted to approve the complaint along party lines, with Acting Chairman Ann Marie Buerkle opposing the filing. As we have previously reported, the Commission’s priorities could shift if she and Republican nominee Dana Baiocco are confirmed.

Under the CPSA, manufacturers, distributors, and retailers have an obligation to report to the CPSC as soon as they obtain information that reasonably supports the conclusion that a consumer product contains a defect that could create a substantial product hazard, or creates an unreasonable risk of serious injury or death. The CPSC takes this reporting obligation very seriously, and staff do not hesitate to reach out to companies after receiving a number of consumer complaints related to a single consumer product (or set of products).

Last week, the Department of Justice (“DOJ”) announced that Michaels Stores Inc. has agreed to pay $1.5 million in civil penalties to settle allegations that Michaels failed to file a timely report about a safety hazard associated with a large glass vase that Michaels sold. In 2015, DOJ filed a complaint on behalf of the Consumer Product Safety Commission (“CPSC”) against Michaels, an arts and crafts retailer, with charges that the company knew of multiple consumer injuries for over a year before reporting to the CPSC. Section 15(b) of the Consumer Product Safety Act requires manufacturers, importers, distributors, and retailers to report immediately, which is defined as “within 24 hours of obtaining reportable information,” if a product has the potential to create a substantial hazard due to a defect, presents an unreasonable risk of serious injury or death, or fails to adhere to a consumer product safety rule or standard. If a company is unsure whether or not a report is required, it may investigate for up to ten working days.

Michaels sold about 200,000 vases, and the CPSC and DOJ alleged that the products could shatter in consumers’ hands because they were too thin to withstand the pressure of normal handling. Injuries reportedly associated with the breaking glass included permanent nerve damage and lacerations requiring stitches. Michaels, as the complaint asserts, “possessed information that the vases had injured one consumer in 2007 and at least four customers in the first half of 2009,” but did not report to the CPSC until February 2010.

In an unusual move for DOJ and CPSC, the original complaint alleged that, once Michaels notified the CPSC, it falsely conveyed how the glass vases were acquired, so DOJ also brought a material representation count. Specifically, the report Michaels submitted to CPSC stated that the vases were purchased from a vendor, but records identified Michaels as the importer. In April 2017, dropped the material misrepresentation claim to focus on the civil penalties and injunctive relief.

In addition to paying the civil penalty, consistent with previous civil penalties, Michaels must implement a compliance program to ensure timely and accurate reporting to the CPSC in the future.

To avoid similar consequences, companies should remember the very low bar for what triggers a Section 15(b) Report to the CPSC, even for products like glass vases that have inherent properties that could cause an injury.

Most Popular Ad Law Access Posts of 2017

As reported in our Ad Law News and Views newsletter, Kelley Drye’s Advertising Law practice posted 106 updates on consumer protection trends, issues, and developments to this blog in 2017. Here are some of the most popular:

Ad Law News and Views is produced every two weeks to help you stay current on advertising law and privacy matters. You can subscribe to it and other Kelley Drye Publications here and the Ad Law Access blog by email or RSS feed.

2018 Advertising and Privacy Law Webinar Series 

Please join Kelley Drye in 2018 as we continue our well attended Advertising and Privacy Law Webinar Series. Like our in-person events, this series gives key updates and provides practical tips to address issues faced by counsel as well as CLE credit. This webinar series will start again in February 2018. Please revisit the 2017 webinars here.

Last Friday, ten consumer and privacy advocacy groups, including the Electronic Privacy Information Center, Center for Digital Democracy, and Consumer Watchdog, sent a letter to Acting Chairman Ann Marie Buerkle, requesting that the CPSC recall the Google Home Mini smart speaker. The speaker was designed to respond to the voice commands, “OK, Google” and “Hey, Google,” as well as to a consumer pressing a small button on the top of the unit. Last week, the blog Android Police reported a glitch that caused the device to detect a touch even when a consumer was not pressing the button and remain “always on.” In response, Google issued a software update and completely disabled the button functionality.

The groups claim that this glitch resulted in Google intercepting and recording private conversations without consumers’ knowledge or consent, and that the device therefore poses a risk to consumer safety. Although they acknowledge that “the privacy concerns associated with Internet-connected devices appear different from traditional public safety concerns,” the groups call on the CPSC and its “broad mandate” to respond to such concerns, particularly in light of the “failure” of the FTC to investigate complaints involving Internet-connected devices.

Under the Consumer Product Safety Act, manufacturers, importers, distributors, and retailers have an obligation to immediately report to the CPSC when they obtain information that reasonably supports the conclusion that a consumer product contains a defect that could create a substantial product hazard, or creates an unreasonable risk of serious injury or death. While the groups note that the CPSC recently announced a recall of Internet-connected devices, the cited recall involved a product that posed an actual injury to consumers. CPSC action based on a non-physical injury, such as invasion of privacy, would be breaking new ground, but manufacturers, distributors, and retailers of IoT and other connected products should continue to watch for new developments and consider the potential safety issues associated with the products.

The Senate Committee on Commerce, Science and Transportation approved Acting Chairman Ann Marie Buerkle’s nomination to become CPSC Chairman last Thursday in a 14-13 vote along party lines. She is expected to be confirmed by the full Senate, and would then be able to move forward with staff appointments. Buerkle has served as Acting Chairman since February, and was nominated to become Chairman in July. For more information about Acting Chairman Buerkle’s priorities at the CPSC, please view our previous blog posts here and here.

Associate Lauren Myers contributed to this post. She is practicing under the supervision of principals of the firm who are members of the D.C. Bar.

Yesterday, President Trump announced his intent to nominate Dana Baiocco as CPSC Commissioner. If confirmed, Ms. Baiocco would replace Commissioner Marietta Robinson when her term expires on October 27, and would serve a seven-year term. Ms. Baiocco would join Acting Chairman Ann Marie Buerkle and Commissioner Joseph Mohorovic, and give the five-member Commission a republican majority once again. She has already received the support of Chairman Bob Latta (R-OH) of the House Energy and Commerce Committee’s Digital Commerce and Consumer Protection Subcommittee.

Currently, Ms. Baiocco is a partner at Jones Day in Boston, and her practice focuses on products liability and tort litigation, as well as regulatory and reporting obligations enforced by the CPSC, for a number of high-profile clients. Ms. Baiocco attended Duquesne University School of Law, and clerked for The Honorable Gustave Diamond of the U.S. District Court for the Western District of Pennsylvania prior to joining Jones Day’s Pittsburgh office as an associate. She became partner in 2007, and helped found the firm’s Boston office in 2011.

The Senate Commerce Committee also announced yesterday that, on September 27, they will hold a nomination hearing for Acting Chairman Ann Marie Buerkle to become CPSC Chairman. She has served as Acting Chairman since February, and was nominated to become Chairman in July. Acting Chairman Buerkle has emphasized her desire to collaborate with stakeholders, to take a “balanced and reasonable approach” to regulation when data justifies rulemaking, and to use information campaigns to educate consumers and industry.

Have ideas to lighten the load for complying with consumer product safety regulations? The Consumer Product Safety Commission (“CPSC” or “Commission”) wants to hear about them.  The Commission has asked for comments and suggestions for ways it could potentially reduce burdens and costs of its existing rules, regulations or practices without harming consumers. CPSC requests that any submissions include information and data in support of the suggestions.

The CPSC is open to any proposals. According to Acting Chairman Ann Marie Buerkle, “The agency’s recent request for information seeking public input on ways to potentially reduce burdens and costs is not limited to existing rules. CPSC is interested in hearing any and all ideas, big or small, that might help ease regulatory burdens without compromising safety.” Acting Chairman Buerkle, who was nominated to the Commission by President Obama in 2013, has said that “seeking to reduce regulatory burdens is responsible governance.” The request for suggestions is in line with Buerkle’s general policy of promoting transparency and collaboration with the industry. For a further discussion of her policies, see our previous post here.

Submissions are due by September 30. This is an opportunity for companies to provide feedback in a collaborative, constructive context.  We will continue to track the comments and provide updates on any important developments.

Summer Associate Carmen Tracy contributed to this post. Ms. Tracy is not a practicing attorney and is practicing under the supervision of principals of the firm who are members of the D.C. Bar.

Register Now for Keeping Up with the Consumer Product Safety Commission: Update on Recent CPSC Developments, the latest in our 2017 Advertising and Privacy Law Webinar Series

Keeping Up with the CPSCWith the complexity of today’s product safety regulatory environment and the civil penalty amounts for failure to report safety hazards, it is more important than ever for manufacturers and retailers to identify and resolve potential liability issues confidentially before they draw scrutiny from regulators and negative publicity.

Please join chair of Kelley Drye’s Advertising and Marketing and Consumer Product Safety practice Christie Grymes Thompson for an update on consumer product safety. The webinar will cover hot button legal issues and summarize significant developments in consumer product safety and at the Consumer Product Safety Commission.

Kelley Drye Speakers:

Christie Grymes Thompson, Partner

To register, please click here.

CLE Information:

Kelley Drye is an accredited provider of NY, IL & CA CLE. This non-transitional continuing legal education program has been approved for 1.0 NY Professional Practice credit, 1.0 Illinois credit, and 1.0 CA General credit. We will apply for CLE credit in other jurisdictions, upon request, but cannot guarantee approval. If you are interested in applying to receive CLE credit, please include your desired jurisdiction and your bar registration number when you register.

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