Archive for September, 2014

Process is Important

This week’s CPSC Commission briefing on the proposed final rule for high powered magnet sets was as notable for what did not happen as for what did.  As the Chairman explained, Commissioner Buerkle declined to participate in the briefing and in the upcoming vote because she believes that it is inappropriate for the agency to vote on a rulemaking addressing the same issues that are currently before a judge in a litigation to which the agency is a party, and which may come back to the commissioners for further review. How refreshing–a public servant who believes that process is important.

The case is being litigated before an administrative law judge against Zen Magnets, and seeks a recall, alleging that the company’s product is defective because it presents a substantial product hazard–children can sustain serious injuries if they swallow small powerful magnets like those Zen sells as adult desk toys.  Zen is the only company currently selling such a product, according to the agency.  While this case is ongoing, the agency plans to issue a final rule to prevent anyone from selling such a product in the future. (It is currently scheduled to vote on the final rule before the end of the month.)

At the hearing at least one commissioner argued that this two-pronged attack against tiny Zen was appropriate because (i) the statute allows for rules to be issued only on a prospective basis for product manufactured in future; and (ii) the statute allows for the agency to get dangerous product already manufactured out of the market through recalls, including those resulting from administrative litigation.  Therefore, the argument goes, the agency’s actions are perfectly proper. That analysis is disingenuous because it is incomplete.

The agency initiated rulemaking in 2012.  It is true that rules are prospective.  However, the agency does have a mechanism for getting products it believes to be unsafe off the market while a rule (or a litigation) is pending and it is not the coercive tactics agency used.  Under section 12 of the statute, the agency may go to court and seek an injunction against the sale of such a product while it undertakes rulemaking if the product poses an imminent hazard.  Of course, the problem, from the agency’s point of view, is that it would have to actually convince a judge.   But that is what the notion of due process is all about.

Instead of seeking an injunction while it pursued rulemaking, the agency “requested” retailers not to sell magnets, destroying the retail market, and tried to negotiate voluntary recalls with as many companies as possible.  Those that did not agree were sued.  The purpose of the agency’s actions was never to get product out of consumer’s hands.  The paltry return rate of the recalls that were done demonstrates that consumers were not going to send the product back.  Instead the purpose was to stop the sale of the product on an on-going basis and on an across-the-board basis, picking the companies off one by one.

At this point in the saga, the only player to withstand the government is Zen which is insisting on its right for a judge to determine whether its products pose a substantial product hazard because they are defective.  While some may say this is a quixotic quest on Zen’s part, that is its right under our system of justice.  If the agency believes that Zen’s products pose an imminent threat to consumers while this litigation is going on, it could seek an injunction under section 12 of the statute but it has not done that.

The commission now seeks to put its very heavy thumb onto the scales of justice by finding that the magnets Zen sells pose an unreasonable risk and therefore are illegal.  This decision by the commission cannot help but have an impact on the litigation before the administrative law judge.  The agency cannot argue that risk to consumers justifies this action since it has not taken the action it could have under section 12 to actually protect consumers.  Add to all this the fact that the same commissioners who are so anxious to vote on the rule will hear any appeals that might come out of the ALJ’s decision and you hardly have to wonder what that outcome will be.

Commissioner Buerkle seems to understand that process is important.  Too bad her colleagues are in such a hurry to throw it out the window.


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