How attorneys can help the CPSC; the agency depends on manufacturers reporting their own hazardous products and lacks the budget to track down nonreporters.

The agency depends on manufacturers reporting their own hazardous products and lacks the budget to track down nonreporters.

Imagine the following: Congress rewrites the criminal code so the center-piece of law enforcement efforts is a provision requiring criminals to turn themselves in when they commit crimes. (Forget about the Fifth Amendment for a minute.) Would you (a) lay off the police force and FBI, (b) build larger prisons, or (c) lock up the silver? I thought so.

While this idea may sound fanciful, even ridiculous, it is exactly what Congress did when it wrote the Consumer Product Safety Act (CPSA) in 1972.(1) In [sections] 15(b) of the CPSA. 15 U.S.C. [sections] 2064(b), Congress requires manufacturers, distributors, and retailers of consumer products to notify the Consumer Product Safety Commission (CPSC) when they obtain information that reasonably supports the conclusion that their products either fail to comply with a consumer product safety rule,(2) or contain defects that could create substantial product hazards.

The CPSA does not give any guidance as to what is meant by the term "defect," but the commission issued regulations in August 1978 discussing the meaning of the term. According to the agency, the term "defect" includes not only faults, flaws, and irregularities in a product but also design choices that create sufficient risk. Inadequate warnings and instructions could render a product defective.(3) The commission's regulations say it will consider products liability law in determining whether a product is defective.

The CPSA defines "substantial product hazard" as a defect that, because of the pattern of defect, the number of defective products distributed in commerce, the severity of the risk, or otherwise, creates a substantial risk of injury.(4) The commission's regulations urge firms not to conduct definitive risk analyses but to err on the side of reporting so the CPSC will know of problems sooner. The regulations suggest time limitations for investigations and adopt presumptions of reportability. For example, information suggesting that a defect caused or could cause or contribute to death or grievous bodily injury should trigger hazard reports.(5)

Disappointed with the level of reporting, the CPSC published an enforcement statement in 1984 to further encourage firms to err on the side of reporting.(6) Unfortunately, this statement had little effect on the number and type of reports received.

Throughout its first decade and a half, the commission sought civil penalties against firms that failed to report under [sections] 15. However, the maximum penalty available was $500,000, and the risks of being caught and penalized did not seem sufficient to deter reporting. A $500,000 penalty was insignificant compared to the costs of a major liability case or a product recall.

By 1990, Congress recognized that firms were not lining up at the CPSC's door waiting to report. Concerned that some firms were reluctant to admit the existence of a defect because of liability and that the commission did not have the budget to investigate and track down nonreporters,(7) Congress added a new reporting requirement to [sections] 15(b).(8) Under that provision, manufacturers, distributors, and retailers must report information they obtain that reasonably supports the conclusion that their products create unreasonable risk of serious injury or death.(9)

Congress also added [sections] 37 to the act, requiring manufacturers to report when particular models of consumer products are involved in three or more settlements or plaintiffs' verdicts in civil actions within a two-year-period.(10)

Have these provisions inundated the commission in a wave of reports? Hardly.

After the 1990 amendments, [sections] 15(b) reports increased modestly. In fiscal year (FY) 1989, the commission received 168 reports. The number increased to 182 in FY 1991, to 203 in FY 1992, and peaked at 245 in FY 1995. It is unclear whether the 1990 amendments, the commission's efforts to publicize them, the change of administration at the agency, or higher penalties for firms that fail to report motivated the additional reports.

Staff analysis of the [sections] 15(b) reports suggests that firms often report newly discovered or relatively low level hazards. Addressing these typically involves little liability exposure and may prevent or limit exposure in the future. Reporting of more serious hazards appears to remain limited. The agency usually has to find more serious hazards on its own. It has sought the largest civil penalties against firms that failed to report.(11)

The lawsuit-reporting provision has also generated disappointing results. While the commission received 191 lawsuit reports for the two-year-period January 1, 1991, to December 31, 1992, the number had dropped to 66 in the most recent two-year-period, January 1, 1995, to December 31, 1996. Even more disturbing, few of these reports led to the discovery of new hazards.

A role for products liability attorneys

The commission collects injury data from a variety of sources, including a statistically representative sample of hospital emergency rooms (the NEISS system), consumer complaints, and news clippings. Although these data have been particularly effective at identifying trends for classes of consumer products, these sources may not be as good at identifying individual defective products. Given the agency's limited resources, finding these products is like searching for black holes with a $100 telescope.

Enter the products liability attorney. Historically, these attorneys have brought many serious problems to the agency's attention. Their cooperation has led to many of the commission's biggest recalls. This is understandable.

Products liability attorneys and their clients often benefit by notifying the commission of hazards. Plaintiffs often want to ensure that whet happened to them or their loved ones does not happen to others. Providing the information they possess to the commission may lead to a recall or other corrective measures that will reduce or eliminate the risk of further injury from the use of the defective product.

If the commission learns about a problem early enough, it often succeeds in obtaining corrective action before the liability matter is resolved. In addition to addressing the hazard, the agency may also seek penalties against a firm that has not complied with the reporting obligations.

Plaintiffs' attorneys are important sources of information for a practical reason: They usually possess critical information about particular defective products. For example, products liability attorneys may know how products failed or caused injury, what the identities of products and their manufacturers are, what the manufacturing and design histories of products are, and what other product failures and injuries have occurred.

Information from products liability attorneys has caused the agency to investigate and remedy many defective products it might not have otherwise discovered. For example, attorneys have provided information leading to recalls of hazardous controls used with liquid propane gas, furniture presenting entrapment hazards, dangerous power equipment, and hazardous playground equipment.

Benefits have not been limited to recalls. Information from attorneys has often supported the commission's mandatory standards or bans or led to upgraded voluntary standards.

Heightened investigation

The commission has created a new unit within the Office of Compliance's Division of Corrective Actions called the Special Investigations Unit (SIU). The SIU helps the commission improve its communications with the products liability bar, insurance companies, accident investigators, state and local courts, fire and police departments, and other underused sources of important safety information.

Designed to investigate and remedy the most serious defective products, the SIU is a multidisciplinary team of investigators (called "compliance officers"), attorneys, and technical experts. In addition to investigating hazards, the SIU can help attorneys obtain agency data by guiding them through the minefields of CPSC information disclosure laws.

Attorneys can notify the SIU about defective products at 4330 East-West Highway, Bethesda, MD 20814, [phone], ext. 1515, fax [phone], or e-mail to [e-mail].

Over the years, trial attorneys have helped the commission combat the underreporting blahs. While bringing information on defective products to the SIU may not cure this illness, which affects the health and welfare of millions, it will go a long way toward healing the symptoms.

Notes

(1.) Consumer Product Safety Act, Pub. L. No. 92-573, 86 Stat. 1207 (1972) (codified as amended at 15 U.S.C. [subsections] 2051-84 (1995)).

(2.) As defined in [sections] 3(a)(2) of the CPSA, 15 U.S.C. [sections] 2052(a)(2), "consumer product safety rule" means a standard or banning rule issued under [sections] 7 or 8 of the CPSA,15 U.S.C. [sections] 2056 or 2057.

(3.) See Substantial Hazard Reports, 16 C.F.R. [sections] 1115.4 (1996).

(4.) Section 15(a) of the CPSA,15 U.S.C. [sections] 2064(a). The commission's regulations provide further guidance about the meaning of these terms. For example, in examining severity of the risk, the commission says it will look at both the severity of any potential injury and the likelihood of this injury. 16 C.F.R. [sections] 1115.12(g)(iii).

(5.) 16 C.F.R. [sections] 1115.12(d).

(6.) 49 Fed. Reg.13,820 (1984).

(7.) Today the agency has a budget of $40 million and a staff, which includes headquarters staff, field investigators, and lab personnel, barely exceeding 500 people.

(8.) The Senate Committee on Commerce, Science, and Transportation said, "Manufacturers are reluctant to indicate that their products may contain a defect or do not believe their products to be defective, and so often do not supply the CPSC with notice under the law. This failure to report places upon the CPSC the entire burden of doing investigative work to uncover products that require corrective action, an activity that the CPSC (particularly in budget-strained circumstances) is not equipped to perform unilaterally." S. REP. NO.37, at 11 (1989).

(9.) Congress also added a requirement that firms must report noncompliance with voluntary standards relied on by the commission. Consumer Product Safety Improvement Act (Improvement Act), Pub. L. No. 101-608, 104 Stat. 3110 (1990) (codified as amended at 15 U.S.C. [sections] 2064(b) 0995)).

(10.) Section 37 of the CPSA, 15 U.S.C. [sections] 2084. This provision of the act emerged after significant lobbying by business interests to limit a straight lawsuit reporting provision that had been sought by consumer groups.

(11.) In FY 1996, the commission obtained civil penalty settlements of over $1.5 million for failure to report information about hazardous products. In one case, McDonald's agreed to a $5 million consumer safety program and to report problems to the commission in the future to resolve allegations that it failed to report defects in its Tug N-Turn that had caused scores of injuries.

Eric L. Stone is acting director of the Consumer Product Safety Commission's Division of Administrative Litigation. The views expressed are his own.