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The 'Daisy Airgun Case'--not CPSC's finest hour.

CPSC's decision to file an administrative complaint against the Daisy Manufacturing Co. of Rogers, Arkansas in 2001 was flawed from the start. The case was developed by CPSC's Compliance staff after then-Chairman Ann Brown made it known that she wanted a strong federal action against the company--demanding that the company recall 7.5 million airguns.

Brown was under fire from Republicans in Congress following the Senate Commerce Committee's rejection of President Bush's nomination of Commissioner Mary Gall as the new chairman of CPSC. Some Republicans believed that Brown had played a major role in the successful effort to defeat Gall.

Brown announced her resignation effective Nov. l, 2001. At the same time, she dropped a big hint that there would soon be another major CPSC lawsuit or recall involving a product that caused injury to children. (1)

Indeed, on Oct. 30, 2001, CPSC announced it had filed a lawsuit against Daisy Manufacturing Co. to recall two models of Daisy's powerline airguns. The complaint alleged a defect in the airguns that caused the guns to discharge when a user believed the gun to be empty. The case was largely based on a lawsuit brought by parents of a 16-year-old boy who was injured when he and a friend were playing with a Daisy airgun. Daisy settled the lawsuit for a reported $18 million.

As soon as the lawsuit was announced, Commissioner Mary Gall issued a statement calling the complaint "politicized" and criticizing both Brown and CPSC Compliance staff for failure to observe the Commission's rules of administrative procedure.

Gall said that the timing of the lawsuit, announced at a press conference at 2 p.m. on the day before Chairman Brown's departure, had been manipulated to give the outgoing chairman the best possible media send-off. (2)

The Commission voted 2-1 to issue the complaint with Chairman Brown and Commissioner Moore voting in favor, and Commissioner Gall voting against.

The case continued through administrative procedures, and when the new Chairman, Hal Stratton, arrived at CPSC, it was already before an Administrative Law Judge (ALJ).

In May 2003, Daisy's attorneys offered a settlement, but on a 2-1 vote, the Commission turned down the offer. Chairman Stratton argued that he was new to the Commission and had little access to the facts of the case. When the parties were asked to waive the Commission's exparte rules against direct conversations with the complaint counsel and the defendants, Daisy refused. Stratton then determined that since he still lacked sufficient information, he must vote to reject the settlement offer.

Daisy's representatives submitted a new settlement offer on Nov. 5, 2003. This time, Stratton and Commissioner Gall voted to accept and Commissioner Moore voted to reject the offer.

All three Commissioners submitted statements to accompany the announcement of the settlement of the Daisy case, but Commissioner Gall's statement deserves a gold star for the most cogent argument and the best narrative of the case. (3)

Commissioner Gall wrote:
 "I voted to approve the proposed Consent
 Agreement and Order ... because it is in the public
 interest and represents an adequate resolution of
 this case. This case remains, however, one that
 should never have been brought and a case that
 should have been settled much earlier. The
 Commission's actions have done serious and
 unjustified damage to the reputation and business
 prospects of a company whose product represents
 no substantial product hazard." (4)

Gall goes on to argue that there was little evidence that the air rifles in question were really "a substantial product hazard" under Section 15(a) of the Consumer Product Safety Act.

In conclusion, Gall noted that she was extremely dissatisfied with the way the case was handled.

She stated,
 "In my nearly twelve years of service with
 this Commission, and indeed, in my over thirty
 years of government service, I have never seen a
 more outrageous miscarriage of justice and abuse
 of the processes of public policy than this case ...
 Some of the deposition testimony given by
 Commission employees show clearly that the
 previous Chairman ordered that the case be
 removed from the ordinary processes of
 Commission staff review because she did not like
 the conclusions that the career staff were reaching
 about the hazards associated with the Model 856
 and 880 air rifles.

 "... The record shows that this is a case that
 should not have been brought in the first place, and
 which has now been settled on terms substantially
 similar to those that Daisy proposed over fourteen
 months ago. Students of government who wish to
 see how the regulatory enforcement process can be
 used to harass a small company to no good purpose
 need look no further than this action for a splendid
 case study ..." (5)

Commissioner Gall deserves credit for taking a courageous stance in the face of both internal and external pressures that might have overcome a more timid public official.

(1) CPSC Monitor, Vol. 6, Issue 8, August 2001, "Commerce Committee Stops Gall Nomination--Brown Announces November Resignation."

(2) Statement of the Honorable Mary Sheila Gall in Opposition to Issuance of Administrative Complaint Against Daisy Manufacturing Company, Oct. 30, 2001, U.S. CPSC, Washington, DC.

(3) "Statement of the Honorable Mary Sheila Gall on Proposed Consent Agreement and Order Submitted by Daisy," Nov. 14, 2003, U.S. Consumer Product Safety Commission, Washington, DC, 20207.

(4) Ibid.
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Article Details
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Publication:CPSC Monitor
Geographic Code:1USA
Date:Jan 1, 2004
Previous Article:Commissioners disposed of major issues in 2003.
Next Article:Chairman Hal Stratton was a prime mover in the implementation of a new federal web site, that was launched in late November.

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