Hunton Retail Law Resource

Court rulings interpreting the Consumer Product Safety Act (CSPA) are rare because parties subject to the act typically resolve any issues directly with the CPSC through administrative actions or settlements. This month, the Seventh Circuit issued such a rare ruling, which makes it more difficult for manufacturers, distributors or retailers to argue the statute of limitations has run on failure-to-report claims.

Section 15 of the CPSA requires manufacturers, distributors and retailers of consumer products immediately to report defects in their products to the CPSC. In this case, a distributor of coffeemakers received over 300 consumer complaints in 2009 because of the tendency of the carafe’s handle to break off, causing burns and lacerations. The distributor modified the carafe’s design to address the issue but never reported it to the CPSC. The distributor also continued distributing the older, defective versions still in stock to retailers after the design change. The distributor continued receiving consumer complaints over the following years but never reported to the CPSC until April 2012. The CPSC and the distributor jointly announced the product’s recall in June 2012.

The US government filed a failure-to-report claim in federal court in June 2015. The distributor did not contest liability. Rather, it argued that the reporting claim was barred by the five-year statute of limitations under 28 U.S.C. § 2462. According to the distributor, its duty to report first arose in 2009 upon receiving consumer reports and therefore the limitations period barred claims no later than 2014, a year before the government’s lawsuit. The district court disagreed, concluding that the duty to report is a continuing one and therefore a violation of that duty was not complete until the distributor either reported to the CPSC or acquired actual knowledge that the CPSC was adequately informed of the defect. Accordingly, the district court imposed an $821,000 civil penalty for the reporting violation. The distributor appealed and the Seventh Circuit affirmed. It agreed with the district court that the duty to report was a continuing violation that did not end until the distributor reported to the CPSC in April 2012. Accordingly, the government’s lawsuit was timely.

One of May’s recalls adds to the ongoing saga about furniture tip-overs, which pose a serious and potentially fatal hazard to small children and therefore have been the focus of the CPSC in recent years. This month, an importer of three-drawer chests recalled over 300,000 units after a two-year-old was killed by an unanchored, empty chest. This recall serves as a reminder about the serious dangers and liability associated with furniture tip-overs.

Total Recalls: 22

Hazards:  Fire/Burn/Shock (7); Laceration (5); Violation of Federal Standard (3); Crash (2); Injury (2); Explosion (1); Tip-Over (1); Entrapment (1)