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From Products Liability Law Daily, March 20, 2015

Graco hit with $10M fine—$3M now; $7M later—for failing to report child seat defects

By Pamela C. Maloney, J.D.

Graco Children’s Products has been fined $10 million for failing to provide timely notification to the National Highway Traffic Safety Administration of a defect in more than 4 million car seats. Graco must pay a fine of $3 million immediately to the federal government and must pay an additional $7 million in five years unless the company spends at least the same amount on new steps to improve child safety. The penalties close an investigation launched last year by NHTSA into whether the company failed its obligations, under the National Traffic and Motor Vehicle Safety Act, to begin what ended up as the largest ever recall of child seats (In re: Graco Children’s Products Inc., TQ14-004, March 19, 2015).

Graco admitted that it did not provide the notice of the safety-related defect to NHTSA within five working days, as required. Under pressure from NHTSA, Graco did recall more than 4 million convertible and booster seats with defective buckles in February 2014 (see Products Liability Law Daily’s February 12, 2014 analysis), and nearly an additional 2 million rear facing infant seats in June, making it the largest child seat recall in U.S. history. In December 2014, NHTSA launched an investigation into the timeliness of Graco’s decision making and reporting of a defect in those recalls (see Products Liability Law Daily’s December 2, 2014 analysis of NHTSA Recall Notice No. 14C-001). According to the recall notice, the seats had buckles that could stick or become stuck in a latched position, potentially placing child occupants at risk in an emergency.

Consent order. Under the terms of the consent order, Graco has agreed to commit $7 million to meet, over the next five years, targeted performance obligations. These obligations could include: (1) improving its assessment and identification of potential safety defects; (2) creating a plan and procedures for addressing certain targeted performance requirements, which could include methods to increase effectiveness of consumer product registration of car seats; (3) revising its procedures for addressing consumer safety complaints and speed the recall of defective products; and (4) launching a campaign to disseminate safety messages to parents and caregivers by producing media products to incorporate in child safety campaigns. According to NHTSA, only 40 percent of people who have recalled car seats get them fixed as compared to an average of 75 percent of people who own recalled light vehicles, for which registration is required by law.

The consent order also requires Graco to provide certification from an independent, third-party that it has met its cost obligations; if the company fails to meet those obligations, it must pay the balance of the $10 million civil penalty.

Attorneys: Jacqueline Glassman (Hogan Lovells US LLP)

Companies: Graco Children’s Products

MainStory: TopStory ChildrensProductsNews

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