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From Products Liability Law Daily, June 19, 2015

Maker of under-the-counter coffeemaker charged with violating CPSA reporting requirements, post-recall sales

By Pamela C. Maloney, J.D.

The U.S. Department of Justice, on behalf of the Consumer Product Safety Commission, filed an enforcement action in a federal district court in Wisconsin against Spectrum Brands, Inc., and its former subsidiary, Applica Consumer Products Inc., for their failure to report to the Consumer Product Safety Commission, in a timely manner, that the plastic handles on the glass carafes of Black & Decker’s SpaceMaker Under-the-Cabinet Coffeemakers could detach suddenly during use, posing a burn and laceration hazard to consumers. (U.S. v. Spectrum Brands, Inc., June 17, 2015).

Background. According to the complaint, beginning in or around 2009, these two companies received hundreds of consumer complaints regarding carafe handles breaking while in use. Despite their actual and presumed knowledge of the nature and number of incidents involving these products, the companies did not report this information to CPSC until April 2013. In addition, the companies continued to sell, offer for sale, or distribute these coffee makers, which were subject to recall in June 2012. In June 2013, Applica notified CPSC that several hundred of the recalled coffeemakers had been sold inadvertently to retailers, resulting in another recall [see Products Liability Law Daily’s August 16, 2013 analysis].

General allegations. The complaint includes allegations supporting counts that these companies violated the Consumer Product Safety Act by (1) knowingly failing to report to CPSC, as required by the Consumer Product Safety Act, immediately upon receiving information that reasonably supported the conclusion that the coffeemakers contained a defect that could create a substantial product hazard and created an unreasonable risk of serious injury and (2) by offering for sale, distribution in commerce or importing into the United States individual recalled coffee makers after the June 2012 recall. The complaint also charged that it was likely that the companies would continue to violate the CPSA reporting requirements and the Act’s prohibition on the sale, offer for sale, distribution in commerce or importation of recalled products.

Relief sought. The DOJ is seeking civil penalties for each violation and injunctive relief that would require these companies to: (1) comply with CPSA’s reporting requirements and prohibition on the sale, distribution, or importation of recalled products; (2) establish internal recordkeeping and monitoring systems designed to (a) provide timely reports to CPSC whenever they obtain information of a defect in their products that could create a substantial product hazard or an unreasonable risk of serious injury or death and (b) prevent the sale, distribution, or importation of recalled products; (3) provide for liquidated damages in the event these companies fail to comply with the reporting requirements or the prohibition on the sale, distribution or importation of recalled products; and (5) establish an escrow account containing funds that could be used to pay any liquidated damages imposed by the court.

Agency statements. “We believe Spectrum Brands and Applica Consumer Products knew about the hazard with these coffeemakers for years,” said CPSC Chairman Elliot F. Kaye. “Despite the fact that these firms were required to report potential hazards and risks to CPSC immediately, it appears they chose to profit from continued sales instead. Their failure to follow the law and report resulted in dozens of injuries to unsuspecting consumers.” Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division added, “Hundreds of consumers complained to the company about this dangerous defect over the years. We rely on companies to report these safety issues immediately, as the law requires, to prevent unnecessary injuries. The Department of Justice will continue to protect the public against companies.” (CPSC Press Release, 15-168, June 19, 2015)

The case is No. 3:15-cv-00371.

Attorneys: Alan Phelps, United States Department of Justice, for United States of America.

Companies: Spectrum Brands, Inc.; Applica Consumer Products Inc.

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