The U.S. Consumer Product Safety Commission (CPSC) and the Department of Justice (DOJ) have jointly announced the filing of an enforcement action lawsuit against Michael’s Stores in federal court for civil penalties and injunctive relief for violation of the Consumer Product Safety Improvement Act (CPSA).
The lawsuit against arts and crafts retailer Michael’s Stores and its subsidiary Michael’s Stores Procurement Co. Inc. alleges the company failed to report a potential product safety hazard to the CPSC in a timely manner. Unlike other CPSC civil penalty actions involving DOJ, this penalty does not already have a negotiated consent decree in place and it appears that the case could be fully litigated.
The complaint alleges that Michael’s knowingly violated the CPSIA by failing to report to CPSC that the glass walls of certain vases sold by the retailer were too thin to withstand normal handling, posing a laceration hazard to consumers. According to the complaint, several consumers suffered injuries, including nerve damage and hand surgeries, from 2007 to late 2009.
According to the complaint, Michael’s did not report the potential defect to the Commission until February 2010. The company said in a press release that “it believes the facts will show it acted promptly and appropriately.” did state The DOJ complaint also alleges that when Michaels filed its initial report with the CPSC in 2010, it provided “only the limited information required to be furnished by distributors and retailers” under the CPSIA. However, according to the complaint the company did not provide information to the agency required by importers.
According to the agency, Michael’s report conveyed the false impression that the Company did not import the vases, even though the Company was the importer of record and thus was required to submit significantly more information as the manufacturer of the vases. The lawsuit alleges that Michael’s made this misrepresentation in order to avoid the responsibility of undertaking a product recall.
CPSC and DOJ are seeking an undisclosed civil penalty and various forms of injunctive relief, including the establishment of a strict compliance program to ensure future compliance with CPSC reporting obligations. This requested relief is similar to what the CPSC has required in almost all civil penalty agreements with other companies during the past few years.
Unlike most case, which are settled without litigation, it appears that the agency may litigate this time, since the ceiling on civil penalties was recently raised to $15 Million. Regardless, CPSC has stepped up enforcement in recent years, and is likely to become more aggressive about filing enforcement actions in the future.