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CPSC Announces Second Civil Penalty Of Year

By Cheryl A. Falvey & Matthew Cohen on April 14, 2017
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CPSC Reaches Civil Penalty Agreement with Viking Range and Middleby Corporation; Firms to Pay $4.65 Million to Resolve Late Reporting Allegations Over Defective Gas Ranges

StoveThe U.S. Consumer Product Safety Commission (CPSC) has announced a civil penalty settlement with Viking Range, LLC of Greenwood, Mississippi and its parent company, The Middleby Corporation of Elgin, Illinois. The companies have agreed to pay a civil penalty of $4.65 million to resolve charges that they knowingly failed to immediately report allegedly defective gas ranges to the Commission under Section 15(b) of the Consumer Product Safety Act (CPSA). This civil penalty, the second of 2017, follows the Commission’s $5.8 million civil penalty levied against Keurig Green Mountain in February. Both penalties underscore that the Commission’s general approach to civil penalties, and desire to increase the amount of penalties imposed for violations, will not change overnight with new agency leadership. Indeed, the Acting Chairman actually voted against the settlement agreement, proposing instead an amendment to reduce the amount of the civil penalty to $2 million.

In this case, CPSC staff alleged that Viking/Middleby failed to report immediately to the Commission that it had information which reasonably supported that certain of its gas ranges could turn on spontaneously and could not be turned off using the control knobs. Such a situation, according to staff, could (and allegedly did) create a burn risk to consumers. In response to the CPSC’s allegations, Viking/Middleby asserted that they notified the Commission of the receipt of complaints and incident reports, voluntarily recalled the defective gas ranges, and have since implemented a robust product safety compliance program.

Along with paying the $4.65 million civil penalty, Viking/Middleby have agreed to maintain a product safety compliance program with the common program elements to ensure that they comply with product safety standards and regulations enforced by the Commission.

The Commission voted 4-1 to provisionally accept the settlement with the Commission’s Democratic majority (Commissioners Kaye, Adler, and Robinson) and Republican Commissioner Joe Mohorovic voting to approve the agreement. Acting Chairman Buerkle’s vote to provisionally accept the agreement with an amendment to reduce the penalty amount to $2 million reflects a different philosophy on civil penalties than the majority. Buerkle has previously stated that defect reporting requirements of Section 15 are vague, civil penalties for failure to immediately report are difficult to evaluate and value, and she has concerns with the CPSC’s lack of transparency throughout the civil penalty process. The settlement agreement does not contain sufficient detail to guess as to what may have motivated her decision to reduce the civil penalty amount in this case.

Companies in the consumer products arena should remain mindful of and attentive to their Section 15(b) reporting obligations under the CPSA. The risk of substantial civil penalties for failing to report to the Commission remains significant despite the change in agency leadership.

Photo Credit: rhodesj (Flickr)

Photo of Cheryl A. Falvey Cheryl A. Falvey

Cheryl A. Falvey helps clients launch innovative new products while protecting their brand and reputation, avoiding and defending liability in the marketing of their products, building safety and security into their products with science-based risk assessment, and successfully navigating product safety challenges with…

Cheryl A. Falvey helps clients launch innovative new products while protecting their brand and reputation, avoiding and defending liability in the marketing of their products, building safety and security into their products with science-based risk assessment, and successfully navigating product safety challenges with rapid response.

An experienced trial lawyer, and a former general counsel of the United States Consumer Product Safety Commission (CPSC), Cheri defends class actions, unfair competition, product liability and other mass tort claims arising out of consumer, occupational, and environmental exposures. She also provides brand and consumer protection counseling services, with a focus on product safety and security, including the Internet of Things; privacy; anti-counterfeiting; and digital media. Cheri represents a wide range of clients, from emerging companies to multinational Fortune 500 conglomerates.

Cheri is widely recognized as a leader in her field. She is one of an elite group of attorneys to be ranked in Chambers USA, Band 1 for Product Liability: Regulatory. She is highly regarded for her considerable experience advising clients on regulatory issues, including risk assessments, product recalls and CPSC investigations.

She represents clients on litigation and counseling matters regarding:

  • Compliance with statutes and regulations enforced by the CPSC, FDA, NHTSA, and the FTC.
  • Handles product recalls conducted in cooperation with NHTSA, CPSC, and FDA, and defends clients in agency enforcement actions seeking civil and criminal penalties.
  • Advises manufacturers faced with the potential release of unfair and inaccurate information by the government.
  • Counsels and defends clients on the sale and marketing of consumer products on the Internet, including compliance with the Children’s Online Privacy Protection Act, the FTC’s Green Guides, and state and federal privacy laws.

Prior to joining Crowell & Moring, Cheri served as the general counsel of the CPSC. In that capacity, she oversaw all federal court litigation, including civil and criminal cases referred by the Commission to the Department of Justice. Her tenure at the CPSC included advising the agency on the implementation of the Consumer Product Safety Improvement Act, a sweeping change to its statutes that had an impact across diverse industry sectors.

Cheri serves as Vice -chair of the American Bar Association’s Consumer Products Regulation Committee, Administrative Law & Regulatory Practice Section. She was named to the National Law Journal’s 2014 list of Governance, Risk & Compliance Trailblazers & Pioneers. Prior to joining the CPSC, Cheri had over 20 years of private practice experience as a partner with another international law firm where she chaired the firm’s D.C. litigation practice. Cheri is also a former member of Crowell & Moring’s Management Board.

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Photo of Matthew Cohen Matthew Cohen
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  • Posted in:
    Administrative and Regulatory
  • Blog:
    Retail & Consumer Products Law Observer
  • Organization:
    Crowell & Moring LLP
  • Article: View Original Source

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