The U.S. Department of Justice and Consumer Product Safety Commission recently announced that they had entered into consent decrees with three New York-based toy companies and five individuals for importing and selling products that violate the Federal Hazardous Substances Act and the Consumer Product Safety Act. The consent decrees enter permanent injunctions against the companies from importing and selling toys until certain remedial actions are implemented and monitored by the CPSC. The decrees can be read here and here.
The DOJ and CPSC alleged that the individuals and companies – Everbright Trading Inc., Lily Popular Varieties & Gifts Inc., and Great Great Corporation – imported and sold numerous children’s toys and products that contained high levels lead content, lead paint, and phthalates; contained small parts; and violated the mandatory toy safety standard (ASTM F-963), bicycle helmet safety standard, and labeling of art material (LHAMA) requirements.
Unsurprisingly, the allegations in the dual lawsuits filed accuse the companies and individuals of engaging in egregious activity: for example, the CPSC allegedly identified at the U.S. ports of entry 49 violative samples of Lily Popular’s children’s products since 2014; 23 violative samples of Great Great’s children’s products since 2013; and 97 violative samples of Everbright’s children’s products since 2013. The CPSC had issued numerous “letters of advice” to the companies notifying them of these product safety issues to no avail.
By entering into consent decrees, the defendants have agreed to be bound by far-reaching provisions that enjoin them from importing and selling toys and other children’s products until the companies are in compliance with the product safety laws. The consent decrees specifically require various mechanisms to ensure compliance – for example, the defendants are required to hire a product safety monitor who will help them establish a robust product safety program that includes, among other elements, written compliance policies and procedures for adhering to product safety laws, internal systems to identify potential product safety issues, a comprehensive product testing program, and the retention of an accredited third party testing lab to conduct certification testing of children’s products.
The level of detail provided in the consent decrees on the necessary remedial actions to be undertaken by the companies in order to do business again is instructive and worth the read. Typically, the CPSC only provides high level guidance on what elements should be included in a company’s product safety compliance program. Some of those elements can be gleaned from past civil penalty consent decrees. But, here, the Government provides more detail on the compliance program elements that must be implemented and/or satisfied to meet the CPSC’s expectations.
Finally, this type of enforcement action is far and few between, but it does highlight the growing trend to enforce product safety compliance at the U.S. ports of entry, rather than at store shelves. Last November, the CPSC blogged that it had stopped 10.5 million products that violated product safety rules at the ports in the prior year, a 123% increase from the year before. These cases, along with past cases such as Daiso and the litigation brought against four California-based companies in 2014 (Toy Distribution, Inc., S&J Merchandise, Inc., BLJ Apparel, Inc., and All Season Sales, Inc.), should serve as reminders that the CPSC and U.S. Customs and Border Protection, continue to increase their screening of imports of consumer goods at the ports – particularly children’s products – and will identify violative products and hold repeat and/or egregious offenders accountable when necessary in full cooperation with the DOJ.