The United States is facing an epidemic of defective products that are being imported from other countries, mainly China. Often times, the actual Chinese manufacturer of the defective and dangerous product is out of reach of the jurisdiction of the American court system. However, the American companies that import these defective products into the U.S. are not immune from suit. In fact, the federal government has placed specific duties and responsibilities on these importers to insure that the products they import are not defective. Unfortunately, there are numerous importers who don’t know about these regulations or, even more scary, don’t care about these regulations and ignore them all in the name of making money.
This problem was recently highlighted in two lawsuits brought by the Department of Justice (DOJ) against two different companies that were importing defective products. On Oct. 6, the Department of Justice announced that it had filed two civil actions in federal court that sought to prevent the importation and sales activities of two California companies and three individuals in connection with their importation of illegal and dangerous children’s products. The Department filed the two actions at the request of the Consumer Product Safety Commission (CPSC), alleging that the Defendants were responsible for importing children’s products containing, among other things, lead, phthalates and small parts posing a choking hazard for children younger than 3.
Both complaints allege that the Defendants imported toys and other children’s products in violation of the Consumer Product Safety Act (CPSA) and the Federal Hazardous Substances Act (FHSA). One complaint was filed against Brightstar Group Inc., a Los Angeles importer and retailer of children’s products and toys, and its owner, Sherry Chen, 61, of Arcadia, Calif. The complaint alleges that, since August 2013, CPSC collected dozens of samples from Brightstar’s import shipments as they attempted to enter the Port of Los Angeles/Long Beach, Calif., and from Brightstar’s Los Angeles facility.
Based on its findings, CPSC issued nine Letters of Advice between September 2013 and April 2015 notifying the Brightstar Defendants that their products violated federal standards. CPSC found numerous children’s products, including a fire engine set, a tea set, toy boxing gloves, collapsing stroller and marbles, in violation of the CPSA, the FHSA and their implementing regulations. Most of the products were stopped at import and were not sold to consumers.
Chen is also sued for violations that include importing infant rattles, which occurred while she was the manager of Taifung Corp., a now-dissolved California corporation owned by her husband that also imported and sold children’s products and toys.
A second action was filed against Unik Toyz Trading Inc. (Unik), a Los Angeles importer and retailer of children’s products and toys, its owner, Julie Tran, 33, and its manager, Kiet Tran, 38, both of Arcadia, Calif. The complaint alleges that, since September 2011, CPSC identified 39 samples of children’s products imported by Unik, including toy cars, toy trains, bubble guns and art materials, that violate federal standards for children’s toys. These violations include illegal levels of lead content and toys intended for children younger than 3 that contain small parts and accessible batteries. Most of these defective toys were stopped at import at the Port of Los Angeles/Long Beach and were not sold to consumers.
Stopping imported defective products from reaching the consumer, however, is oftentimes difficult. Our firm is currently handling a case against an importer of a defective motorcycle helmet. A young man was riding a motorcycle in Georgia when, in effort to avoid a collision with a car, he had to lay down his motorcycle in the roadway. Although the helmet was supposed to protect him in this specific type of an accident, it failed miserably. The helmet failed to stay on during the accident and, as a result, the young man suffered devastating and fatal head injuries. His widow brought negligence and product liability actions against the Chinese manufacturer of the helmet and the importer/distributor of the helmet.
The Chinese manufacturer was dismissed from the action because the trial court held that it lacked jurisdiction over the Chinese company. Unbelievably, the U.S. importer/distributor also sought to be dismissed because it claimed it was not the manufacturer and thus could not be held responsible for the product’s defect, even though it was the exclusive importer and sole distributor of this helmet throughout the U.S.
As you have been reading this report, you know the National Highway Traffic Safety Administration is the federal agency responsible for issuing and enforcing safety standards concerning the manufacture of motor vehicles and motor vehicle equipment (including motorcycle helmets). NHTSA is the agency that investigates alleged defects in the vehicles and equipment. Some of the standards that it enforces are found in the National Traffic and Motor Safety Act. The Safety Act defines “manufacturer” to include any company “importing motor vehicles or motor vehicle equipment for resale.” Thus, importers are considered by the federal government as the “manufacturer” of the product and, thus, the same duties and responsibilities of the manufacturer are transferred to the importer.
As the helmets’ “manufacturer” under the Safety Act, the importer had responsibilities under the Safety Act and NHTSA’s implementing regulations to assure compliance with NHTSA’s regulatory requirements. The importer thus was responsible for the safety of helmets imported into the United States. In a nutshell, the importer had the following responsibilities as the “manufacturer” of record for the imported helmets:
Further, if the importer becomes aware that a product does not comply with the federal standards or the product contains a defect, it is required by law to notify NHTSA, as well as the owners and dealers. It’s stated:
If an importer becomes aware that a vehicle or equipment item it has imported does not comply with an applicable [Federal Motor Vehicle Safety Standards] FMVSS or contains a defect related to motor safety, it must provide NHTSA, as well as owners and dealers of the affected vehicles or equipment, with notification of the noncompliance or defect and must remedy the noncompliance or defect, usually without charge to the consumer. [Recommended Best Practices at (a)(vi), Importer's Recall Obligations, 73 Fed. Reg. at 79214.]
Not only do these regulations place the responsibility on the importer to contact NHTSA, on the flip side, if the federal government becomes aware of a problem, it does not contact the Chinese manufacturer, but instead it contacts directly the “manufacturer” of record – the importer.
Sadly, a good number of importers don’t follow these regulations and blindly import defective products into the U.S. all for sake of profits. The importers of defective products can be and should be held accountable to consumers who are injured and/or killed as result of those imported products. The importers should not be overlooked as a potential Defendant in any case where death or catastrophic injury has resulted from a product manufactured in a foreign country. If you have any questions about importer liability, feel free to contact Chris Glover, Rick Morrison or Dana Taunton, lawyers in our firm’s Personal Injury/Products Liability Section, at 800-898-2034 or by email at Chris.Glover@beasleyallen.com, Rick.Morrison@beasleyallen.com, or Dana.Taunton@beasleyallen.com.
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