A Wisconsin federal judge gave the Consumer Product Safety Commission (CPSC) a win, finding importer Spectrum Brands Inc. to be liable for taking years to report a defect in a Black & Decker-branded coffee maker. While declining to issue summary judgment on penalties, U.S. District Judge William Conley did find that Spectrum Brands and Applica Consumer Products Inc. – which it bought in 2010 and merged with in 2014 – failed to report dangerous defects in the carafes of the imported coffee makers. The judge also dismissed claims by Spectrum that the reporting standards were too vague and that its due process rights had been violated. Judge Conley said in his opinion:
Under the facts alleged, defendant engaged in knowing, arguably outrageous, conduct by failing to notify the CPSC about substantiated complaints that carafes were breaking due to design defects and harming individuals for over two years. Furthermore, even after issuing a recall notice for those defective carafes, Applica sold more of them, necessitating another recall.
According to the government, from 2008 to 2012, Spectrum and Applica imported and distributed more than 159,000 Black & Decker SpaceMaker Under-the-Cabinet Coffeemaker products. The product had “an obvious and potentially dangerous defect whereby the handles on the coffee makers’ glass carafes would suddenly break or detach while the carafe was full of scalding-hot coffee,” the government said. In late 2008, the company began receiving what would add up to more than 1,600 consumer complaints, including more than 65 reports of burns, the government said.
In March and April 2009, the company analyzed the defect, prompting the import of a redesigned carafe, but continued distributing its entire inventory of the defective coffee maker. The company did not report the defect to the CPSC until April 2012, after it was served with a class action complaint about the defective carafe handles. Even after issuing a recall on the coffee makers that year, the government contends that Spectrum knowingly and unlawfully sold roughly 640 more of the coffee makers. Judge Conley wrote, referring to Section 15 of the Consumer Product Safety Act:
Even at the time Spectrum finally filed its Section 15 report in April of 2012, the CPSC was still not told that Applica had changed the design of the carafes in 2009 in an attempt to remedy the defect, nor that Spectrum had voluntarily recalled the carafes in March of 2012!”
Judge Conley also said the fact that the CPSC did not have a formal, recorded deliberation of the evidence before referring the case for prosecution was not a due process violation, saying there was no statutory requirement. Judge Conley declined a government motion for summary judgment imposing injunctive relief and financial penalties. Instead, the judge set a scheduling conference for the penalty phase of the case. Scott Wolfson, director of communications for the CPSC, said the agency regarded the ruling as “very positive,” particularly in regard to notice and the statute of limitations. He said:
This ruling is a very clear message to the regulated community of what the laws are and how this pertains to how the CPSC pursues civil penalties.
The government is represented by Thomas Ross and Alan Phelps of the U.S. Department of Justice and Harriet Kerwin of the CPSC. The case is U.S. v. Spectrum Brands Inc. in the U.S. District Court for the Western District of Wisconsin.
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