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The Road to Recall: Evaluating Substantial Product Hazards

Insight
01.18.2017
By Julie Scheipeter

The U.S. Consumer Product Safety Commission (CPSC) is the regulatory agency responsible for protecting the public from unreasonable risks of injury and death associated with consumer products. According to the Consumer Products Safety Improvement Act (CPSIA) and Child Safety Protection Act (CSPA), manufacturers, importers, distributers, and retailers of all consumer products, including children's products,1  have an ongoing obligation to report potential product defects to the CPSC.2  See 15 U.S.C. § 2064(b). Reporting a potential defect, however, does not necessarily mean that the CPSC will require a recall of the product or other corrective measures. Rather, the CPSC may order corrective actions (including but not limited to a recall) if: (1) after a hearing, the CPSC determines that the product presents a substantial product hazard, and notification is necessary to adequately protect the public from such substantial product hazard, or (2) after notifying the manufacturer, the CPSC determines the product is an imminent hazard and has filed an action under 15 U.S.C. § 2061

This article will focus on the first cause for a potential product recall – determining whether a "substantial product hazard" exists. The following provides an overview of the criteria used by the CPSC and its staff in assessing substantial product hazards, as well as the hazard priority system used by the CPSC staff to rank defective products. 

Substantial Product Hazard 

After receiving a report of a potential product defect 3, the CPSC staff will preliminarily determine whether the product at issue presents a substantial product hazard. The decision is preliminary because only the CPSC can make a formal determination that a product is defective and creates a substantial product hazard after affording interested persons, including consumers and consumer organizations, an opportunity for a hearing. The CSPA defines "substantial product hazard" as follows: 

  1. "A failure to comply with an applicable consumer product safety rule under [the CSPA] or a similar rule, regulation, standard, or ban under any other Act enforced by the CPSC which creates a substantial risk of injury to the public, or
  2. A product defect which (because of the pattern of defect, the number of defective products distributed in commerce, the severity of the risk, or otherwise) creates a substantial risk of injury to the public."

15 U.S.C. § 2064(a) [Emphasis added]. 

As such, there are two categories of substantial product hazard that the CPSC will consider: 1) a hazard presented by noncompliance with safety regulations and 2) a hazard created by a defect in the product. Hazard by noncompliance is fairly straightforward - if the violation of an applicable consumer safety rule creates a substantial risk of injury, a substantial product hazard may exist. In assessing hazard by defect, the CPSC staff will consider the factors listed in section 2064(a)(2) set forth above, which are further explained in 16 C.F.R. § 1115.12(g)(1):

  • Pattern of defect. The CPSC and its staff will consider whether the defect arises from the design, composition, contents, construction, finish, packaging, warnings, or instructions of the product or from some other cause, and will consider the conditions under which the defect manifests itself.
  • Number of defective products distributed in commerce. Even one defective product can present a substantial risk of injury and provide a basis for a substantial product hazard determination if the perceived injury is serious and/or is likely to occur. However, multiple defective products in commerce with no potential for causing serious injury, and little likelihood of causing even minor injuries, may not provide a proper basis for a substantial product hazard determination. The number of products remaining with consumers is also a relevant consideration.
  • Severity of the risk. A risk is severe if the injury which might occur is serious and/or if the injury is likely to occur. In considering the likelihood of any injury, the CPSC and the staff will consider the number of injuries reported to have occurred, the intended or reasonably foreseeable use or misuse of the product, and the population group exposed to the product (e.g., children, elderly, disabled persons).

In evaluating substantial product hazard, the CPSC staff (and, if adjudicated, the CPSC itself) will study and evaluate all relevant information pertaining to the product, including: 

  • Information about engineering, quality control, production data, and any design changes in the product
  • Product liability lawsuits and claims of personal injury or damage
  • Information about the product from independent testing laboratories
  • Complaints or other information about the product from consumer groups and government agencies

The CPSC staff then applies hazard priority standards to classify the severity of the problem, as discussed below.

Hazard Priority System

The hazard priority system is a three-tier classification system used by the CPSC staff to uniformly rank substantial product hazards. The hazards are delineated as follows:

  • Class A Hazard: Exists when a risk of death or grievous injury or illness is likely or very likely, or serious injury or illness is very likely.
  • Class B Hazard: Exists when a risk of death or grievous injury or illness is not likely to occur, but is possible, or when serious injury or illness is likely, or moderate injury or illness is very likely.
  • Class C Hazard: Exists when a risk of serious injury or illness is not likely, but is possible, or when moderate injury or illness is not necessarily likely, but is possible. 

If the CPSC staff makes a preliminary determination that the product presents a substantial product hazard, the hazard priority systems provides a guide for selecting the level and intensity of corrective action. As the most severe, Class A hazards warrant the highest level of attention and most immediate, comprehensive and expansive corrective action measures. 

Impressions

Product manufacturers and sellers that have identified a potential defect in a product and have made a 15 U.S.C. § 2064(b) report to the CPSC should consider taking voluntary corrective action through the CPSC's Fast Track Product Recall Program. To participate in this program, a company must immediately stop sale and distribution of the product and must be prepared to implement a corrective action plan, including a consumer-level recall, within 20 working days of submitting the initial report to the CPSC. However, if the company completes the Fast Track Program, the CPSC staff will not make a preliminary determination that the product creates a substantial product hazard. This may save the company from any negative effects a preliminary determination by the CPSC may have on the business. Additionally, businesses that participate in this program are assigned a point of contact at the CPSC who can provide significant assistance to first-time participants as they go through the recall process. 

For additional questions, please contact Julie Scheipeter, or the Stinson Leonard Street attorney with whom you regularly work.



1 "Children's products" are those designed or intended for use by children twelve (12) years of age and younger. 15 U.S.C. § 2052.

2 For a discussion of when to report a potential defect, see "Children's Product Recalls: Identifying Reportable Defects," Julie Scheipeter, Stinson Leonard Street (Jan. 21, 2016)

3 If a company obtains information which reasonably supports the conclusion that a product is defective, it must report the information to the CPSC within 24 hours. See15 U.S.C. § 2064(b).

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