PPB February 2016

included art materials, fire engine sets, tea

sets, strollers, marbles, toy boxing gloves, cars

and trains.

According to complaints, Brightstar and

Unik Toyz violated the CPSA and FHSA

over multiple years as many of their respec-

tive children’s products were sampled at ports

of entry. In fact, between September 2013

and April 2015, the CPSC issued nine letters

of advice (violation notices) to Brightstar

informing the company that its products vio-

lated the CPSA and/or FHSA. In the case of

Unik Toyz, the company received 21 notices

from November 2011 to January 2015. The

companies continued importing defective

products notwithstanding the many warnings

issued by the CPSC.

The Consent Decrees

The companies and individuals have

agreed to settle the government’s charges by

binding themselves to consent decrees. The

dual consent decrees are noteworthy

because of their far-reaching provisions.

Crucially, the agreements prohibit the com-

panies and individuals from conducting any

future business (selling, importing or dis-

tributing) involving children’s products or

toys until the CPSC verifies that certain

detailed conditions are met. All of the con-

ditions agreed upon relate to future compli-

ance with the CPSA and FHSA and their

implementing regulations.

Certain provisions of the consent decrees

are worth noting here. They include:

• The retention of an independent product

safety coordinator to assist the companies

in creating comprehensive product safety

plans and conducting a product audit to

determine which products require testing

and certification.

• A quarantine of all merchandise until the

above-referenced product audit is complete.

• The creation of a comprehensive product

safety plan with written standard operating

procedures to ensure:

o future compliance with third-party testing

requirements, including periodic testing;

o the issuance of proper certificates of

conformity;

o appropriate cautionary and tracking

labels are placed on products;

o adequate and timely corrections are made

to any violation cited by the CPSC;

o the companies must respond promptly to

any CPSC communications, including

letters of advice; and

o all reports of consumer incidents are

investigated thoroughly

• The retention of an independent third-party

testing laboratory to perform the requisite

certification testing on children's products;

• The issuance of all appropriate certificates

of conformity for all the companies’ chil-

dren's products; and

• An inspection of the companies’ facilities

once they inform the agency that the above

conditions have been met.

Why Are These Consent Decrees

Significant?

In recent years, the CPSC has used

compliance programs as an enforcement

mechanism in civil penalty and recall nego-

tiations. Many companies have agreed to

implement compliance programs at the

behest of the CPSC in such negotiations.

The compliance programs have involved,

among other provisions, implementation of

written standards and policies; a mechanism

for confidential employee reporting of com-

pliance related questions and concerns;

management oversight of compliance per-

sonnel; and a policy for recordkeeping,

among others.

Yet, the Brightstar and Unik Toyz com-

pliance program provisions set forth within

the consent decrees are significant because

they are remarkably different from those

inserted into recent CPSC civil penalty set-

tlement agreements. Rarely does the CPSC

enter into a consent decree with a company

alleged to have violated the CPSA and/or

FHSA whereby the company must satisfy

detailed conditions

prior to

conducting any

future business involving children’s products.

Additionally, the Brightstar and Unik Toyz

compliance programs must be audited and

monitored by an independent third party,

which is not a common requirement in

other compliance programs. Not since the

Daiso case in 2010 and LM Import cases in

2011 and 2012 have consent decrees been as

extensive or far-reaching as the ones

involved here.

Why Are These Consent Decrees More

Comprehensive?

So what distinguishes Brightstar and

Unik Toyz, as well as Daiso and LM Import,

from other companies, mostly larger, who

have entered into agreements with the

CPSC that include compliance program

provisions?

The small companies involved in these

cases allegedly spurned and ignored numer-

ous CPSC letters of advice over multiple

years notifying them that their products were

not in compliance with the CPSA and

FHSA. The complaints also suggest that

these violations were not just occasional

occurrences, but rather systemic (i.e., numer-

ous and different products sampled by CPSC

at ports of entry violated federal product

safety regulations).

On the other hand, many large compa-

nies that now face multimillion-dollar

CPSC civil penalties do so for alleged late

reporting of product safety issues. In many

of these cases, the issue involved one or two

products and the companies self-reported

the issue to the CPSC as required by the

CPSA (albeit later than the CPSC believed

a report was required). Although intentional

product safety violations and late reporting

violations alike involve the potential expo-

sure of consumers to unsafe products, the

60 •

PPB

• FEBRUARY 2016

THINK

The small companies involved in these cases allegedly spurned and ignored

numerous CPSC letters of advice over multiple years notifying them that their

products were not in compliance with the CPSA and FHSA.

“

”