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Failure to Report Product Hazard Nets Penalty, Compliance Program Requirement

Monday, November 30, 2015
Sandler, Travis & Rosenberg Trade Report

The Consumer Product Safety Commission announced Nov. 24 that a New Jersey company has agreed to pay a $2 million civil penalty and maintain an internal compliance program to resolve allegations that it knowingly violated federal product safety reporting requirements with respect to certain compact fluorescent lamps enclosed inside glass envelopes.

According to the CPSC, approximately 1.86 million of the subject lamps were sold between March 2007 and July 2011 by grocery and home center stores nationwide, online retailers and professional electrical distributors. The CPSC alleges that these lamps are defective and create an unreasonable risk of serious injury or death because the glue that attaches the glass outer envelope to the body of the lamp can fail, allowing the glass envelope to fall and strike persons and objects below.

The New Jersey company allegedly received numerous reports that glass envelopes separated or were loose, including ten reports of lacerations and seven reports of property damage. While the company implemented multiple design changes to remedy the defect and risk, it did not notify the CPSC immediately of such defect or risk as required by section 15(b)(3) and (4) of the Consumer Product Safety Act. The CPSC therefore alleged that the company knowingly violated section 19(a)(4) of the CPSA because it possessed actual and presumed knowledge of the hazard.

In addition to the penalty and internal compliance program requirement, the company has agreed to a system of internal controls and procedures that includes written standards, policies and procedures; confidential employee reporting of compliance concerns to a senior manager; effective communication of compliance policies and procedures, including training; senior management responsibility for, and general board oversight of, compliance; and requirements for record retention.

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