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$3.5 Million Penalty for Failure to Timely Report Defect in Children’s High Chairs

Friday, September 11, 2015
Sandler, Travis & Rosenberg Trade Report

The Consumer Product Safety Commission has provisionally accepted a settlement agreement under which a Colorado importer, distributor and retailer of baby products and accessories has agreed to a $3.5 million civil penalty to settle charges that it failed to timely report defects in children’s clip-on high chairs. The settlement also requires the company to (a) implement and maintain a program designed to ensure compliance with the laws and regulations enforced by the CPSC that, at a minimum, contains specified elements such as written compliance standards and policies, procedures for implementing corrective and preventive actions when compliance deficiencies or violations are identified, and senior manager responsibility for compliance and accountability for violations; and (b) implement, maintain and enforce a system of internal controls and procedures designed to ensure that information required to be disclosed to the CPSC is recorded, processed and reported in accordance with applicable law, that all reporting made to the CPSC is timely, truthful, complete and accurate, and that prompt disclosure is made to company management of any significant deficiencies or material weaknesses in the design or operation of such internal controls. The company will have to provide written documentation of its compliance program and system of internal controls and procedures upon CPSC request.

According to the CPSC, the high chairs are defective and create an unreasonable risk of serious injury because the clamps on the chairs can detach from the table, posing a fall hazard. If only one side of the chair detaches, the lack of space between the metal cross bar and the clamps creates a finger pinching, laceration and amputation hazard. The CPSC alleges that despite its awareness of these defects and related incidents and injuries, as well as two design changes that had been implemented to address these defects, the company failed to immediately inform the CPSC. The Commission also asserts that when the company did file a full report it knowingly committed a material misrepresentation by underreporting the total number of incidents and injuries, failing to notify staff that the chairs posed an amputation hazard, and withholding information that the chairs had been redesigned to address the hazard. The company denies these charges.

Under the settlement agreement all but $200,000 of the penalty will be suspended. Four of the five CPSC commissioners approved this arrangement, but one voted in favor of seeking a higher penalty. Any interested person may ask the CPSC not to accept this agreement or otherwise comment on its contents by filing a written request no later than Sept. 28.

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