8 n For The Defense n April 2009

n Neil A. Goldberg, a past president of DRI and past chair of DRI’s Product Liability Committee, specializes in product liability and cat-

astrophic injury defense. Cheryl A. Possenti, chair of DRI’s Children’s Products SLG, specializes in product liability and professional malpractice actions. Joseph J. Welter’s prac-tice includes the representation of insurance carriers and self-insured companies in product liability, railroad and toxic tort lawsuits. The authors are partners with Goldberg Segalla LLP in the firm’s Buffalo, New York, office.

Through Regulations and in Court The 2008 CPSIA

Starts to Take ShapeBy Joseph J. Welter,

Cheryl A. Possenti

and Neil A. Goldberg

A look at how the CPSC has responded to its challenges in this emerging and fascinating area of law.

P r o d u c t L i a b i L i t y

© 2009 DRI. All rights reserved.

For The Defense n April 2009 n 9

importers in a quandary over the conse-quences. Of paramount concern was how the Consumer Product Safety Commis-sion (CPSC), on its still-limited budget and staffing, would meet the ambitious chal-lenges and schedules mandated by Con-gress for the implementation of required regulations and enforcement of the new laws. In the ensuing months and well into 2009, the CPSC has made significant inroads in tackling some of the difficult regulatory issues.

In the October 2008 edition of For The Defense, we provided an overview of the 2008 CPSIA. See Overview of the 2008 CPSIA: Preparing for the Unknown and Unknowable, For The Defense, October 2008. In this installment, we address how the CPSC has responded to its challenge in the following areas: (1) a one-year stay of enforcement of certain testing and certifi-cation requirements; (2) lead content lim-its in children’s products; (3) conformity certificates; (4) third-party testing and accreditation; (5) rules for resellers of chil-dren’s products; (6) advertising labeling requirements for toys and games; and (7) mandatory all terrain vehicle (ATV) stand-ards. We also discuss the first published judicial decision retroactively applying the phthalate prohibitions to existing invento-ries of products.

One-Year Stay on Enforcement of Testing and Certification RequirementsOn January 30, 2009, the CPSC announced a one-year stay of enforcement for certain new testing and certification requirements that were established pursuant to the 2008 CPSIA. While these requirements became effective on February 10, 2009, the CPSC voted to issue the one-year stay to give it more time to finalize four proposed rules. However, the CPSC did not stay all testing and certification requirements, which will be of particular interest to manufacturers and importers.

The CPSC stay of enforcement respect-ing children’s products applies to new total lead content limits (600 parts per mil-lion, or ppm), phthalates limits for certain products (1000 ppm), and mandatory toy standards. According to the CPSC, “[m]anufacturers and importers—large and small—of children’s products will not need to test or certify to these new requirements, but will need to meet the lead and phtha-lates limits, mandatory toy standards and other requirements.”

The one-year stay does not apply to the ban of lead in paint and other surface coat-ings that went into effect on December 10, 2008. The bans on cribs and pacifiers made after January 20, 2009, are also not subject to the stay. Prospectively, the CPSC stay will not apply to: (1) “small parts,” effec-tive on February 15, 2009; (2) the lim-its on lead content of metal components of children’s jewelry for products made after March 23, 2009; and (3) the certifica-tion requirements for ATVs manufactured after April 13, 2009. Testing and certifica-tion requirements that were in place prior to the 2008 CPSIA remain unaffected by the stay as well.

The stay of enforcement does not pre-vent a state attorney general from enforc-ing these requirements. The CPSC, in its announcement, strongly encouraged the state attorneys general to “focus their own enforcement efforts on other provisions of the law, e.g., the sale of recalled products.”

Retroactive Application of Phthalate Prohibitions to All Existing ProductsSections 108(a) and 108(b)(1) of the 2008 CPSIA makes it unlawful “to offer for sale… [or] distribute in commerce… any children’s toy or child care article that contains concentrations of more than 0.1 percent of” chemicals known as phtha-lates. 15 U.S.C. §2068. These sections took effect on February 10, 2009. However, it was unclear whether these sections applied only to products manufactured after that date

With the passage of the 2008 Consumer Product Safety Improvement Act (CPSIA), the legal landscape regard-ing consumer product regulation in the United States was dramatically changed, leaving manufacturers and

or retroactively to all existing products that were offered for sale. On November 17, 2008, the CPSC’s General Counsel issued an advisory opinion letter stating that prod-ucts containing impermissible concentra-tions of phthalates may continue to be sold and distributed in commerce after Febru-ary 10, 2009, as long as they were manufac-tured prior to that date.

In response, the National Resources Defense Council, Inc., and Public Citi-zen, Inc., sued the CPSC in the United States District Court for the Southern Dis-trict of New York, challenging the CPSC position. In response to cross-motions for summary judgment, United States Dis-trict Court Judge Paul Gardephie issued a decision rejecting the CPSC’s position that the phthalate prohibitions do not apply to existing inventory as of February 10, 2009. The court focused on the language “it shall be unlawful to… offer for sale… [or] dis-tribute in commerce” and concluded that the sale or distribution of a product that was manufactured before February 10, 2009, would nevertheless violate section 108. The court reasoned:

The plain text of the phthalate prohibi-tions unequivocally and unambiguously that no covered products may be sold as of February 10, 2009. Unless another section of the statute can be read as cre-ating an express exception for exist-ing inventory, the Commission may not interpret the phthalate prohibitions as containing such an exception.

National Resource Defense Council, Inc. v. U.S. Consumer Product Safety Commission, 08-CV-10507, Memorandum Opinion and Order (Feb. 5, 2009) at 12.

The court also rejected a series of argu-ments by the CPSC for a statutory excep-tion. It declared that the CPSC “violated the Consumer Product Safety Improvement Act and the Administrative Procedure Act” and ordered the CPSC’s November 17, 2008, advisory opinion set aside. The result of this decision was that all retailers and other sellers were required to remove from inven-tory all products that violated the phthalate prohibitions.

Lead Content in Children’s Products: Procedures for Relief from Testing Requirements and ExclusionsIn accordance with section 101(a) of the

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2008 CSPIA, products designed or intended primarily for children 12 years of age or under may not contain more than 600 ppm of lead by weight as of February 10, 2009, 300 ppm after August 14, 1009, and 100ppm after August 14, 2011, unless the CPSC determines it is not technologically feasible. Children’s products that exceed these lead content limits are considered

banned hazardous substances, subjecting the seller to substantially increased civil and criminal penalties contained in the 2008 CPSIA. All This and $15 Million Pen-alties Too: Negotiating the Landscape of Increased Penalties under CPSIA, For The Defense, February 2009 (discussing the CPSIA’s substantially increased civil and criminal penalties).

Even if a children’s product meets the lead content requirements under section 101(a), it is still subject to the third-party testing requirements set forth in section 102, unless the CPSC issues a lead content determination relieving the manufacturer or importer of a particular product of those requirements. The CPSC has promulgated regulations establishing the procedures and circumstances under which it would issue a relief determination.

Pursuant to 16 C.F.R. §1500.89, any request for a determination that a prod-uct contains no lead or lead below the limit “must be supported by objectively reason-able and representative test results or other scientific evidence showing that the product or material does not, and would not, exceed the lead limit specified in the request.” 16 C.F.R., Part 1500, E., Procedures and Requirements Comments. A request must include (1) a detailed description of the product and how it is used by children; (2) representative production data regarding

lead content of the parts; (3) data on how lead is introduced into the product in the manufacturing process; (4) data on the likelihood of lead contamination of other product parts during the manufacturing process; (5) information on the facilities where the product is made; (6) assessment on whether use of lead in a facility would lead to contamination of other products or material; (7) assessment on whether the lead content would exceed the statutory limit; (8) information on the test methods and how the resulting data is representative of the lead content; and (9) any unfavorable data. 16 C.F.R. §1500.89(d)(4).

Even if a product exceeds the lead con-tent limits under section 101(a), Congress gave the CPSC the discretion to grant an exclusion to a commodity or class of mate-rials or a specific material or product that “will not result in the absorption of any lead into the human body nor have any other adverse impact on public health or safety.” The CPSC established the procedures and standards for granting that exclusion.

Pursuant to 16 C.F.R. §1500.90, requests for an exclusion will be “based on the best-available, objective, peer-reviewed, sci-entific evidence showing that lead in that product or material will not result in the absorption of any lead into the body, taking into account normal and reasonably fore-seeable use and abuse by a child, including swallowing, mouthing, breaking, or other children’s activities, and the aging of the product, not have any adverse impact on health or safety.” 16 C.F.R. §1500.90(b).

Any interested party making a request for an exclusion will include (1) a detailed description of the product and how it is used by children; (2) representative pro-duction data regarding lead content of the parts; (3) data on how lead is introduced into the product in the manufacturing pro-cess; (4) any other information regarding the lead content available to the requestor; (5) information on the test methods and why the resulting data is representative of the lead content; (6) an assessment of the manufacturing process that “strongly supports” the conclusion that it would not be a source of lead contamination of the product or material; (7) the best available peered-review evidence on absorption into the human body, including the conditions under which lead may come out of the

product; and (8) any unfavorable evidence. 16 C.F.R. §1500.90(c)(4).

The procedure for relief from the test-ing requirements of section 102, or to ob-tain an exclusion under section 101(b), is the same. On receipt of a complete request, the Office of Hazard Identification and Re-duction (EXHR) will make an initial rec-ommendation within 30 days, to the extent practicable. 16 C.F.R. §1500.89(f); 16 C.F.R. §1500.90(e). Any request for relief or an ex-clusion that does not contain the required information listed above, will be rejected, with a notice on the request’s deficiencies. 16 C.F.R. §1500.89(e); 16 C.F.R. §1500.90(d).

The EXHR will provide a staff memo to the CPSC, either granting or denying the request, for ballot vote. If a request is granted, the CPSC will determine whether to publish a notice of proposed rule making for public comment in the Federal Register, in which case the EXHR will evaluate and make a final recommendation. 16 C.F.R. §1500.89(h); 16 C.F.R. §1500.90(g). If the CPSC determines that the product neither does nor would exceed the lead content limits or qualifies for an exclusion, it will vote on whether to publish a final rule. 16 C.F.R. §1500.89(h); 16 C.F.R. §1500.90(g). However, the manufacturer or importer must continue to certify that the product has not been altered or modified, or expe-rienced any change in the processing, facil-ity or supplier conditions that could impart lead into the product.

Rules on Conformity CertificatesThe 2008 CPSIA requires that all products manufactured on or after November 12, 2008, that are subject to a consumer prod-uct safety rule, or any similar rule, ban, standard or regulation under any other act enforced by the CPSC, be accompanied by a general conformity certificate. This requirement has raised many questions, some of which have been answered by the CPSC in a Final Rule dated November 10, 2008. The new regulations are contained in Title 16 of the Code of Federal Regula-tions, Part 1110.

Section 14(a)(1) of the CPSA, as amended by the 2008 CPSIA, requires the manufac-turer, importer and private labeler to issue a certificate of conformity. However, sec-tion 14(a)(4) gives the CPSC the author-ity to designate one party to supply the

It is up to the manufacturer

or importer to determine

whether its product or

shipment is subject to the

certificate requirement.

For The Defense n April 2009 n 11

certificate, relieving other parties of that obligation. The CPSC, in its November 10, 2008, Final Rule, exercised that authority. In the case of an imported product, only the importer must issue the certificate, which must be available at the time that the product or shipment becomes available for inspection in the United States. 16 C.F.R. §1110.7(a), (c)(1). In the case of a domes-tically produced product, only the domes-tic manufacturer must issue the certificate, which will be made available to the CPSC on request before the product or shipment is introduced into domestic commerce. 16 C.F.R. §1110.7(b), (c)(2).

Prior to enactment of the 2008 CPSIA, conformity certificates were required with respect to only 11 CPSC standards. The new legislation expands the requirement to all acts administered by the CPSC, in-cluding the Federal Hazardous Substances Act, the Flammable Fabrics Act, the Poison Prevention Packaging Act, the Refrigerator Safety Act, the Children’s Gasoline Burn Prevention Act, and the Virginia Graeme Baker Pool and Spa Safety Act. This con-formity certification requirement expan-sion resulted in thousands of inquiries and prompted, in part, the CPSC’s decision to streamline the certificate requirements.

While the CPSC has clearly defined who is responsible for issuing a conformity cer-tificate, it also cautioned that it is up to the manufacturer or importer to deter-mine whether its product or shipment is subject to the certificate requirement. The CPSC also cautioned importers that after an initial period of adjustment, failure to abide by the general certificate require-ment “will subject shipments to refusal of admission into the country and potential destruction.”

Pursuant to 16 C.F.R. §1110.11, a con-formity certificate must contain the fol-lowing information: (1) identification of the product; (2) citation to each CPSC reg-ulation or statutory requirement to which the product is subject for certification pur-poses; (3) identification of the manufac-turer or importer, including address and telephone number; (4) contact informa-tion for the individual maintaining records of test results; (5) date on which and place where the product was manufactured; (6) date on which and place where the product was tested for compliance; and (7) identi-

fication of any third-party laboratory on which testing for the certificate depends.

Section 14(g)(3) of the CPSA, as amended by the 2008 CPSIA, provides: “Every certificate required under this sec-tion shall accompany the applicable prod-uct or shipment of products covered by the same certificate and a copy of the certifi-cate shall be furnished to each distributor or retailer of the product.” There has been much debate over the meaning of “accom-pany” and “furnish” and whether provid-ing the certificate electronically complies with these terms.

The CPSC recognized the logistical prob-lems for importers in providing a paper certificate with the contents of a shipping container containing some items that may not be subject to certification requirements, as well as bulk shipments that are subse-quently divided and shipped to various distributors and retailers. It also acknowl-edged the burden on smaller manufac-turers that ship to independent retailers. Lastly, the CPSC recognized the reality that international shipments are now largely tracked and otherwise conducted electron-ically. For these reasons, the CPSC decided to accept conformity certificates in elec-tronic format.

Section 16 C.F.R. §1110.13(a) defines “electronic certificate” as a set of informa-tion available in, and accessible by, elec-tronic means that sets forth the required information and meets the availability requirements. In this context, the “accom-pany” requirement is met “if the certificate is identified by a unique identifier and can be accessed via a World Wide Web URL or other electronic means, provided the URL or other electronic means and the unique identifier are created in advance and are available, along with access to the electronic certificate itself, to the Commission author-ities as soon as the product or shipment itself is available for inspection.” 16 C.F.R. §1110.13(a)(1). The “furnish” require-ment is satisfied “if the distributor(s) and retailer(s) of the product are provided a reasonable means to access the certificate.” 16 C.F.R. §1110.13(a)(2).

The CPSC has not limited the type of electronic platform, stating: “Any entity or entities may maintain an electronic cer-tificate platform and may enter the requi-site data.” 16 C.F.R. §1110.15. However, the

entity responsible for issuing the certificate ultimately retains legal responsibility for its completeness, accuracy and availability in a timely fashion.

Standards for Third-Party Testing AccreditationIn connection with issuing conformity cer-tificates, the CPSC established the stand-ards and procedures for accreditation of third-parties that are permitted to issue these certificates.

The third-party testing laboratory must be accredited by a signatory accredit-ing body of the International Laboratory Accreditation Cooperation—Mutual Rec-ognition Arrangement (ILAC—MRA). The accreditation must be to ISO Standard ISO/ESI 17025:2005—General Requirements for the Competence of Testing and Cali-bration Laboratories and include testing for compliance with the small part regulations of 16 C.F.R. Part 1501. The laboratory’s accreditation and compliance documents must be electronically filed with the CPSC. The CPSC will maintain on its website a current list of accredited laboratories that are qualified to perform the third-party testing required under the 2008 CPSIA.

A testing laboratory in which the manu-facturer or private labeler owns more than a 10 percent interest must meet additional requirements. This firewalled laboratory must submit to the CPSC its training docu-ments showing how employees are trained to notify the CPSC immediately and confi-dentially of any attempt by the manufac-turer, private labeler or other interested party to hide or exert undue influence over the laboratory’s test results. The CPSC must formally accept by order this accreditation before any firewalled laboratory may per-form third-party testing.

The CPSC also permits government owned or controlled laboratories to attain accreditation if (1) the manufacturers or private labelers, when practicable, can choose laboratories not owned or con-trolled by the government in that coun-try; (2) the laboratory’s results are not subject to undue influence; (3) the labo-ratory is not given favorable treatment or the results given more weight over non- government laboratories; and (4) the lab-oratory does not exercise undue influence over other governmental authorities on

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matters related to the distribution of prod-ucts. The CPSC will engage the government laboratory to ensure compliance with these additional requirements.

Rules Covering Resellers of Children’s ProductsOn January 8, 2009, the CPSC clarified a reseller’s responsibilities under the 2008

CPSIA concerning various circumstances, eliminating some of the uncertainties with which resellers have struggled.

First, as of February 1, 2009, children’s products cannot be sold if they contain more than 600ppm total lead, or more than 0.1 percent of certain specific phthalates, or if they fail to meet new mandatory stand-ards for toys. Manufacturers and import-ers are required to certify compliance with these requirements. Under the 2008 CPSIA, it was unclear whether a reseller of chil-dren’s products was also required to pro-vide this certification. The CPSC advised that there is no such certification require-ment. However, since selling products that exceed the new limits is a violation, the CPSC advises that resellers should avoid products that are likely to have lead con-tent, unless they have testing or other infor-mation to indicate the products being sold have less than the new limit. Failure to comply subjects the reseller to civil and/or criminal penalties.

Second, the 2008 CPSIA outlawed the sale of recalled products. The CPSC’s posi-tion is that the reseller has the burden to determine whether a product has been recalled. If a product has been recalled, a reseller must remove it from inventory. The CPSC advises resellers to check the CPSC website for a list of recalled products before taking them into inventory.

Third, the CPSC cautioned resellers to pay particular attention to special cate-gories of recalled or banned products, in-cluding cribs, play yards, jewelry, painted wood or metal toys, toys that are easily breakable into small parts, and stuffed toys that have small parts insecurely fastened. Significantly, the CPSC will hold a reseller responsible for selling children’s products that lack the required age warnings.

Labeling Requirements for Toy and Game AdvertisementsPrior to enactment of the 2008 CPSIA, 15 U.S.C. §1278 contained warning require-ments on toys and games that posed a choking hazard to children three years and under. Any toy or game intended for use by a child between three and six years old was required to contain prescribed cau-tionary labels on the packaging, descriptive materials that accompanied the product, and cautionary labels on retail bins or vending machines when the product was sold in bulk. 15 U.S.C. §1278(a). Simi-lar requirements were in place for toys or games involving latex balloons, small balls and marbles. 15 U.S.C.A. §1278(b).

The 2008 CPSIA expanded these require-ments to advertisements on the Internet, effective December 12, 2008, as well as catalogues and on other printed materials published and distributed after February 10, 2009. In connection with catalogues and printed material, the CPSC was given (1) the option to promulgate regulations regarding the size and placement of the cautionary statements, (2) the task of clarifying the applicability of these requirements to cat-alogues and other printed material distrib-uted solely between businesses but not to individual consumers, and (3) the option to establish a grace period of no more than 180 days for distribution of catalogues and other printed material. On November 17, 2008, the CPSC issued a final rule address-ing all three issues. Fed. Reg. Vol. 73, No. 222 at 67730–39.

The CPSC promulgated six, full cau-tionary statements to be included in cat-alogues and other printed materials. The full cautionary statements generally con-tain a safety alert symbol (! inside a trian-gle) with cautionary language, to the effect of “WARNING: CHOKING HAZARD—small parts. Not for children under 3 yrs,”

or similar language related to the particu-lar item, such as a ball, balloon or marble. The seller may include this full precaution-ary statement in the advertisement.

Alternatively, the CPSC will permit an abbreviated cautionary statement to accompany each individual product advertisement, as long as the full caution-ary statement applicable to that product appears near the beginning of the cata-logue before any catalogue pages that con-tain advertisements, or adjacent to the ordering information form. The CPSC des-ignated the six full cautionary statements by number (1–6), which can be referenced in the abbreviated cautionary statement. For example, an abbreviated statement may contain a safety alert symbol with language “CHOKING HAZARD (1, 2). Not for under 8 yrs.” Each page on which the abbreviated cautionary statement appears must also contain a statement at the bottom refer-ring to the precise location of the full cau-tionary statement.

The CPSC will permit replacing multiple, full or abbreviated cautionary statements with one statement. When all products in a catalogue require the same cautionary statement, it may appear on the front cover or an equally conspicuous location, as long as it advises the consumer that the warning applies to all of the catalogue’s products. If all products on one page or two facing pages of a catalogue require the same warn-ing, one warning may be placed at the top of the page, as long as it advises the consumer that it applies to all products on the page or facing pages.

Under all scenarios, warnings must be “reasonably related to the type-size of any other printed matter in the product adver-tisement, and must be in conspicuous and legible type by typography, layout or color with other printed matter in the advertise-ment and separated from other graphic matter.” 16 C.F.R. §1500.20(e); Fed. Reg. Vol. 73, No. 222 at 677333.

Respecting business to business mate-rials, the CPSC created an exception only in the instance that a catalogue or other printed material is distributed solely between businesses, unless the recipient business is expected to purchase the prod-uct for use by children. The CPSC identi-fied day care centers, schools and churches

The CPSC’s position

is that the reseller has

the burden to determine

whether a product

has been recalled.

CPSIA of 2008�, continued on page 67

For The Defense n April 2009 n 67

as examples of businesses that would not fall within this exception.

Finally, the CPSC established a 180-day grace period, meaning that sellers have until August 9, 2009, to become compli-ant with this new standard. The CPSC balanced the significant costs to sellers without a grace period against the relatively small likelihood of harm to consumers who would not have purchased the product had the cautionary statement appeared during the grace period. Fed. Reg. Vol. 73, No. 222 at 67735.

Mandatory ATV StandardsFor years, the CPSC and major ATV dis-tributors in the United States have abided by a voluntary standard for ATVs known as ANSI/SVIA, The American National Standard for Four Wheel All-Terrain Vehi-cles Equipment Configuration, and Perfor-

mance Requirements. On April 19, 2009, this standard will become mandatory. 16 C.F.R. §1420.3.

Historically, ATV distributors developed action plans pursuant to which they agreed to abide by many of the ANSI/AVIA volun-tary standards and agreed to monitor their dealerships. The newly mandated stan-dard requires ATV manufacturers and dis-tributors to file with the CPSC action plans substantially similar to prior action plans These action plans address the standards as related to the ATV’s equipment and config-uration, maximum speed capability, speed capabilities of youth ATVs, service and parking brakes, pitch stability, electromag-netic compatibility, sound level limits and certification labels. Fed. Reg. Vol. 73, No. 221 at 67386. A plan must be approved by and filed with the CPSC, unless the action plan was filed with the CPSC before August 14, 2008.

CPSIA of 2008�, from page 12 While the 2008 CPSIA permits the CPSC to promulgate standards for three-wheel ATVs, it continues to ban three-wheel ATVs for importation and sale in the United States in the absence of such standards. The CPSC affirmatively reaffirmed the current ban and did not indicate that any new standards were contemplated. 16 C.F.R. §1420.4.

ConclusionThese new regulations are only the begin-ning. As the CPSC continues to balance the differing interests of manufacturers and consumer groups, there will inevitably be more litigation challenging these statutes and regulations. Meanwhile, the CPSC will continue to explore and promulgate addi-tional regulations, which will presumably lead to additional challenges. There is no doubt the 2008 CPSIA will continue to be an emerging and fascinating area of law for years to come.