CPSC Settles Buckyball Recall Case Against Importer
The Consumer Product Safety Commission’s two-year attempt to recall Buckyballs has come to an end, with Maxfield and Oberton CEO Craig Zucker agreeing to pay $375,000 to finance a “recall trust fund” as part of a settlement. The trust fund will be used to refund consumers who bought Buckyballs and Buckycubes, which were marketed by Maxfield and Oberton as a desk toy but were claimed by CPSC to cause serious injury when ingested by children. Zucker did not admit to any product safety hazards or personal liability under the settlement.
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CPSC had been investigating Buckyballs since 2009, after it “received numerous incident reports of ingestions involving Buckyballs and Buckycubes, many of which required surgery.” It filed an administrative complaint in 2012 against Maxfield and Oberton, the importer of the product, seeking a mandatory recall. CPSC expanded the case to include Zucker in February 2013 after Maxfield and Oberton went out of business.
"From 2009 to the present, the Commission staff has received numerous incident reports of ingestions involving Buckyballs and Buckycubes, many of which required surgery,” said CPSC in a press release on the settlement (here). “This recall is intended to protect children and teenagers from the risk of injury that can occur when multiple magnets are ingested.”
Zucker expressed relief that the case was finished. “After nearly two years of fighting, it’s good to finally have this case behind me,” said Zucker in a statement (here). “My life has been consumed with defending both an overreaching lawsuit and the rights of small business owners. At this point, I have spent more on legal fees than I will on the settlement. The law does not support an individual being named in a case like this and I hope that this settlement will discourage the CPSC from wrongfully pursuing individual officers and entrepreneurs again in the future.” According to Zucker, CPSC originally sought $57 million to finance the recall before it agreed to settle for $375,000. “This settlement is a victory for me and for small business owners across the United States,” said Zucker. This case has always had important implications, and we were privileged to represent Mr. Zucker,” said Tim Mullin of Miles & Stockbridge, co-counsel for Zucker, in a blog post (here).
Settlement Leaves Much Resolved, Says Former Commissioner Nord
The agreement was accepted by CPSC commissioners in a 2-1 vote on May 9. Commissioner Marietta Robinson voted in favor. "This settlement accomplishes exactly what the Commission set out to do," said Robinson (here). "I hope, as a result, families who own Buckyballs will return the dangerous product as per the directions in the settlement and all companies and individuals will stop sale of Buckyballs in this country," she said. "I also hope that the publicity of this settlement and the accompanying Buckyballs recall and stop sale will lead to a significant decrease in injuries, incidents and deaths related to this product." Commissioner Ann Marie Buerkle also voted for the agreement, although she took issue with the administrative decision to add Zucker to the complaint without a commission vote (here).
Chairman Robert Adler dissented from the decision to accept it, citing weaknesses including the small amount of money CPSC will get, the short six-month period for consumers to request refunds, and the provision that any portion remaining from the $375,000 after the refund period will be returned to Zucker. “This Agreement is a thoroughly unacceptable deal that is likely to be cited time and again in the future by respondents seeking to minimize and undermine CPSC staff requests for effective Corrective Action Plans,” he said in a statement (here). “I would reject this Consent Agreement and send it back to the parties with instructions to build in more protections for at-risk consumers, especially children, from this extremely serious hazard,” said Adler.
Former Commissioner Nancy Nord said the agreement doesn’t decide many of the issues originally raised by the case. It doesn’t confirm that a product can be defective because of insufficient warnings. “The government’s theory of defect was that warnings are not sufficient to prevent injury to an unintended user group and therefore the product cannot be made and sold, even though there were no injuries to the intended user group,” said Nord on her blog (here). “In the settlement Mr. Zucker does not concede that Buckyballs are defective, and the settlement leaves unresolved the agency’s apparent philosophy that a product can be banned if warnings do not work. Nor does it answer the question of whether even CPSC had personal jurisdiction over Zucker, she said.
"It seems that there are lots of losers but I don’t see any winners," said Nord. CPSC lost because it spent "substantial public resources" only to get a small amount of money and leave many issues unresolved, she said. Zucker lost because he probably spent more in legal fees than the value of the recall "and basically paid the government to get them off his back," said Nord. "But at the end of the day, consumers lost," she said. "Scarce public resources were spent to achieve a recall that cannot be effective both because of how it is structured and what it is trying to accomplish."