Conference of Western Attorneys General

Annual MeetingSun Valley, ID

August 4, 2009

State Attorneys General,Federal Consumer Product Safety Law, andThe Consumer Product Safety Improvement

Act of 2008Presented

by

Hal Stratton

Brownstein | Hyatt | Farber | Schreck

Albuquerque, NM—Washington, DC

Overview

• State AG Federal Jurisdiction

• Federal Product Safety Law

• CPSIA State AG Powers and Procedure

• Other issues

State Attorney GeneralFederal Consumer Protection Functions

• Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. 6101, 6103

• Home Ownership and Equity Protection Act,15 U.S.C. § 1640(e)

• The Credit Repair Organizations Act,15 U.S.C. § § 1679h and 1681s

• Children’s Online Privacy Protection Act,15 U.S.C. § 6504

• Nutrition Labeling and Education Act, 21 U.S.C. § 337 • Telephone Consumer Protection Act (do not call)

47 U.S.C. § 227 • Truth in Mileage Act (odometers) 49 U.S.C. § 32709• Consumer Product Safety Improvement Act of 2008

Federal Consumer Product Safety--CPSC Jurisdiction

• Consumer Product Safety Act• Federal Hazardous Substances Act• Flammable Fabrics Act• Poison Prevention Packaging Act• Children’s Gasoline Burn Prevention Act • Virginia Graeme Baker Pool and Spa Safety Act• Refrigerator Safety Act

Federal Product SafetyRegulatory Structure

• Federal Product Safety Scheme:– Development of Product Safety Standards– Compliance and Product Recalls– Education– Research

• Consumer Product Safety Improvement Act of 2008 (CPSIA)

Consumer Product--Definition

• The term ‘‘consumer product’’ means any article, or component part thereof, produced or distributed (i) for sale to a consumer for use in or around a permanent or temporary household or residence, a school, in recreation, or otherwise, or (ii) for the personal use, consumption or enjoyment of a consumer in or around a permanent or temporary household or residence, a school, in recreation, or otherwise; but such term does not include—

Consumer Product—Definition (Con’t)Exceptions

• any article which is not customarily produced or distributed for sale to, or use or consumption by, or enjoyment of, a consumer;

• alcohol, tobacco, firearms;• motor vehicles and equipment;• pesticides;• aircraft and boats;• food, drugs and cosmetics;• Fixed-site amusement park rides

Federal Product Safety Law Application

• Manufacturers

• Distributors

• Importers

• Private Labelers

• Retailers

New CPSIA State AG Powers

• Consumer Product Safety Improvement Act of 2008 (CPSIA)

• Enacted August 14, 2008• AG Powers at

– Consumer Product Safety Act § 24– 15 U.S.C. § 2073

• Provisions of CPSA AG’s can enforce– CPSA § 19 (15 U.S.C. § 2068)(Prohibited Acts)– CPSA § 15 (15 U.S.C. § 2064)(Substantial Product

Hazards)

CPSIA AG Powers

– Enjoin the sale of products that violate CPSC issued safety standards

• Includes mandatory rules or bans

– Enjoin the sale of certain recalled products as announced by the Commission

• Includes mandatory and voluntary recalls

– Enjoin the sale of banned hazardous substances

• A substance that cannot be sold safely regardless of the application of safety standards

CPSIA AG Powers (Con’t.)

– Enjoin the sale of children’s products that have not been certified and tested by third-party laboratories once those certification requirements go into effect

• Third party testing requirements for children’s products

• Requirement is stayed by the Commission for one year until, Feb 10, 2010

• Only testing and certification is stayed—products must still meet applicable standards

• Stay does not apply to lead paint, cribs, small parts, lead in children’s jewelry, pool drain covers or pre-CPSIA testing and certification requirements, others

CPSIA AG Powers (Con’t.)

– Enjoin the sale of children’s products that lack tracking labels

• Required of products intended for children age twelve and younger

• Includes source of product, location and date of manufacture, cohort information (batch or run number)

• “To the extent practicable”• August 14, 2010 effective date

– Enforce the prohibitions against stockpiling products in advance of regulatory changes

• Prohibits manufacturing or importing a consumer product in advance of an effective date of a new rule at a rate greater than the rate at which the product was being imported or produced before the promulgation of the rule

CPSIA AG Powers (Con’t.)

– Enjoin the sale of products with registered safety certification marks if the use of those marks is unauthorized• Marks such as UL, ETL, etc.

– Enjoin the sale of products subject to general conformity certification requirements where a certificate does not accompany the product

• Required of all products subject to a consumer product safety rule

• Requirement is limited to Importers and Domestic Manufacturers by CPSC Interpretation

Substantial Product Hazards

• a failure to comply with an applicable consumer product safety rule under this Act or a similar rule, regulation, standard, or ban under any other Act enforced by the Commission which creates a substantial risk of injury to the public, or

• a product defect which (because of the pattern of defect, the number of defective products distributed in commerce, the severity of the risk, or otherwise) creates a substantial risk of injury to the public

• 15 U.S.C. §§ 2064(a) and 2073(b)(2)(C); §15(a) and § 24(b)(2)(c) and 16 C.F.R. Part 1115

Two Opinions

• AG powers apply to substantial product hazards as a result of failure to comply with a CPSC administered regulation

• AG powers apply to all products exhibiting a substantial product hazard

• Difference of Opinion at the Commission

AG Substantial Product Hazard Procedure

• Identify product with substantial product hazard

• Determine if “immediate action is necessary to protect residents of the state”

• Provide notice to CPSC

• File complaint in U.S. District Court

• Commission may intervene

CPSIA AG PowersEnforcement Procedure

• Relief obtained through “appropriate injunctive relief”

• Action in U.S. District Court where defendant “can be found or transacts business”

• Notice provided to CPSC at least 30 days prior to filing complaint (except for substantial product hazards)

• Commission may intervene and be heard and appeal any ruling

• No suit can be brought if the same alleged violation is the subject of a civil or criminal action by the United States (except for regulation and recall violations)

Construction

• Nothing in the federal acts shall—– Prevent the attorney general or other

authorized state officer from exercising powers conferred by state law, or

– Prohibit the attorney general or other state officer from proceeding in state or federal court on the basis of a violation of any civil or criminal statute of a state

If Private Counsel is Retained--

• If retained to assist state, private counsel may not– share with participants in other private civil actions

that arise out of the same operative facts any information that is

• subject to the attorney-client or work product privilege; and• was obtained during discovery; or

– use any information that is subject to attorney-client or work product privilege that was obtained while assisting the state in any other civil action arising out of the same operative facts

Further Enforcement--Any Interested Person

• Any interested person (including individuals or businesses)

• Suit must be in U.S. District Court where defendant is found or transacts business

• May bring action to enforce – A consumer product safety rule– A recall order (under 15 U.S.C. § 2064 or § 15(a))

• May obtain appropriate injunctive relief• Must give at least 30 days notice to CPSC, Attorney

General and defendant before filing suit• May not bring suit if one is already pending by U.S.• Court may award costs including reasonable

attorneys fees and expert witness fees

AG State Statutory PowersConsumer Protection Statutes

• Sources of Authority—state statutes:– “Little FTC Act”--“unfair methods of competition

and unfair or deceptive acts or practices” – “false, misleading or deceptive acts or practices in

the conduct of any trade or commerce” – laundry list of specified deceptive practices with a

prohibition against “any other act or practice that is unfair or deceptive to the consumer.”

– variation of the Uniform Consumer Sales Practices Act Unfair Practices Act

Preemption Issues

• Numerous Preemption issues

• CPSC regulations preempt non-identical regulations at the state and local level by statute

• Common Law preemption determined by the court

• Many specific preemption issues in the CPSIA

Federal Product Safety Resources

• www.cpsc.gov

• www.cpsc.gov/about/cpsia/cpsia.html

• www.recalls.gov

• http://www.consumer.gov/productsafety.htm

CWAG

Hal Stratton

Brownstein | Hyatt | Farber | Schreck

Albuquerque, NM | Washington, DC

505-724-9596

hstratton@bhfs.com