|May 26, 2014|
Previously published on May 15, 2014
The Consumer Product Safety Commission (CPSC), Maxfield & Oberton Holdings LLC, and the company’s former chief executive officer agreed to settle the agency’s lawsuit seeking to force a mandatory recall of the company’s Buckyballs and Buckycubes magnetic desk toys. Craig Zucker, the former CEO, will pay $375,000 to fund a trust to conduct a recall of the subject products. This ends the years-long legal battle that drew national attention over the company’s steadfast position that its products were not unsafe if used properly. The CPSC’s staff also advanced a legal argument that is novel in the CPSC context: that the agency can seek to force a company’s corporate officer to conduct a mandatory recall under the so-called “responsible corporate officer” doctrine, as discussed in this background piece.
The Commission voted 2 to 1 to accept the settlement, with Commissioners Marietta Robinson and Ann Marie Buerkle voting to approve the settlement and Acting Chairman Robert Adler voting against it. All members of the Commission had something to critique in the agreement and the procedure leading up to its approval. Chairman Adler criticized the recall trust’s size, structure, and the potential future return of much of the trust to Zucker. Commissioner Robinson was not satisfied with the information provided to the Commission for its consideration regarding the settlement. Commissioner Buerkle disagreed with the addition of Zucker to the complaint without a Commission vote. For his part, Zucker expressed satisfaction that the complaint had been settled and noted that he spent more on legal fees than he would spend on the settlement.
The settlement here leaves unanswered the question of what an administrative law judge thinks of the CPSC’s theory of liability. It also leaves for another day the resolution of arguments about the ability of the CPSC to pursue executives (current or former) at companies that it argues should be required to recall their products under the responsible corporate officer doctrine. Given the support of a majority of the Commission for action as least as aggressive as occurred here, consumer product companies should not be surprised to see similar efforts to target companies and company officials for the foreseeable future.