On Monday, June 11, 2018, a Colorado District Court Judge tossed a U.S. Consumer Product Safety Commission’s recall order on due process grounds. The Court found that Commissioner Robert Adler’s previous statements showed that he had prejudged the case, or gave the reasonable appearance of having prejudged it, and his mind was irrevocably closed on key factual issues, depriving Zen Magnets of its right to an impartial tribunal.

Zen Magnets markets and sells sets of highly powerful and small rare earth magnets. The magnets can be separated and rearranged, and are intended for educational, scientific, stress reduction, and artistic purposes. However, these magnets have been implicated in internal injuries in children. The CPSC’s concern is that when children or adolescents swallow two or more magnets, the magnets can pinch or perforate digestive tissues as they attract towards each other in the gastrointestinal tract.

Many will remember the debacle with “BuckyBalls” from years prior. In 2014, BuckyBalls (the same highly powerful and small rare earth magnets) were officially recalled following a two-year ban with the CPSC after over 1,700 children went to the hospital after swallowing these high-powered magnets. In October 2014, the CPSC set a safety standard and required magnets and magnet sets that fit completely within the CPSC’s small parts cylinder to have a flux index of 50kG2 mm2 or less. The safety standard for magnet sets is currently vacated and not in effect, but there has been discussion about reissuing a notice of proposed rulemaking for magnet sets as soon as possible.

The CPSC filed a complaint in 2012 against distributors of these magnets, seeking to have them declared a substantial product hazard and to obtain a public notice and recall. Also in 2012, the Commission established standards for magnet sets, setting industry wide standards limiting the size and strength of these magnets. Zen Magnets challenged these rules, and the Tenth Circuit vacated and remanded the rule in 2016.

As a result of the Tenth Circuit’s holding, Zen Magnets sought dismissal of the complaint against it. ALJ Metry granted the request in part, holding that Counsel failed to prove the magnets were a hazard when accompanied with proper warnings. The Complaint Counsel appealed that decision, and the Commission overturned the ALJ’s holding, finding that the products presented a substantial hazard and should be subject to public notification and recall measures. Zen Magnets filed a complaint for relief with the District Court, arguing the decision should be set aside as arbitrary and capricious and that the Commission violated Zen Magnet’s due process rights because its members were biased. While the Court disagreed with Zen Magnet’s argument that the decision was arbitrary or capricious, it agreed that Zen Magnet’s due process rights had been violated.

The Court quoted a statement Commissioner Robert Adler made in 2014 that “irrespective of how strong the warnings on the boxes in which they’re sold or how narrowly they are marketed to adults, children will continue to be at risk of debilitating harm or death from this product” if it remains on the market. District Court Judge Jackson stated that this comment proved that Commissioner Adler had “an irrevocably closed mind, or at the very least a reasonable appearance that he had prejudged the key questions of fact and law at issue in the adjudication” by refusing to even consider the possibility that the company could mitigate the risk of injury.

Judge Jackson found that bias or the “reasonable appearance of such” by just one commissioner is enough to invalidate the entire appellate order and justifies remanding the matter to ensure Zen Magnet’s right to an impartial tribunal. As such, the Court vacated the Commission’s order, reinstated the ALJ’s decision, and remanded the matter to the Commission with directions to conduct the appellate review without the participation of Commissioner Adler and provide Zen Magnets with a fair and impartial tribunal. Following the decision, Zen Magnet’s founder, Shihan Qu, promised to continue working with the CPSC to develop magnet safety standards that are more effective and reasonable.

This case study provides a good lesson. Commissioners must be judicious in their public statements, and particularly careful not to give off the appearance that they have pre-judged the issues. Contact our office for assistance navigating the CPSC and other regulatory agencies.