As we previously reported, Kelly Faglioni, a partner in our Product Liability group, authored an article identifying and discussing approaches for managing risk that arises from complexity and ambiguity in product regulatory schemes including approaches to the question: “To recall or not to recall?”
Parts 1 and 2 of the article illustrate that regulatory complexity makes it tough to know the right questions to ask, much less to get straight answers, and ambiguity prevents accurate predictions for purposes of setting accounting reserves. Nevertheless, a business that wishes to do business must project and plan in the face of complexity and uncertainty. That typically means budgeting for potential risk scenarios, planning for recall scenarios and in some cases, grappling with the ultimate question whether to recall or not to recall your product.
Remember that as an initial matter, your product group asked legal for input on the product regulatory and risk landscape. How will you give it to them?
As we previously reported, Kelly Faglioni, a partner in our Product Liability group, authored an article highlighting the sources of ambiguity in the law that governs products in the U.S. and discusses that ambiguity as a purposeful tool in the regulatory tool belt. This post discusses Part 2 of her article.
Welcome to the regulators’ world where ambiguity is likely a purposeful tool in the regulatory tool belt. Consider the question of whether the Consumer Product Safety Commission (“CPSC”) has jurisdiction relative to hard hats and work boots to illustrate the sources of ambiguity in the law that governs products in the U.S.
Starting with statutory law, a manufacturer, distributor or retailer of a “consumer product” or “other product or substance over which the [CPSC] has jurisdiction under any other Act enforced by the [CPSC]” that has been “distributed in commerce” must file a report with the CPSC when it “obtains information which reasonably supports the conclusion that such product” (1) fails to comply with an applicable consumer product safety rule or with a voluntary consumer product safety standard upon which the CPSC has relied; (2) fails to comply with any other rule, regulation, standard or ban under this chapter or any other Act enforced by the CPSC; (3) contains a defect which could create a substantial product hazard; or (4) creates an unreasonable risk of serious injury or death. For any of these four reporting requirements to apply to a hard hat or work boots, they must be “consumer products.” Applying the definition of “consumer products” has challenged the manufacturing industry since the CPSA’s inception in 1972. Despite numerous advisory opinions, administrative decisions, and cases addressing the issue, the definition – and CPSC’s resultant jurisdiction over certain products – continues to contain some likely intentional gray area.