Children’s toys continue to capture the attention of federal regulators. The Consumer Product Safety Commission spent the summer issuing nearly 200 safety violations to domestic importers of children’s toys, almost all of which were manufactured in China. Just last month, the Department of Justice announced that it has secured a guilty plea from two individuals accused of importing more than 100,000 toys from China with a host of alleged safety problems, such as excessive lead levels, choking and ingestion hazards, and easily-accessible batteries. Not surprisingly, there is no shortage of plaintiffs’ firms soliciting clients in connection with “unsafe toy lawsuits.” These lawsuits can mean big money for plaintiffs and serious exposure for United States importers.
Aleo v. SLB Toys USA, Inc. et al, 995 N.E.2d 740 (Mass. 2013), is a reminder of the uphill, and at times arguably unfair, battle importers face when defending lawsuits involving foreign made toys that allegedly do not comply with US federal safety regulations. Aleo was a wrongful death case resulting from a tragic accident involving an inflatable swimming pool slide – The Banzai Falls In-Ground Pool Slide – imported from a vendor in China and sold by Toys R Us. While there was a dispute in the case about whether decedent slid head first down the slide or dove off the slide, she ultimately struck her head on the concrete deck of the swimming pool and died the next day. The jury found Toys R Us grossly negligent, awarding compensatory damages in the amount of $2,640,000 and punitive damages in the amount of $18 million, both of which were upheld on appeal. The size of the verdict, as well as the evidentiary rulings sanctioned by the appellate court, reveal just how difficult these cases can be to defend.
The evidence in Aleo established that Toys R Us commissioned an independent testing laboratory to test the slide prior to importing it from China. At trial, the laboratory produced certificates evidencing that the slide complied with US regulations regarding lead content, flammability, soluble heavy metals content, labeling, sharp points and edges and more. However, there was no evidence that the slide was tested for compliance with federal design requirements promulgated to reduce or eliminate the risk of death or injury associated with swimming pool slides. As a result, the trial court allowed plaintiffs to argue in opening and closing statements that the slide was “illegal” – a devastating and prejudicial ruling that one can only conclude may have proven outcome determinative.
Toys R Us was further hindered by several additional rulings that: (1) excluded as hearsay statements in a police report about potential misuse of the slide; (2) excluded as hearsay statements in the medical records about potential misuse of the slide; and (3) excluded as unreliable expert testimony that decedent could not have been injured by sliding down the slide, but rather must have been injured diving off the slide. As a result, Toys R Us was left with little admissible evidence to defend against the “illegal” slide.
Even though the appellate court determined that the issue of whether there was sufficient evidence of gross negligence was not preserved on appeal, the court in its discretion addressed it anyway. Incredibly, the appellate court reasoned that evidence of an indemnification agreement between Toys R Us and the Chinese vendor could have allowed the jury to find that Toys R Us was indifferent to the safety of the slide because it would not have been financially responsible for any defects. That indemnification agreements cannot, as a matter of public policy, indemnify against gross negligence appears to have been of no moment to the court. Indeed, the Court’s effort to twist a standard feature of global commercial transactions into something sinister is further evidence of the difficulty importers face in these emotionally charged cases involving foreign made toys. Unsurprisingly, the appellate court upheld the constitutionality of the amount of the punitive damages award, which was more than 7 times the compensatory award, underscoring the incredible exposure importers can face in “unsafe toy lawsuits.” For now, the issue does not appear to be going way – the spotlight remains on foreign made toys, both from a regulatory and litigation perspective.