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Consumer Products and Retail Navigator
July 9, 2024

Leachco Wins Round One: Administrative Law Judge Hands CPSC Complaint Counsel Loss in Rare Litigated Recall Matter

Consumer Products and Retail Navigator

In a rare litigated recall case initiated by the U.S. Consumer Product Safety Commission (CPSC or the Commission) — indeed, only the third case in the last two decades to reach a merits decision by an administrative law judge (ALJ) — the presiding ALJ has ruled that CPSC Complaint Counsel did not prove by a preponderance of the evidence that the product at issue presents a substantial product hazard as defined by the Consumer Product Safety Act (CPSA), and that a recall is therefore warranted. While Complaint Counsel may appeal this initial win for the litigating company — Leachco, Inc. (Leachco) — the result may nevertheless prompt some companies to consider more seriously the option of rejecting recall requests from the agency when warranted by the facts and a careful analysis of the costs, benefits, and risks in either path.

CPSC’s Mandatory Recall Authority and Process

Under Section 15(b)(3) of the CPSA (codified as amended at 15 U.S.C. § 2064(b)(3)), companies must “immediately inform the Commission” where they have “information which reasonably supports the conclusion” that their product “contains a defect which could create a substantial product hazard [(SPH)].” (Section 15(b) provides three other reporting triggers, such as failure to comply with a mandatory CPSC standard, but these were not at issue in the Leachco matter.) Section 15(a)(2) defines an SPH, in pertinent part, as “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.”

In practice, virtually all CPSC recalls are “voluntary” recalls, meaning the company proposes to conduct a recall of the product when notifying CPSC under Section 15 or after the notification, or agrees to conduct a recall upon request of the CPSC staff.

However, CPSC has authority to mandate that a company recall a consumer product that presents a substantial product hazard. More specifically, CPSC can order any manufacturer, distributor, or retailer of a product found to present an SPH to cease distribution, notify the public of the hazard, and provide affected consumers with an approved remedy in the form of either a refund, repair, or replacement if doing so would be in the public interest.1 Further, even before doing so, CPSC can issue a unilateral press release warning consumers to stop using the product.

The process to order a recall starts with administrative litigaton conducted pursuant to Section 554 of the Administrative Procedure Act (APA).2 Such administrative litigation begins when the Commission votes to authorize CPSC’s compliance attorneys, known as Complaint Counsel, to file a Complaint. The Commission is then firewalled from the first stage of the process, which is overseen by a Presiding Officer (generally an ALJ). The ALJ oversees a litigation process and at the conclusion of which the ALJ issues an “Initial Decision.”

Any party — including both Complaint Counsel and the Respondent company — can appeal the ALJ’s Initial Decision. That appeal is then heard by the Commission — the body that voted to issue the Complaint in the first place. After considering the appeal, the Commission then issues a Final Decision. If that Final Decision is adverse to a Respondent (i.e., the party being required to conduct a recall), the APA provides that party a right to judicial review in federal district court.

This administrative litigation process can take a long time. The most recent administrative complaint litigated to completion — against certain magnet products sold by Zen Magnets, LLC — began with a Complaint filed in August of 2012 and did not conclude until the issuance of a mandatory recall announcement in August of 2021, a nine-year span.

Leachco Background

In January 2022, CPSC issued a unilateral press release warning consumers to stop using Leachco’s “Podster” infant lounging pillows due to an alleged suffocation hazard. In February 2022, the Commission voted 3-1 to authorize the filing of an administrative Complaint against Leachco. The Complaint alleged that the Podster lounging pillows present a substantial product hazard, claiming that it is foreseeable that caregivers would allow infants to sleep unattended on the pillows and that their design can allow an infant to move into a position in which the infant’s breathing is obstructed, potentially leading to suffocation.3 The Complaint alleged the Podster had been associated with two fatalities.4 The Complaint advanced this theory of defect even while noting that the Podster “is not and never has been advertised” for infant sleep5 and contains several warnings, including “warnings that the product should not be used for sleep”6 and “warnings and instructions that use of the product in contravention to these warnings could result in serious injury or death.”7
In pertinent part, Leachco’s Answer denied the Complaint’s allegations of defect and substantial product hazard.8 The ALJ held a hearing on August 7-10, 2023, and Complaint Counsel and Leachco each submitted their post-hearing briefs on September 29, 2023.

ALJ Order

In a 66-page Opinion, ALJ Michael Young (detailed from the Federal Mine Safety and Health Review Commission) concluded that Complaint Counsel had not met its burden “to prove that a risk exists and that a defect in the Podster products ‘creates’ that risk,”9 nor shown “proof of a product defect and a demonstrated potential for danger to the public caused by that defect.”10 While acknowledging testimony from a variety of experts on CPSC’s behalf, which “project a valid hypothetical,” the ALJ held that Complaint Counsel “has failed to address the real-world, experiential data invalidating its theories about the existence of a defect or a substantial product hazard.”11

In coming to this conclusion, the ALJ walked through several considerations that he held were insufficient to support a conclusion that the Podster presents an SPH:

  • Because the Podster is not intended for sleep (as the parties agreed), and consumers are warned to always supervise an infant in the product, the ALJ found it important to distinguish the Podster from the class of products referred to as “infant sleep products.” Therefore, it could not be said that the Podster was “part of a class of products that are categorically defective.”12 Importantly, the ALJ pointed out that the characteristics of infant sleep products that are considered dangerous, including features such as an inclined positions or surrounding padding, are also present in swings and car seats, which are not infant sleep products and were not accused of presenting an SPH. The ALJ therefore found that Complaint Counsel failed to establish that a defect existed with the Podster’s design when compared with similar products.
  • No evidence was presented that a safer alternative design or a safer infant lounger product exists. The ALJ opined that this fact alone might be “sufficient to refute the existence of a design defect” as Complaint Counsel’s experts did not believe the Podster could be made safer and there was no effective way to warn against its dangers, which the ALJ concluded went against the common understanding of “defect” and “design defect.”13
  • Complaint Counsel failed to address the utility of the Podster when Leachco has sold 180,000 units of the product since 2009 for between $49-$89 and the product is a “useful aid for busy caregivers.”14 The ALJ found this to be a “crippling weakness” in Complaint Counsel’s case.15
  • Complaint Counsel and its expert witnesses failed to consider misuse of the Podster, i.e., that caregivers were intentionally using the Podster as a sleep product contrary to its intended use and its warning labels. Significantly, the ALJ found that consumer misuse “must play a role” in the product hazard determination because no injuries had ever been reported when the Podster was used as intended.16
  • As conceded in the Complaint, Leachco warned consumers against using the Podster as an infant sleep product or with an unsupervised infant. Again, the ALJ cited the absence of record evidence that an infant had ever been injured when the Podster was used as intended and in compliance with its instructions and warnings.
  • While the ALJ agreed that infants are a vulnerable population, the ALJ also concluded that the data presented (as ultimately reflected in the record following discovery, three incidents over 12 years) did not support the assertion that misuse of the Podster was as prevalent as alleged. Ultimately, the ALJ found that Complaint Counsel had put forward a “hypothesis” of how the Podster could create a substantial risk of injury to the public by harming infants, but the real-world evidence did not support the conclusion that the misuse of the Podster was widespread and therefore presented an unacceptable risk of serious injury or death.17
  • Removing the Podster from the market would not likely significantly address the harm targeted by the CPSC because infant sleep is a “complex problem” and, even if the Podster were not available on the market, caregivers would likely find another product to use in a similarly risky manner.18
  • The CPSC’s role is to protect the public from unreasonable risk of injury, “not to eradicate any risk of injury to any member of the population.”19

The ALJ further found Complaint Counsel’s argument lacking because “[t]he case against the Podster does not reflect a weighing of interests, costs, or alternative approaches that would seem to be required where consumer misuse is the primary factor (and perhaps the only relevant factor) to which any injuries involving the Podster have been attributed.”20 The ALJ’s rationale echoes the perhaps prescient comments of then-Commissioner Dana Baiocco, who voted in 2022 to direct CPSC staff to “[f]ile the Complaint once staff has appropriate data to support the action” as, in her view, “[p]leading that the product is not marketed for sleep, that parents do not use the product as intended and in direction [sic] contravention of the warnings, calls into question the legal sufficiency of the Complaint.”

Next Steps for Leachco, CPSC

As discussed above, the CPSA and CPSC’s implementing rules authorize Complaint Counsel to appeal ALJ Young’s Initial Decision to the Commission. If Complaint Counsel appealed and the Commission’s Final Decision were to reverse the ALJ’s Initial Decision and order Leachco to conduct a recall, the company could then seek judicial review. It is too early to tell which, if any, of these steps will occur, but CPSC-regulated companies will likely be watching the matter keenly.

For questions about compliance with the Consumer Product Safety Act or with other product safety matters, please reach out to the authors or any of their colleagues on Arnold & Porter’s Consumer Product Safety team.

© Arnold & Porter Kaye Scholer LLP 2024 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

  1. CPSA § 15(c) and (d)).

  2. CPSA § 15(f).

  3. ¶¶ 50-52.

  4. ¶¶ 35-37.

  5. ¶ 14.

  6. ¶ 15.

  7. ¶ 19.

  8. ¶¶ 47-51.

  9. p. 64, emphasis in original.

  10. Id., emphasis in original.

  11. p. 64.

  12. p. 42.

  13. p. 43.

  14. p. 44.

  15. p. 56.

  16. p. 48.

  17. p. 58.

  18. p. 62.

  19. p.62.

  20. p. 64.