Traps for the Unwary: California’s Prop 65

In a previous blog post in our ongoing series about legal and regulatory challenges specific to the multichannel merchant, I indicated that I would next discuss quirky California laws that can create traps for unwary merchants. The first of these is one of the many voter-initiated statutes enacted by referendum in California. Popularly known as Prop 65, the Safe Drinking Water and Toxic Enforcement Act of 1986 requires the State of California to publish a list of chemicals known to cause cancer or birth defects or other reproductive harm. This list, which must be updated at least once a year, has grown to include approximately 800 chemicals since it was first published in 1987.

Many of the chemicals on the list are present in common, every day products, and would require massive doses every day for a lifetime to produce an observable effect. For example, acrylamide is a chemical found in many common food products such as potato chips, breads, coffee, tomato sauce, breakfast cereal, and fruit preserves.  See http://www.consumerfreedom.com/2009/11/4024-lawyer-math-1-1-prop-65.  But an individual would have to consume massive quantities of any of these foods every day to create any kind of appreciably increased cancer risk.  See id.  Nevertheless, Proposition  65 requires businesses to notify Californians about the presence of acrymalide and hundreds of other chemicals in the products they purchase.

Report, Recall, or Both: Do You Know Your Obligations Under the Consumer Product Safety Act?

Manufacturers, importers, distributors, and retailers of consumer products have a legal obligation to report hazardous or dangerous products to the Consumer Product Safety Commission ("CPSC"). Failing to do so may result not only in large civil penalties, but also criminal prosecution. But, there are many common myths and misconceptions about this reporting requirement and how it relates to the separate question of whether a product recall ought to be commenced. Here are just a few:

Myth One: “I only need to report to the CPSC if someone is injured by a product I sell.”

In truth, a reporting obligation can arise if not a single consumer has been injured. The law requires the reporting of “unreasonably hazardous or dangerous” products that pose a risk to consumers—even if the risk of harm has never been realized. The possibility of harm, alone, triggers a reporting obligation.

Myth Two: “I can avoid the need to report simply by sending a communication to my customers telling them how to avoid being injured by the product.”

Are You Selling "Children's Products"?

When Congress passed the Consumer Product Safety Improvement Act (the “CPSIA”) in 2008, it included a new definition of what constitutes a "children's product." Along with that new definition came a host of onerous testing, certification, and product design/composition standards. If the products you're selling fall into this category, your legal obligations expand dramatically to include third-party certification, substrate testing for lead, prohibitions on phthalates, product tracking labels, and more.  And so, the question of "What is a children's product?" becomes extraordinarily consequential for wholesalers, retailers, "private labelers," and importers.

As is traditionally the case with "age grading" of products, the CPSIA's definition generalizes things to the point of providing very little practical guidance on many products.  Under the new regime, a "children's product" is "a consumer product designed or intended primarily for children 12 years of age and under." While it is one thing to say roughly which products are intended for children who are two, or four, or six, or even eight, products of interest to many twelve-year-olds also appeal to older teens and even adults. Is a product primarily intended for twelve-year-olds if it broadly appeals to teenagers, for example? How closely must you parse the demographics of potential customers to figure out whether your audience is likely to be "primarily" twelve-year-olds? Coupling this with analysis of design aims and product "intentions" makes matters even more complex.

Into this analytical quagmire, the Consumer Product Safety Commission (“CPSC”) has now dropped 50 pages of industry guidance, including a brand new proposed regulation.  Once you dive in, it doesn't take long to realize that some of the products you thought were children's items may not be. Worse yet, some products that you reasonably might have concluded were "not designed or primarily intended for children 12 years" or younger may well be viewed very differently by the CPSC.  In other words, the CPSC has raised as many questions as it answers.