A federal court in Madison, Wisconsin, ordered Spectrum Brands Inc., a large consumer products distributor, to pay $1.9 million in civil penalties for failing to timely report dangerously defective Black & Decker SpaceMaker coffee carafes and for continuing to distribute the carafes following a recall, the Department of Justice announced today.
The civil penalty and a related permanent injunction, imposed by U.S. District Judge William M. Conley, follows a 2016 court ruling that Spectrum and its former subsidiary, Applica Consumer Products Inc., violated the Consumer Product Safety Act by waiting years to inform the Consumer Product Safety Commission (CPSC) of customer reports about handles that suddenly broke or separated from carafes of hot coffee. The court noted that between 2008 and 2012, Spectrum received approximately 1,600 reports of broken SpaceMaker carafe handles, with about 66 consumers referencing burns from spilled coffee, and three others referencing cuts from broken carafe glass. The court noted that one consumer reported to the company in 2009 that she sought medical attention after hot coffee burned her stomach.
“When a company learns that one of its products could seriously injure customers, it must immediately report that information to the CPSC,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Waiting until someone is hurt before taking action is irresponsible and illegal. We will continue to enforce safety laws that protect consumers from unreasonable harm.”
The Consumer Product Safety Act (CPSA) requires manufacturers, retailers, and distributors of consumer products to report “immediately” to the CPSC information that reasonably supports the conclusion a product contains a defect which could create a substantial product hazard or creates an unreasonable risk of serious injury. In its summary judgment ruling, the court held that Spectrum knowingly failed to report information it was required to report to the CPSC. The court found that by May 2009, the company knew of 60 reports of broken handles and four reports of burns, and had identified a similar cause of the breakages in two separately returned carafes. While the company implemented a design change in 2009 to remedy the handle issue, it continued to sell the old carafes through the end of that year. By June 2010, the court found, Spectrum knew of 714 complaints regarding carafe-handle failures.
As set out in the court orders, Spectrum did not report the carafe-handle incidents to the CPSC until April 2012, after the company was served with a private class action complaint alleging the carafes were defectively designed. Spectrum subsequently recalled the coffeemakers in consultation with the CPSC. As the company acknowledged, however, it distributed more than 600 additional carafes after the recall announcement. The United States filed suit against Spectrum in 2015 in the Western District of Wisconsin over the company’s failure to timely report the carafe hazard and the company’s sales of recalled products.
“I am pleased with the court’s order for a permanent injunction and a civil penalty against Spectrum Brands Inc.,” said CPSC Acting Chairman Ann Marie Buerkle. “Companies who fail to immediately report hazards with their products to CPSC put consumers at risk. Consumer safety should be the top priority for companies making consumer products.”
As detailed in the court’s summary judgment ruling, Applica and Spectrum received reports over the years from customers who said that they believed the carafe handle was dangerous. Numerous consumers told the company that spills related to broken handles caused burns to themselves or to family members. Other consumers reported near misses.
Along with the $1,936,675 in civil penalties, the court entered a permanent injunction against the company. The court ordered Spectrum to maintain systems and internal controls to ensure future compliance with the CPSA. The court further ordered Spectrum to provide copies of its rulings to officers and managers at the company. Under the terms of the injunction, Spectrum must report back to the court in six months to verify the company has made improvements to avoid repeating the CPSA violations.
The government was represented in the case by former Trial Attorney Thomas Ross and Assistant Director Alan Phelps of the Civil Division’s Consumer Protection Branch, with the assistance of Harriet Kerwin of the CPSC Office of the General Counsel and the U.S. Attorney’s Office for the Western District of Wisconsin.
Additional information about the Consumer Protection Branch and its enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch. For more information about the Consumer Product Safety Commission, visit its website at https://www.cpsc.gov.