CPSC Enforcement Action Against Michaels Highlights Importance of Proper Reporting

By Elliot Belilos The U.S. Consumer Product Safety Commission (CPSC) recently filed an action in federal court against Michaels Stores, Inc., seeking civil penalties for allegedly untimely reporting injuries from a vase sold in the stores and, notably, for allegedly falsely reporting the incidents as a retailer rather than as the manufacturer of the product.  According to the Complaint, Michaels misrepresented to the Agency the company’s role in the distribution chain, allowing another company, The Gerson Company (“Gerson”) to report as the manufacturer even though Michaels was the importer of record (and, as a result, the statutory “manufacturer”). CSPC asserts that Michaels engaged Gerson to contract to have the vase made overseas exclusively for Michaels, but that Michaels was the importer of record, a fact that CPSC alleges Michaels withheld from the Agency in its 15(b) report.  CPSC asserts that Michaels purposefully withheld that information so that Gerson would be the recalling entity, and that the recall would have been more successful had the more well known Michaels been the recalling entity. This case bears watching as it moves forward.  Certainly companies that are importers of record for products manufactured overseas need to understand that they are deemed to be the manufacturer of those products under the Consumer Product Safety Act (CPSA), and that any report to the CPSC should properly reflect their role in the distribution chain. Elliot Belilos represents companies on consumer product safety compliance issues, including reporting obligations to the CPSC and corrective actions, up to and including recalls.  Elliot can be reached at ebelilos@ofwlaw.com.

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