Last week, the U.S. Department of Justice, on behalf of the United States Consumer Product Safety Commission (CPSC), filed suit against Michaels Stores, Inc. (“Michaels”) in the Northern District of Texas. United States of America v. Michaels Stores, Inc. and Michaels Stores Procurement Co., Inc., Case No. 3:15-cv-1203. The CPSC alleges that Michaels did not meet CPSC reporting requirements and made a material misrepresentation to the CPSC concerning one of its products, a glass vase. Allegedly, the glass used to make the vase was as thin as that used in a lightbulb and could easily shatter when handled. The CPSC seeks both civil penalties and injunctive relief. While Michaels may well have defenses to the CPSC’s claims, this suit could be intended by the CPSC to serve as a warning to similarly situated companies deciding whether to report products containing potential hazards. It is also potentially instructive for companies deciding in the future whether it may be preferable for them to conclude a CPSC civil penalties investigation with a settlement instead of a lawsuit.

REPORTING STANDARD -

The Consumer Product Safety Act (CPSA) requires that manufacturers, distributors, and retailers “shall immediately inform” the CPSC of any potential substantial product safety hazards or unreasonable risks of serious injury associated with their products. According to the CPSC, “immediately” means “within 24 hours.” 16 C.F.R. § 1115.14(e).