Court Imposes First Civil Penalty for Failing to Report a Product Hazard
California Firm Fined $300,000 After Waiting Months to Report Defective
Juicers
WASHINGTON, D.C. - The U.S. Consumer Product Safety Commission (CPSC)
announced today a court ruling imposing a $300,000 civil penalty against
a firm for not reporting a serious product hazard - the first time such
a penalty ever has been awarded by a court for a company's failure to
report. The ruling was made in a civil penalty action brought on CPSC's
behalf by the Department of Justice's Office of Consumer Litigation
against Mirama Enterprises Inc., which does business as Aroma Housewares
Co., in San Diego, Calif., a small importer and distributor of juice
extractors (juicers) and other household appliances.
"Whenever a company fails to report its knowledge of a hazardous
product to CPSC, it will pay a civil penalty that hurts," said CPSC
Acting Chairman Thomas Moore. "If the company refuses to settle, we'll
get the penalty in court."
U.S. District Court Judge Judith N. Keep, of the Southern District
of California, also stressed the deterrent value of civil penalties,
saying that there "has to be teeth to the [Consumer Product Safety]
Act." Judge Keep noted that not knowing about the statutory requirement,
not understanding the defect, or blaming the problem on consumer misuse
do not excuse a company from the requirement to report a hazardous
product.
Aroma received telephone calls and letters beginning early in 1998
that the juicers were breaking apart and injuring consumers. By the time
Aroma reported to CPSC in November 1998, the firm had at least 23
reports of incidents of juicers breaking apart, including reports of
injuries to at least 22 consumers. Five of these injuries required
stitches and one required surgery for lacerated arteries.
In January 2002, Judge Keep held the company liable before trial,
based on the existing evidence and legal arguments. The judge imposed
the fine following a separate three-day hearing on an appropriate
amount. She heard evidence on several factors including the severity of
the risk of injury, Aroma's ability to pay, and Aroma's behavior.
This was the first time ever that a federal court found that a
company had violated the reporting statute and ordered a civil penalty.
CPSC civil penalties previously collected from companies that failed to
report product hazards were paid as a result of voluntary settlements.
Aroma Housewares Co. conducted a joint recall with CPSC of about
40,000 of these juice extractors in June 1999. For more information on
the recall, call Aroma at (800) 276-6286 or go the press release.