Court Imposes First Civil Penalty for Failing to Report a Product Hazard, California Firm Fined $300,000 After Waiting Months to Report Defective Juicers

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.