Profit First, Consumer Safety Second?

Industry Tries to Remove 'Safety Net' of Accountability in Court

The Consumer Product Safety Commission is a small fish in a big pond. With its meager staff, and a budget that is just a fraction of what product manufacturers spend on advertising alone, CPSC is responsible for policing the safety of more than 15,000 products found on retailers’ shelves. Not surprisingly, its policing is hit and miss, as a number of recent unsafe product episodes amply demonstrate. But one backstop for CPSC’s failings has been that consumers harmed by unsafe products could bring suit against manufacturers. Now industry is taking aim at that as well, working to persuade the courts that CPSC regulations preempt state tort laws under which consumers can sue.

When it established CPSC in 1972, Congress gave the agency far-reaching authority to set product safety standards and to recall dangerous products. But Reagan era changes to the law left the agency at the mercy of the very industry it was supposed to regulate. The deregulation created a system in which CPSC is required to rely on industry-developed, voluntary safety standards to address product hazards, whenever such a standard is deemed to be an adequate way to address the standard and when industry is significantly in compliance. In addition, the deregulation weakened CPSC’s ability to order a recall of unsafe products, requiring the agency to give manufacturers administrative hearings to present their cases against a recall.

The result of this deregulation is that unsafe products are making a comeback on American store shelves. The list is long and by now familiar. It includes lead-laden toys, baby cribs that collapse on toddlers, and harmful chemicals in the plastic used for baby bottles.

Tort law can provide a safety net for consumers injured by dangerous products, giving them a chance to sue manufacturers to recover damages. But such lawsuits play other important roles, too – giving a hobbled CPSC access to useful information about safety failures, and discouraging manufacturers from dumping unsafe products on the marketplace.

For all those reasons, industry lawyers are attempting to use the doctrine of regulatory preemption to shield their clients from liability. And in a 2006 rulemaking, CPSC took their side. The rule dealt with flammability standards for mattresses, and in it, CPSC asserted that the regulation preempted state tort laws.

In their 2008 white paper, The Truth About Torts: Regulatory Preemption at the Consumer Product Safety Commission, CPR Member Scholars William Funk, Thomas McGarity, Nina Mendelson, Sidney Shapiro, David Vladeck, and Policy Analyst Matthew Shudtz dispute that argument. The Scholars examine the law of preemption in the consumer product safety context and show why the defense attorneys’ arguments fail.

The Scholars also go beyond legal analysis, examining the policy implications of regulatory preemption at CPSC and concluding that state tort law is too valuable to abandon. They note that the laws under which CPSC operates were written against a background of state tort law, precisely because Congress was (and remains) mindful of the protections tort law provides. The Scholars also point out that tort law is the only way that consumers injured by unsafe products can be compensated, because CPSC does not have authority to order a manufacturer to reimburse a consumer for harm caused. Finally, they observe, the courts have information-gathering powers that CPSC lacks, and lawsuits tend to pry loose information about manufacturers’ choices and processes that are valuable to regulators.

The Scholars conclude by recommending that CPSC abandon the practice of asserting preemption, call on Congress to consider legislation further clarifying its intentions on the subject, and urge the courts to constrain CPSC’s push for preemption.

• Read The Truth About Torts: Regulatory Preemption at the Consumer Product Safety Commission, published December 18, 2008.
• Read the news release about Regulatory Preemption at the Consumer Product Safety Commission, December 18, 2008.
• Learn more about CPR’s Truth About Torts series.