Last Thursday, April 6, the Department of Justice (DOJ) and Consumer Product Safety Commission (CPSC) sued SunSetter Products LP (SunSetter) in a Massachusetts federal court in a rare civil penalty lawsuit. SunSetter manufactures motorized retractable awnings for outdoor use. The Government alleges in its complaint that SunSetter knowingly failed to timely report under Section 15(b) of the Consumer Product Safety Act (CPSA) a hazardous defect related to vinyl covers for its retractable awnings. The complaint seeks permanent injunctive relief, including a third-party monitorship over the company, and civil penalties.
Specifically, the lawsuit claims that SunSetter knowingly failed to immediately report to the CPSC (as is required by law) that when a powered awning is activated while the cover is secured with bungee tie-downs, when the cover is removed, the awning can open unexpectedly with enough force to strike a consumer standing in the awning’s path. Should such an event occur, it could pose a fall hazard to consumers—particularly to those consumers standing on a ladder or stool. The complaint alleges that although SunSetter knew about the alleged defect as early as 2012, it did not report to the agency until October 2017—about one month after learning of the death of a 73 year-old man who was knocked off his ladder and over a balcony as a result of this issue. The Company ultimately recalled the awning in August 2019 offering consumers free breakaway safety clips and updated instructions.
A review of the complaint’s factual allegations points to multiple factors that likely led the Government to seek a civil penalty and file this lawsuit. Clearly, the CPSC alleges a failure to report over a multi-year period; the death of a senior citizen; and six additional injuries. But some of the additional, more nuanced facts set forth in the complaint likely contributed to the civil penalty investigation and subsequent lawsuit. For example, the Government also alleges that SunSetter performed “simulation testing” to recreate an incident about two years prior to reporting and determined that the awnings could unexpectedly extend upon removal of the cover. The complaint also alleges that SunSetter conducted a silent recall (without notifying the CPSC) by updating the product’s installation and use instructions; distributing them to approximately 350,000 consumers; and then issuing a unilateral “safety notice” without first reporting to or otherwise notifying the agency. This alleged conduct would weigh heavily in favor of pursuing a civil penalty.
The relief sought by the Government from the district court is also noteworthy. As to the injunctive relief sought, in addition to seeking SunSetter’s compliance with the CPSA’s reporting requirements and the establishment of a compliance function within the firm, the Government has also asked the court to appoint a third-party monitorship. We have seen the Government, including the CPSC and its sister safety agencies, seek the imposition of monitorships on firms more and more often to ensure future compliance—all on the firm’s dime. As for civil penalties, the Government asks that they be imposed pursuant to the CPSA though a particular dollar amount at this early juncture is not provided. It is always interesting when such civil penalty cases are filed to see if the court will look to the Spectrum Brands decision from October 2017—specifically the methodology used by the court to calculate the civil penalty—in the event that SunSetter is held liable for the underlying conduct and a penalty needs to be assessed. In the Spectrum Brands case, the civil penalty assessed on the firm by the district court ($1.9 million) was significantly lower than the amount typically demanded of the firm by the agency in settlement negotiations.
We expect SunSetter to defend the lawsuit vigorously and will update our readers of key developments. In the interim, this lawsuit seeking civil penalties for alleged violations of the CPSA shows yet another face of the agency’s compliance function and increased willingness to seek relief in federal court to hold firms accountable for alleged violations of the product safety laws.
For further information, please contact:
Matthew Cohen, Crowell & Moring
mcohen@crowell.com
