Williams-Sonoma Must Launch Reporting Compliance Program

Williams-Sonoma’s $987,500 Section 15 settlement with CPSC related to recalled hammock stands also includes the company’s agreement to create a compliance program aimed at avoiding future problems. This settlement follows that of Kolcraft, which two months ago agreed a similar program (PSL, 3/4/13, p. 1).

Williams-Sonoma must focus on recordkeeping and processing of incident reports; reporting timeliness and accuracy; and communication between those running the program and the company’s management to help ensure any potential recordkeeping and reporting deficiencies are avoided. The company also must give CPSC documentation of its efforts and agree to cooperate with the agency in assessing the program. Commissioners accepted the settlement 3-0.

However, Commissioner Nancy Nord echoed concerns she expressed in the Kolcraft case (PSL, 3/18/13, p. 1) but wrote that she voted to approve Williams-Sonoma’s agreement “in deference to the negotiation process and capable attorneys on both sides.” In the previous case, the commission added the compliance program requirements during the vote to approve it. In disagreement, Nord voted to approve the settlement as negotiated. Now, repeating her worry that the scope of the program goes beyond the firm’s actions and stating that using voluntary recalls “to justify mandates unrelated to the current problem” could undermine industry’s trust in the voluntary recalls process, she wrote:

“If we can demonstrate that requiring corporate compliance programs on a wide-spread basis is a good idea, then perhaps we can explore such a requirement. The right way to do this, though, is to use our rulemaking authority, to let the world know what we are considering and give the public the opportunity to weigh in. Trying to sneak a non-rule rule through the enforcement process is the essence of backdoor rulemaking. If the agency sees a need to require comprehensive compliance programs as redress for any rule violation, or even when there has been no rule violation, we should allow the sun to shine on CPSC policy and institute that requirement through appropriate process.”

Commissioner Robert Adler replied, asserting that Nord has no legal basis for her objections and that the agreement falls within CPSC’s authority. He also disagreed on her contentions about undermining the voluntary recall process. On “backdoor rulemaking” he wrote:

“[F]raming the Commission’s action as ‘backdoor rulemaking’ seems to suggest that something improper has occurred – which it has not. As any student of administrative law knows, regulatory agencies have great discretion to decide whether to implement policy through litigation or rulemaking – or both. Which tool(s) an agency selects depends on the situation before it. With respect to the recent settlements that the Commission has entered into, I believe the underlying facts strongly support the Commission’s actions. The fact that the Commission has sought similar language in the two settlements says little at this point about whether there has been a shift in agency policy in the future. Even if it did, there is nothing improper about implementing the policy in individual case settlements. That said, I do not rule out asking for such clauses in future non-civil penalty settlement agreements nor do I rule out future expansions of the Commission’s voluntary recall policies.”

Read the settlement at www.cpsc.gov/Global/Business-and-Manufacturing/Civil%20Penalties/2013/Williams-SonomaCivilPenalty.pdf.

The vote sheet and both statements are at www.cpsc.gov/Global/Newsroom/FOIA/Records-of-Commission-Action-and-Meeting-Minutes/2013/rcawilliams-sonoma.pdf.