Adler Opposes Settlement for ‘Minuscule…Fleeting’ Buckyballs Recall

Describing the settlement of CPSC’s administrative lawsuit on the recall of Buckyballs and Buckycubes as “unacceptable” and “bad precedent,” Acting Chairman Robert Adler dissented in the 2-1 commission vote that approved the deal. He focused his opposition on three issues.

First is what he called, “a five year deal good for only six months.” He said there is an “enormous disconnect” between the plan to have a website promoting the recall exist for five years and the restriction that refunds would be available for only six months.

Second, he deemed the up-to $370,000 payment to be much lower than the potential liability of a recall, noting that there were 2.5 million sets of the magnetic amusement devices sold at $25-$35 each. He wrote that he did not know if the amount was due to a “gloomy estimate” of recall success or a “state of poverty” on the part of Craig Zucker, the former CEO of now-closed Maxfield & Oberton. CPSC had sought for him to be personally liable for the recall.

Third, Adler said it was bad precedent to return any leftover money to Zucker after a year.

Commissioner Marietta Robinson wrote that her favorable vote involved her experience as a litigator and work on settlement agreements. She said she learned to assess settlements on how she would have evaluated the case prior to discovery. She explained that she thus looked at the agency’s original complaint and found, “This settlement accomplishes exactly what the Commission set out to do”: having a recall, stopping distribution and manufacture, publicizing the recall, and publicizing the dangers of the ingestion and aspiration injuries.

Commissioner Ann Marie Buerkle’s favorable vote came with an explanation of “an aspect of this case that I find troubling,” the authority and method of naming Zucker individually, This included whether there is need for a commission vote, which she noted never occurred. Her disagreement rested on rules that a CPSC chairman can approve an amended complaint only if it “do[es] not unduly broaden the issues in the proceedings or cause undue delay.”

She wrote, “Naming a new respondent and leveling a new charge would fall outside the scope of the original complaint approved by the Commission.” She relatedly disapproved of the amended complaint containing the phrase “issued by order of the Commission” without a vote. She suggested that if CPSC is to operate with the chairman able to amend complaints this way, there should be a vote to remove any ambiguity in its rules.

The settlement provides for a “recall trust” funded by an escrow account of $375,000. The first transfer to the trust is $100,000 with $75,000 aimed at a recall information and notice campaign and $25,000 for consumer refunds and administrative costs. The remaining $275,000 would be transferred in $25,000 increments as needed. After 12 months, any remaining funds in the escrow account would return to Zucker.

Zucker declared the settlement a victory, pointing out that the $375,000 is less than 1% of $57 million, a figure frequently used to estimate his potential liability in the agency’s suit to force a recall. There is debate over whether the $57 million would be an accurate representation of the costs of a full recall, which many deem likely to be much less.

Find a copy of the agreement at www.cpsc.gov//Global/ Recalls/Recall-Lawsuits/ConsentAgreementOrder050914.pdf.

The agency’s related suits against Zen Magnets and Star Networks, distributors of similar products, continue.

Related FoIA litigation against CPSC by Cause of Action also will continue. The group is seeking information it says could demonstrate that CPSC targeted Zucker in retaliation for his campaign to criticize the agency’s actions against him.