CPSC’s Sec 15 Suit against Michaels Rests on Importer versus Retailer Distinction

Much of CPSC’s April 21 Section 15 suit against Michaels Stores hinges on whether the retail chain was an importer and thus bore higher reporting duties than as a distributor or retailer.

The suit alleges that the company’s 2010 report about shattering glass vases, besides being due in 2008, complied with only 16 CFR 1115.13(b), which requires distributors and retailers to submit just descriptions of defects. However, asserts the agency, Michaels operated as an importer, so it had to submit all additional information detailed in sections (c) and (d) on initial and full reports. The suit refers to Michaels as a “manufacturer” because importers meet the CPSA definition.

The suit alleges that from 2006 to 2010, The Gerson Company of Kansas procured the Chinese-made vases for Michaels. However, the items shipped directly from the factory to Michaels’ agents in China and then to its U.S. distribution centers, according to the complaint, which also notes that Michaels was the importer of record.

CPSC further claims that Michaels sent safety complaints to Gerson and represented to CPSC that it purchased the vases from Gerson without fully disclosing its role. Thus, says CPSC, its recall negotiation was with Gerson, and Michaels played only a secondary role in the 2010 recall, including not being required to accept returns or assume legal responsibility.

The complaint asks the court to impose a recordkeeping program aimed at Section 15 compliance in addition to penalties.

The suit also includes the typical late-reporting allegations of most Section 15 cases. In this instance, CPSC says Michaels knew of incidents in 2008 but did not report until 2010.

The company has issued a statement that its actions were prompt and appropriate and that it is committed to safety.

The complaint is at www.justice.gov/sites/default/files/opa/press-releases/attachments/2015/04/21/michaels_complaint.pdf.