It seems like a rare day when there is not a notice of a foreign-made defective product being recalled in the United States. In recent months, there have been more than 500 recalls of a variety of products including millions of toys coated with lead paint, thousands of illegal fireworks, contaminated meats, and tainted medicines.
The issue has become so enormous that the U.S. Government has created a website—www.recalls.gov—that provides information about recalls coordinated by a variety of agencies including the Consumer Product Safety Commission, the Food and Drug Administration, U.S. Department of Agriculture, the Environmental Protection Agency, and others.
It seems, too, that a common consumer complaint is that companies have not responded as quickly as they might have in the face of the need to conduct a recall. Companies importing products from foreign countries should now be aware that California is entering the regulatory mix.
Assembly Member Huffman has introduced California Assembly Bill 1860 that would govern the responsibility of the entire chain of distribution in dealing with an unsafe product.
Most notably, the bill would:
- Make it a misdemeanor for any company in the chain of distribution to sell or distribute a “misbranded hazardous substance or banned hazardous substance.”
- Make it illegal for any company in the chain of distribution to engage in any activity that involves an “unsafe product.” For the purposes of the Act, an unsafe product exists if:
- The product does not conform to state and federal laws and regulations setting forth standards for the product.
- The product has been recalled for any reason, or it has been recalled in cooperation with an agency of the federal government or the product's commercial dealer, manufacturer, importer, distributor, or wholesaler, and the recall has not been rescinded.
- A state or federal agency, or the product's commercial dealer, manufacturer, importer, distributor, or wholesaler, has issued a warning that the intended use of a specific product constitutes a safety hazard, and the warning has not been rescinded.
- Permit distribution of a recall product if it has been “retrofitted” in a manner approved by the agency initiating or regulating the recall.
- Once a recall or warning has been issued, the “commercial dealer, manufacturer, importer, distributor or wholesaler” must—within 24 hours after receiving the recall notice or warning:
- Contact “customers, other than end consumers” about the recall and include the recall notice.
- Place information about the recall on its website if one is maintained.
- Send a notice of the recall, if having sold the product directly to an “end consumer,” if the consumer has provided a shipping address or e-mail address at the time of sale.
- If the retailer receives notice of a recall or warning from someone in the chain of distribution:
- Remove the product or program registers to “ensure that the product cannot be sold” within three days of the notice.
- Remove the product from its website within three days of notice if the product is sold through the website.
- Notify the consumer of the recall of warning if an e-mail or shipping address was provided at the time of sale.
- Prominently post notice of the recall or warning again within three days of notice.
- If the retailer is not “a first seller,” it has five days from notice to complete the above.
As well-intentioned as the bill might be, it is reminiscent of what a student in a crisis management course might outline in response to a recall hypothetical.
The draft legislation is defective for a number of reasons, including its failure to take into account the breadth of products that it captures, the competing regulatory requirements for recalls of each category of product, and the impracticality posed to the entire chain of distribution creating logistical nightmares in coordination of the horizontal and vertical chains, as well as issues of preemption.
The proposed legislation in California contrasts import safety efforts at the federal level. A number of bills introduced in Congress deal with issues related to the notification of defective products and their removal from the chain of distribution. Notably, only one has a chance of being enacted into law. Senate Bill 2045 (and its House counterpart H.R. 4040) would require manufacturers to place tracking labels on all children’s products to ascertain source, date of manufacture, and similar information. It also applies restrictions to the amount of lead that children’s products may contain, and requires importers, retailers, distributors, and manufacturers to give the CPSC the names of all others in the chain of distribution for products, but only if they are asked. The bill does not create new criminal liability, but does increase existing civil and criminal penalties for those who sell recalled products.
In addition to the measures set forth in Senate Bill 2045, the President has established the Interagency Working Group on Import Safety—www.importsafety.gov—which is an initiative that incorporates efforts by a number of agencies to foster an environment that facilitates import safety, thereby reducing the likelihood that recalls become necessary in the first place. For example, the CSPC and its Chinese counterpart agency have reached a memorandum of understanding establishing a system whereby testing facilities in China can go through an accreditation process. Accredited facilities can then provide U.S. importers with a reliable source of assurances that the products they import are safe. Thus, there are import safety developments at the federal level that are less burdensome at the recall stage and which aim to partner with industry to reduce the need for a recall in a way that the proposed California law does not.
Reed Smith’s Government Relations, Product Liability, and Import Safety Teams are available to counsel clients on an appropriate response to the legislation. In addition, we provide a full range of import safety services, from advising on import regulations and safety standards to handling recall strategies and litigation.
