Drawing on 3 years of top-notch programming, ACI’s 4th Annual Biosimilars program remains the industry’s leading legal and regulatory event. Check this interesting retrospective slide.

The tide continues to rise for Consumer Product Safety Commission (“CPSC”) civil penalties as the Commission announces a $987,000 penalty against Williams-Sonoma, Inc. and the company’s agreement to implement an extensive compliance program. On Monday, the CPSC announced that Williams-Sonoma has agreed to pay the civil penalty to resolve allegations that the company knowingly failed to report a defect in its Pottery Barn wooden hammocks. Williams-Sonoma also agreed to implement a comprehensive compliance program that arguably encompasses far more than the company’s alleged failure to report in a timely manner.

According to the settlement agreement, the wood in the hammock stands allegedly deteriorated over time, and Williams-Sonoma had received notice of a consumer injury resulting from the failure of the hammock as early as November 2004 and had received its eighth incident report by the end of October 2006. The company, however, did not report to the Commission until September 2008, when it knew of 45 incidents. In October 2008, Williams-Sonoma and the CPSC announced the recall of 30,000 hammock stands. Because the alleged failure to report occurred prior to September 2008, it was subject to the CPSC’s previous civil penalty cap of $1.825 million instead of the current cap of $15 million.

In addition to the civil penalty, Williams-Sonoma agreed: (1) to implement and maintain a comprehensive compliance program designed to ensure compliance with all safety statutes and regulations enforced by the Commission (not just the Consumer Product Safety Act, which was the subject of the penalty); and (2) to maintain and enforce a system of internal controls and procedures designed to ensure timely and accurate reporting to the CPSC. The comprehensive compliance program is the same as that imposed in the settlement agreement entered with Kolcraft Enterprises, Inc. earlier this year. In a statement issued in connection with the Williams-Sonoma settlement, Commissioner Nord expressed concern that, for a second time, the CPSC had insisted on a comprehensive compliance program absent evidence of widespread noncompliance and that “the compliance program language in [the] settlement is another step toward just such a de facto rule.” She also noted that using recalls to justify imposing mandates unrelated to the problem (in this case, timely reporting) discourages participation in the voluntary recall process.

Companies with products subject to the CPSC’s jurisdiction should note that mandated compliance programs appear to be the new normal for civil penalty agreements, regardless of a company’s history with the Commission as civil penalty demands continue to increase.

ACI has developed Consumer Products Regulation and Litigation as a safety net for companies struggling to balance regulatory compliance and litigation risks. 

When: Wednesday, June 26 to Thursday, June 27, 2013

Where: Chicago-Mart Plaza (Riverview) Hotel, Chicago, IL

For more information, and to register: click here

Industry News

Expert guest article from ADLawAccess.com, by Christie Grymes Thompson, posted on 02/06/13. Christie Grymes Thompson will be speaking ACI’s conference on Consumer Products.

The Consumer Product Safety Commission (“CPSC”) recently announced a settlement with Whalen Furniture Manufacturing, Inc. (d/b/a Bayside Furnishings), resolving allegations that the company failed to file a timely Section 15(b) Report and imposing a $725,000 civil penalty. The penalty demonstrates that the CPSC will be particularly aggressive when it goes to a company to seek information, even if the product meets certain safety standards.

Over a two-year period, Whalen sold approximately 7,700 children’s boat-shaped beds that contain a toy chest with a 20-pound lid in the “bow.” The CPSC alleges that, in November 2007, Whalen received notice that a toddler had died after the toy chest lid fell on his head, but did not file a full incident report with the CPSC until March 2008 and only at the staff’s request. Whalen denies the allegations and states that it believed the reported death did not represent a “legitimate incident” and that the beds passed toy chest safety tests completed by third-party testing agencies.

The $725,000 civil penalty continues the trend of the CPSC seeking higher civil penalties for untimely reports. All penalties imposed since October 2011 have been for over $400,000, and this penalty is the second largest since September 2011.

Ohio Revised Code 4213.542 does not permit the filing of a workers’ compensation claim in Ohio if a claimant or the dependents involved in a workers’ compensation claim have been granted an allowed claim in another state. In Smiley v. Professional Staff Mgt. Inc., 2013-Ohio-139, the claimant was involved in a motor vehicle accident while in the performance of her job duties. The claimant worked for a property management company as a regional manager. The claimant was responsible for overseeing and managing properties in both Ohio and Indiana. The claimant’s employer was located in Indiana. The claimant resided in Ohio. The employer filed a claim for the claimant in Indiana. This claim was allowed and both medical bills and compensation were paid in this claim.

Later, the claimant filed a claim in Ohio. This claim was denied by the Industrial Commission of Ohio pursuant to ORC 4123.542. The claimant appealed the denial of this claim to Common Pleas Court who ruled that this denial was proper. The claimant then appealed this decision to the Court of Appeals who upheld this decision. It did not agree that this statute was unconstitutional as argued by the claimant and upheld the decision of the lower court.

To date, all challenges to ORC 4123.542 have been struck down. This case provides the precedence that this statute also applies even when the claimant does not file the claim in another state and this filing results in an allowed claim in that state.

Come join your colleagues and clients at the nation’s premier wage and hour defense forum and hone the skills and strategies needed to keep pace with this rapidly changing area of law, defend against new and innovative claims, and prepare for emerging regulations and evolving enforcement priorities cliff

When: Thursday, May 30th to Friday, May 31st , 2013

Where:  One United Nations Plaza  New York, NY

For more information, and to register: click here

Industry Related News

Industry related article from atlantaemploymentlawattorney.com, by  Barrett & Farahany, LLP, posted on 04/15/2013

Wage and Hour Lawsuits Increased Last Year

Wage and hour lawsuits in California and throughout the country increased last year compared to 2011, according to a new report by the National Economic Research Associates. The report showed that employers in the U.S. paid 18 percent more in 2012 to settle wage and hour lawsuits filed by employees.

Most wage and hour lawsuits are filed under the Fair Labor Standards Act. FLSA provides employees with the right to receive proper payment for all hours worked; receive accurate payments for overtime according to state and federal guidelines and establishes meal or rest breaks during work shifts.

The report noted that in 2012, U.S. employers paid roughly $467 million in wage and hour settlements, and that 102 lawsuits filed last year were settled before they even went to trial. The average settlement award in 2012 was reported at $1,300 per plaintiff.

Wage and hour lawsuits should be taken very seriously by employers because they are legally obligated to pay employees for the hours they have worked. If they do not pay employees according to federal and state laws, employees can file a wage and hour lawsuit against the company to try and receive a monetary settlement for any unpaid wages.

Workers are protected by California employment laws as well as federal laws. Employees should understand their rights under California law, especially if they work overtime hours or are concerned they may not be receiving proper lunch or rest breaks during their shifts. Employment laws can be difficult to fully understand so it is beneficial to work with an employment law attorney when taking legal action against your employer, especially when filing a wage and hour lawsuit.

Governor Edmund G. Brown Jr. today proposed reforms to strengthen and restore the intent of Proposition 65, a three decade old law enacted to protect Californians from harmful chemicals, that has been abused by some unscrupulous lawyers driven by profit rather than public health.

The administration, through the California Environmental Protection Agency, will work closely with the Legislature and stakeholders to revamp Proposition 65 by ending frivolous “shake-down” lawsuits, improving how the public is warned about dangerous chemicals and strengthening the scientific basis for warning levels.

“Proposition 65 is a good law that’s helped many people, but it’s being abused by unscrupulous lawyers,” said Governor Brown. “This is an effort to improve the law so it can do what it was intended to do – protect Californians from harmful chemicals.”The package of reforms will build on legislative efforts already underway, including a proposal to limit frivolous lawsuits.“Proposition 65 serves a vital public interest. It provides the public with information about carcinogens and toxins that may be present in the products we use in our everyday lives. But for Prop 65 to be effective, this information must be clearly stated and we need to work with the Legislature to prevent groups from exploiting or misconstruing this information for their own personal gain,” said California EPA Secretary Matt Rodriquez.

Voters approved Proposition 65 in 1986. The measure requires the Governor to annually publish a list of chemicals known to the state to cause cancer or reproductive toxicity. If a business in California sells a product containing chemicals listed by the state in excess of safe levels, the business must provide a clear warning to the public. Similar provisions apply to California workplaces.

The administration, stakeholders and the Legislature will discuss reforms to:
• Cap or limit attorney’s fees in Proposition 65 cases.
• Require stronger demonstration by plaintiffs that they have information to support claims before litigation begins.
• Require greater disclosure of plaintiff’s information.
• Set limits on the amount of money in an enforcement case that can go into settlement funds in lieu of penalties.
• Provide the State with the ability to adjust the level at which Proposition 65 warnings are needed for chemicals that cause reproductive harm.
• Require more useful information to the public on what they are being exposed to and how they can protect themselves.

While Proposition 65 has motivated businesses to eliminate or reduce toxic chemicals in consumer products, it is also abused by some lawyers, who bring nuisance lawsuits to extract settlements from businesses with little or no benefit to the public or the environment.

Under provisions of Proposition 65, a private attorney can bring a complaint against a business if the business knowingly exposes consumers to state-noticed chemicals.
Since 2008, nearly 2,000 complaints have been filed by these “citizen enforcers.”

In one case, Consumer Defense Group Action brought 45 Proposition 65 notices of violation against banks based on second-hand smoke near bank entrances or ATMs. The group claimed that the banks had failed to post warnings, and alleged that the banks controlled the behavior of smokers in those areas. In responding that there was no basis for the claim and misrepresentations within the notices, the Attorney General warned that the group’s notices could “constitute unlawful business practices.”

Governor Brown’s proposed reform follows a strong record of pursuing regulatory changes to improve the state’s business climate. Since taking office in 2011, the Governor has approved legislation to improve the workers’ compensation system, the regulatory and fee structure for the timber industry, Americans with Disabilities Act (ADA) compliance requirements and the facility inspection process for the life sciences industry. In addition to these legislative actions, Brown has established the Governor’s Office of Business and Economic Development (GO-Biz) to help companies deal with regulatory “red tape.”

]]> http://www.americanconference.com/blog/index.php/governor-brown-proposes-to-reform-proposition-65/feed/ 0 http://www.americanconference.com/blog/index.php/consumer-products-regulation-litigation/ http://www.americanconference.com/blog/index.php/consumer-products-regulation-litigation/#comments Tue, 07 May 2013 20:59:21 +0000 mattgodson http://www.americanconference.com/blog/?p=5998

Essential strategies for overcoming regulatory and litigation hurdles in consumer products

When: Wednesday, June 26 to Thursday, June 27, 2013

Where: Chicago-Mart Plaza (Riverview) Hotel, Chicago, IL

For more information, and to register: click here

Industry News

Industry related article from Examiner.com, by Mary Schwager, posted on 05/07/13:

Williams-Sonoma fined for failure to report defects in Pottery Barn products

Williams-Sonoma: BUSTED! The retailer is dishing out nearly a million dollars to pay a civil penalty to the Feds for failing to report product safety defects it knew about. Companies are supposed to report any defects, product failures or people injured by defective merchandise to the US Consumer Product Safety Commission ASAP. Looks like the company didn’t follow that ASAP part.

The defective product is a hammock stand made by Pottery Barn, a company owned by Williams-Sonoma. Here’s a link to the original recall in case you have one in your backyard.

The CPSC put out a news release today saying:

Williams-Sonoma, Inc., of San Francisco, Calif., has agreed to pay a $987,500 civil penalty.

In addition to paying a monetary penalty, Williams-Sonoma has agreed to implement and maintain a compliance program designed to ensure compliance with the safety statutes and regulations enforced by the Commission. Williams-Sonoma has also agreed to maintain and enforce a system of internal controls and procedures designed to ensure that:

• Information required to be disclosed by the firm to the Commission is recorded, processed, and reported, in accordance with applicable law;

• All reporting made to the Commission is timely, truthful, complete, and accurate; and

• Prompt disclosure is made to Williams-Sonoma’s management of any significant deficiencies or material weaknesses in the design or operation of such internal controls that are reasonably likely to adversely affect, in any material respect, the company’s ability to report to the Commission.

Williams-Sonoma further agreed to provide written documentation of such improvements, processes, and controls, upon request of CPSC staff; to cooperate fully and truthfully with CPSC staff; and to make available all information, materials, and personnel deemed necessary to staff to evaluate the company’s compliance with the terms of the agreement.

The settlement resolves CPSC staff’s charges that the firm knowingly failed to report to CPSC immediately, as required by federal law, a defect involving Pottery Barn wooden hammock stands. Williams-Sonoma imported the wooden hammock stands between March 2003 and July 2008, and distributed them exclusively through Pottery Barn and PBteen catalogs and websites, and Pottery Barn Outlet stores. The hammock stands were sold nationwide for approximately $300.

CPSC staff alleged that when used outdoors, the wood in the hammock stands can deteriorate over time and break. Because the deterioration was occurring inside the metal bracket and was hidden from view, there was sometimes no outward indication to consumers that the wood was rotting until a consumer sat in the hammock and the beams broke. This posed fall and laceration hazards to consumers.

Williams-Sonoma did not file its full report with CPSC until September 11, 2008. On October 1, 2008, Williams-Sonoma and CPSC announced the recall of 30,000 wooden hammock stands. By that time, Williams-Sonoma was aware of 45 incidents involving the hammocks, including 12 reports of injuries requiring medical attention for lacerations, neck and back pain, bruising, and one incident involving fractured ribs.

Federal law requires manufacturers, distributors, and retailers to report to CPSC immediately (within 24 hours) after obtaining information reasonably supporting the conclusion that a product contains a defect which could create a substantial product hazard, creates an unreasonable risk of serious injury or death, or fails to comply with any consumer product safety rule or any other rule, regulation, standard, or ban enforced by CPSC.

In an interpretation letter released on April 5, 2013, OSHA stated that employees in a non-union facility may select a non-employee who is affiliated with a union to act as their representative during OSHA’s walk-around inspection of the employer’s worksite. OSHA issued the letter in response to a question from a health and safety specialist of the United Steelworkers Union.

By way of background, OSHA regulations provide that employees may designate a representative to accompany the OSHA compliance officer during the physical inspection of any workplace. The regulations recognize that in most cases the representative will be an employee of the employer. However, the compliance officer also has authority to permit a non-employee third party to be present during the inspection whenever it is “reasonably necessary to the conduct of an effective and thorough physical inspection of the workplace.”

The new OSHA interpretation letter specifically recognizes that non-union employees may select a union representative to accompany the compliance officer during the inspection. OSHA reasoned that union representatives could make an important contribution to the inspection through their experience evaluating similar working conditions in different plants. OSHA also noted that workers in some situations may feel uncomfortable talking to a compliance officer without “the trusted presence of a representative of their choosing.” OSHA even went so far as to rescind an older interpretation letter that may have conflicted with its new position on this issue.

Clearly, non-union employers should be concerned about this policy, which may encourage union representatives to use OSHA as an organizing tool. The policy creates an opportunity for union representatives to make contact with non-union employees at their workplace and promote the benefits of organizing and collective bargaining. So, what can non-union employers do to keep employees from selecting a union representative to speak for them during an OSHA inspection? The safest course is to encourage employees to become actively involved in workplace safety issues. For example, employers can create a safety committee and invite employees to join the committee. Employees who are already involved in safety issues will be less likely to reach out to a union representative when an OSHA inspection occurs.

A legal battle is anticipated regarding OSHA’s new policy. In the meantime, Roetzel will keep you updated on new developments in this important issue.

]]> http://www.americanconference.com/blog/index.php/osha-states-that-union-representatives-can-participate-in-inspections-of-non-union-workplace/feed/ 0 http://www.americanconference.com/blog/index.php/seemingly-harmless-provision-in-a-severance-agreement-can-place-your-non-compete-into-jeopardy/ http://www.americanconference.com/blog/index.php/seemingly-harmless-provision-in-a-severance-agreement-can-place-your-non-compete-into-jeopardy/#comments Fri, 12 Apr 2013 19:19:57 +0000 mattgodson http://www.americanconference.com/blog/?p=5866 Expert Article by Emily Wilcheck

A recent case out of the Sixth District Court of Appeals in Ohio demonstrates how easily a few words (or the absence of a few words) in a severance or separation agreement can place a carefully crafted non-competition agreement into jeopardy. In Try Hours v. Douville, 2013-Ohio-53, an employer found itself battling a terminated employee to enforce a covenant not to compete that the employee argued was superseded by an integration clause within the employee’s separation agreement. Although the employer ultimately prevailed in this particular instance, the case demonstrates how easily an employer could unwittingly terminate an otherwise binding non-competition clause in the course of severing an employment relationship.

In the Douville case, the employer was involved in the expedited freight industry. Due to the highly competitive nature of this industry, the employer required employees to agree to a non-competition clause that was included within their employment agreements. The plaintiff in Douville signed an employment agreement containing such a clause agreeing not to engage directly or indirectly in any position with a competitor for a period of one year following the termination of his employment.

The employer in Douville later terminated the plaintiff on the basis that the plaintiff was not a good fit for the organization. The parties executed a separation agreement, which entitled the plaintiff to certain severance payments in exchange for a release of claims. The separation agreement included the following integration clause:

“The parties agree that this Agreement constitutes the entire Agreement between the parties as to the subject matter of this Agreement and no prior or subsequent oral Agreements, representations, or understandings shall be binding upon the parties and such shall be null and void and shall have no effect.”

The separation agreement did not include any reference to the non-competition clause from the employment agreement.

Shortly after his termination, the Douville plaintiff began working for a competitor believing that his separation agreement had superseded the employment agreement and voided the covenant not to compete. The former employer sued, seeking to enforce the one-year covenant not to compete. The Court narrowly found for the employer, holding that the reference to “the subject matter of this Agreement” within the integration clause limited the clause to the benefits the employer was willing to provide to the plaintiff in exchange for his release of any and all claims he may have had against the employer stemming from his employment. Additionally, the Court found that the clause only excluded prior or subsequent “oral Agreements, representations or understanding.”

Without these two limiting phrases, the result could have been entirely different for this employer. This case is a reminder to employers to carefully review the provisions of any such integration clauses in your separation or severance agreements to ensure that you are not inadvertently voiding otherwise binding non-competition and non-solicitation agreements.

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