Six years into its battle, tiny-magnet maker Zen Magnets has won another key round against the Consumer Product Safety Commission in court, persuading a Colorado federal court to reverse a Commission order ordering a halt to its sales [Nancy Nord] A larger and at the time better known maker of tiny magnet sets, Buckyballs, folded under the Commission’s pressure. More on Zen Magnets’ fight here and here.
Last year the Tenth Circuit struck down the CPSC’s ban on tiny desk magnet sets. Pursuing the legal consequences of an earlier recall order, however, the CPSC has required the destruction of $40,000 worth of rare-earth magnets from the inventory of defiant manufacturer Zen Magnets. You can watch the resulting “funeral” at my new Cato post.
A Tenth Circuit panel has sent the Consumer Product Safety Commission back to the drawing board in its attempt to ban tiny magnet sets intended for adult use as a desk toy or creative outlet accessory. It ruled that the commission had not conducted an adequate cost-benefit analysis of the ban in line with the requirements of its enabling statute. We covered the CPSC’s legal vendetta against the defiant maker of BuckyBalls; the last surviving company to sell the product is Zen Magnets, which now is allowed to resume operations while the Commission goes back to the drawing board, assuming it decides to do so. [Nancy Nord] And: Nov. 29 statement from Zen Magnets; Abby Schachter, Weekly Standard; Brian Doherty, Reason.
A year ago, I wrote: “It’s rare for a regulated company to mount open and disrespectful resistance to a federal regulatory agency, but that’s what the maker of BuckyBalls, the popular desktop magnetic toy, is doing in response to the Consumer Product Safety Commission’s effort to ban its product.” The maker in question had devised cheeky, sarcastic ads asking why other products with injurious potential (coconuts, hot dogs) weren’t banned on the CPSC’s logic.
One reason it’s rare to mount open and disrespectful resistance to a federal agency is that agencies have so many ways to make businesspeople’s lives unhappy. This spring, breaking new legal ground, the CPSC reached out and named CEO Craig Zucker personally as a respondent in its recall proceeding. According to a Gibson Dunn commentary,
For the first time, the CPSC is pursuing individual and personal liability against an executive for a company’s alleged violations of the Consumer Product Safety Act. Although it remains to be seen whether the CPSC will adopt this approach in other cases, at minimum, this demonstrates just how far the CPSC is willing to push the envelope.
It’s just the latest example, the law firm says, of a pattern in which “the CPSC has aggressively enforced its governing statute and regulations, repeatedly pushing the limits of its expanded authority.”
As Morrison & Foerster says in its client alert:
Despite [Buckyballs maker] Maxfield and Oberton’s aggressive publicity campaign against the CPSC, the CPSC continued to pursue its complaint. Maxfield and Oberton folded and the company dissolved in December 2012, making the complaint moot. In February 2013, the CPSC moved for leave to file a second amended complaint naming the former CEO, Craig Zucker, both individually and as an officer of Maxfield and Oberton. The CPSC requested the same relief against Zucker as it had against Maxfield and Oberton—i.e., recall, refund, and compliance reports.
While Zucker has “argued that he could not be liable as he did not personally manufacture, distribute, or sell the product at issue,” CPSC has invoked something called the responsible corporate officer doctrine, approved by the Supreme Court in U.S. v. Dotterweich (1943) and U.S. v. Park (1975), which “permits responsible corporate officers to be held liable for the actions of the corporation, even in the absence of personal guilt on the part of the individual.”
P.S. Zen Magnets LLC of Denver, which markets a similar product which it says has not been linked to injury reports, and which has refused to withdraw its product from the market despite CPSC’s demands, is calling attention to a poll that it says shows the U.S. public overwhelmingly in favor of leaving recreational rare earth magnets on the market labeled for adult use (& Brian Doherty, Reason, Joe Patrice/Above the Law, Alexander Cohen/Atlas; cross-posted in slightly different form at Cato at Liberty).
P.P.S. Noted at the Cato version: “If the move succeeds, Zucker could be ordered to foot the bill personally for offering consumers full refunds for all products sold, reimbursing retailers for recall costs, and various other expenses potentially reaching into the millions.”
- “Special economic zones can be anything from tools of crony capitalism to seeds of a freer world order.” [Tom W. Bell on The Political Economy of Special Economic Zones by Lotta Moberg]
- 33 state constitutions have “baby Ninths,” which like federal version suggest existence and protection of some unenumerated individual rights. Potential there [Anthony B. Sanders, Rutgers Law Review forthcoming/SSRN]
- Judge hears argument on Seattle law ordering landlords to accept first otherwise qualified tenant who applies [Heidi Groover/The Stranger, earlier]
- Labeling of food, other products as “natural” helps keep class action lawyers in business [Julie Creswell, New York Times]
- SESTA, FOSTA, and trafficking: L.A. Times editorial warns on dangers of abridging Section 230 protections for Internet freedom [earlier here, here, etc.]
- Saga of Zen Magnets versus the CPSC, told in detail [Alan Prendergast, Westword (Denver); earlier; related, Nancy Nord]
- Elected-official governance of how state university law centers sue local governments = “interference”? [J. Clara Chan, Chronicle of Higher Education; Jane Stancill, News and Observer; Ana Irizarry, UNC Daily Tarheel; James G. Martin Center for Academic Renewal, Jesse Saffron, Alex Contarino, Frank Pray]
- Zen Magnets update: “How One Man’s Quest To Save His Magnets Became A Massive Regulatory Battle” [Jeremy Kutner, Huffington Post, earlier]
- “The solar eclipse is no longer mysterious, supernatural, foreboding, or ominous.” Or cause to delay a trial [court order in U.S. v. Bishop, M.D. Fla.]
- Trump vs. business: “His recurring message is that any executive who doesn’t do as Trump wishes can expect retribution from the most powerful man on earth.” [Steve Chapman, Chicago Tribune/syndicated]
- Wales: “Mute and autistic girl was seized from family and locked up after false abuse claims” [Lucy Johnston, Express] On “facilitated communication” and the like, see earlier posts here and here;
- California bill would extend pre-litigation subpoena power, a powerful tool in inflicting cost and loss of privacy on targets, from current holders (state AG, county DAs) to city attorneys in San Francisco, L.A., San Diego, and San Jose [Civil Justice Association of California Bulletin; Amanda Robert, Legal NewsLine]
- Report: FBI investigation of Prenda lawyer Paul Hansmeier now extends to his mass ADA filings [KSTP, KMSP, Stephen Montemayor/Minneapolis Star-Tribune, Tim Cushing/TechDirt earlier]
- Meanwhile: “Sanctioned Austin ADA attorney now targeting websites” [KXAN on Omar Rosales, earlier]
- “It is a crime to ‘allow’ a pet to make a noise ‘that frightens wildlife’ on National Park Service land. Yeah.” [@KatMurti on David Rosenthal, Daily Signal]
- Looking to the states as a counterweight to dangers from Washington? Hope your federalism insurance is paid up [Rick Hills]
- A defense of the Consumer Product Safety Commission’s punitive, fine-happy turn in recent years. Beleaguered manufacturers are unlikely to agree [Brian Joseph, Fair Warning; the CPSIA fiasco and magnets episode]
- Michael Greve versus Adrian Vermeule on administrative law, originalism and the Constitution [Law and Liberty]
- Do lawyers find ways to litigate over the effects of the leap day, Feb. 29, that is inserted into the calendar every four years? Glad you asked [Kyle White, Abnormal Use]
- Weren’t regulations supposed to have fixed this, or is it that accommodation rules for air transport are legally separate from those for ordinary commerce? “More flights seeing odd animals as emotional support companions” [WHIO]
- Tiny desk and art magnets: Zen Magnets wins partial but important legal victory against Consumer Product Safety Commission (CPSC) [Zen Magnets, Nancy Nord, earlier]
- Federal government, which has passed no law on private-sector LGBT bias, considers withholding funds to punish North Carolina for declining to have one [New York Times; earlier on Obama EEOC’s wishful effort to generate such coverage through reinterpretation of other law]
- Spirit of trade barriers: Nevada workers walk off job to protest use of workers from other U.S. states [Alex Tabarrok] Expansion of foreign trade “has revealed, not created, problems in the American economy” [Scott Lincicome] More: “Limiting trade with low-wage countries as severely as Sanders wants to would hurt the very poorest people on Earth. A lot.” [Zack Beauchamp, Vox; related Jordan Weissmann, Slate (what Sanders told NYDN “should be absolutely chilling to the developing world… inhumane”)]
- Latest ICWA (Indian Child Welfare Act) cause célèbre is over 6-year-old Lexi, whose world is getting upended because of her 1.5% Choctaw descent (a great-great-great-great grandparent on her father’s side) [Christina Sandefur/Federalist Society blog, Naomi Schaefer Riley, New York Post earlier generally on ICWA and in my writing at Reason and Cato on the Adoptive Couple case]
- All aboard! “Louisiana AG hires nine private law firms, 17 attorneys for federal antitrust pharmaceutical lawsuit” [Legal NewsLine]
- National Association of Insurance Commissioners has, and exploits, legally privileged status as collector of insurance data. Time for open access [Ray Lehmann]
- Europe’s antitrust charges against Google remind us of “the poverty of the standard antitrust doctrine” [Pierre Lemieux]
- Court blasts Morrison Foerster for ‘nonsensical’ legal theories and ‘carnival fun house’ arguments [ABA Journal]
- “Trolls aren’t the primary problem with the patent system. They’re just the problem Congress is willing to fix.” [Timothy Lee, Vox] What makes you think lawyers and rent-seekers aren’t going to turn “patent reform” to their own purposes? [Mark Mills]
- “It only goes that one direction, too.” Rachel Maddow recognizes the fairness problem with one-way fee shifting, this one time [Huffington Post on pro-defendant Colorado firearms law]
- CPSC still going after Zen Magnets, which isn’t backing down [Nancy Nord, earlier]