CPSC Commissioner Says $425K Penalty Settlement w/ HP Is Too Small
On January 19, 2012, the Consumer Product Safety Commission voted 3-1 to provisionally accept an agreement with Hewlett-Packard Company (HP) that would settle CPSC staff allegations that HP failed to immediately inform the Commission of a defect on its lithium-ion battery packs for its notebook computers. HP agreed to settle the allegations by paying a $425,000 civil penalty. While Commissioner Adler voted against the agreement, stating that the penalty amount was too small to deter violations, Commissioner Tenenbaum voted for the agreement, but with significant reservation.
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(CPSC staff alleged that HP failed to immediately inform the Commission that some of its lithium-ion battery packs for its notebook computers contained a defect that caused some battery packs to overheat, posing a fire and burn hazard to consumers. See ITT's Online Archives 11053133 for summary of HP's voluntary recall of these batteries in May 2011.)
Adler Voted Against Settlement, Says $425K Is Too Small to Deter Violations
Commissioner Adler voted against accepting this settlement agreement as he believed the size of the proposed penalty is too small. He states that while the proposed civil penalty amount reflects good faith negotiations between CPSC staff and HP, it does not come close to what he considers the appropriate amount for this case. He stated that, among other things, a civil penalty this small might be advanced as precedential, which is a proposition he strong rejects, especially as the Commission moves into the higher authorized civil penalty amounts provided in the Consumer Product Safety Improvement Act of 2008 (CPSIA).
In sum, Adler states he does not believe a civil penalty this small in relation to the size of the company and in relation to the potential harm of this defect achieves the purposes of civil penalty enforcement, which is to deter violations, provide just punishment, promote respect and full compliance with law, reflect the seriousness of the violation, protect the public.
Tenenbaum Says Vote Speaks to CPSC's Future Approach to Civil Penalty Cases
Commissioner Tenenbaum voted to approve the HP settlement with significant reservation. Tenenbaum stated that she shares many of the concerns articulated by Commissioner Adler, including concern as to whether this agreement sufficiently effectuates the main purposes of seeking a civil penalty. However, she states she decided to vote for the settlement agreement with HP because her concerns speak more to how the Commission will approach civil penalty cases going forward, especially those that fall under its enhanced statutory authorities.
CPSIA Increased Statutory Limit on Civil Penalties in CPSC Enforcement Actions
She explains that through the passage of the CPSIA, Congress sent a clear signal by dramatically raising the statutory limits on civil penalties available in CPSC enforcement actions. As Congress intended, this enhanced authority empowers the Commission to seek, as appropriate, significantly higher civil penalties to ensure that civil penalties do not get written off as a cost of doing business, but rather truly serve their intended policy purpose.
Hopes Future Enforcement Includes Penalties that Maximize Deterring Violations
While this settlement with HP was negotiated under the pre-CPSIA statutory scheme, Tenenbaum hopes and expects that future enforcement actions, particularly those that arise under the Commission's enhanced authorities, will (as Congress intended) include civil penalty amounts that maximize the likelihood of deterring violations, providing just punishment, promoting respect for and compliance with the law, reflecting the seriousness of the violation, and ultimately protecting the public from unreasonable risks of injury and death.
Commissioner Tenebaum's statement is available here.
Commissioner Adler's statement is available here.
CPSC press release (dated 01/23/12) is available here.
Subsequent Federal Register Notice (Pub 01/26/12) on CPSC seeking comments on this provisional agreement is available here.