CPSC sues defiant CEO individually in Buckyball case

by Walter Olson on August 13, 2013

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.”

Especially when the individual has helped promote Internet memes making fun of the CPSC.

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.”

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1 Fubar 08.13.13 at 1:05 pm

CPSC, the same organization that made every children’s book published before 1985 illegal because children might eat the pages, thereby consuming unsafe quantities of lead. CPSC even stated they were considering raiding garage sales to suppress those books.

CPSC — leading the world crusade against education and learning.

2 C Hill 08.13.13 at 10:43 pm

“CPSC — leading the world crusade against education and learning.”

…and fun!

This is serious, someone could get hurt! Repeat 100 times…”Must not make fun of bureaucrats…must not make fun of bureaucrats…must not make fun of bureaucrats…must not make fun of bureaucrats…”

3 prior probability 08.14.13 at 12:35 am

What’s next? A ban on Ginsu knives?

4 wfjag 08.14.13 at 5:41 am

No C.H. – write it 100 times . . .
using an unleaded pencil.

5 Bob Lipton 08.14.13 at 8:20 am

As my mother used to say when my brother and I got into a pillow fight: “You could put an eye out with that.”

Bob

6 C Hill 08.14.13 at 10:51 am

Exactly, wfjag! I should have thought of that.

I guess the “necessity” of banning this product is proof that the only responsible adults left in this country are working for the government. The rest are letting their young children play with Buckyballs.

7 DensityDuck 08.14.13 at 11:28 am

I think what’s funny is that this is exactly the kind of go-after-the-bastards regulatory activisim that so many leftists want to see happen. You think they’d be applauding this move.

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