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Craig ZuckerWith a new “United We Ballcampaign against the Consumer Product Safety Commission (CPSC) and its Draconian enforcement action. Background here and here (& Scott Shackford, Reason).

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A couple of weeks ago I wrote about the very disturbing legal war being waged by the Consumer Product Safety Commission against Craig Zucker, CEO of a company that made Buckyballs, the adult magnetic-balls desk toy. After the CPSC decided to ban his product, Zucker fought back in the arena of public opinion, aiming satirical barbs at the commission and individual commissioners. CPSC then proceeded to pull him into the action personally as a party, seeking (on the basis of legal theories rarely if ever used in the past) to tag him with recall liability that the agency estimated at $57 million.

This weekend the Wall Street Journal came out with a big feature on the case, including an interview with Zucker by the Journal’s Sohrab Ahmari. Some highlights:

* At a time when sale of Buckyballs was still quite lawful pending adjudication, “and before Maxfield & Oberton [Zucker's firm] had a chance to tell its side of the story,” the agency sent letters to major retailers asking that Buckyballs be pulled from shelves; most did, wishing to avoid trouble.

* The “responsible corporate officer” doctrine, which the CPSC cites as grounds for holding Zucker personally liable, has been very seldom invoked in the past, and the circumstances here (including the lack of reference to officer liability in the CPSC’s enabling statute) suggest that the Buckyballs case doesn’t fit. [More on that poor fit in this recent paper, previously linked in this space.]

* As for motives to go after Mr. Zucker, he provided a lot of them. During his attempt to fight the ban, his online “ads pointed out how, under the commission’s reasoning, everything from coconuts (‘tasty fruit or deadly sky ballistic?’) to stairways (‘are they really worth the risk?’) to hot dogs (‘delicious but deadly’) could be banned. Commission staff were challenged to debate Mr. Zucker, and consumers were invited to call Commissioner Inez Tenenbaum’s ‘psychic hotline’ to find out how it was that ‘the vote to sue our company was presented to the Commissioners on July 23rd, a day before our Corrective Action Plan was to be submitted.'” The thing is, you’d think, or hope, that the First Amendment to the Constitution would protect the right of a regulated party to talk back in this way, even disrespectfully.

Michigan-based commentator Bob Dorigo Jones, who has previously commented on the Buckyballs affair, wrote this on Facebook:

Buckyballs were a Godsend to our son, Johnny, last summer as he laid in a hospital bed recovering from a serious brain injury. He couldn’t watch TV or look at any type of screen because it hurt his eyes too much. He couldn’t read because it gave him headaches. But he could play with the Buckyballs that we purchased at the HOSPITAL gift store. They made a long stay in the ICU much more tolerable. Ironically, the same week he was in the hospital, an overreaching government agency banned the sales of Buckyballs — even to adults. Read this interview to get the full story on the Buckyballs saga. This is what happens when personal injury lawyers and their allies make the rules. We slowly lose our freedoms.

Read the WSJ piece here. More: Clark at Popehat, Gus Hurwitz at Truth on the Market, Alexander Cohen/Daily Caller.

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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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Buckyballs maker gives up

by Walter Olson on November 2, 2012

“Oh Buckyballs, my Buckyballs. The addictive magnetic desk toy succumbs to government pressure and resigns itself to life as a cherished relic of the past.” [Amanda Kooser, CNet] Earlier on the manufacturer’s war with the Consumer Product Safety Commission (CPSC) here, here, etc.

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The Buckyball resistance

by Walter Olson on October 17, 2012


A small company goes right on defying the Consumer Product Safety Commission: I’ve got more at Cato at Liberty (& see Nick Farr, Abnormal Use).

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“Buckyballs vs. the CPSC”

by Walter Olson on September 15, 2012

The maker of the popular rare earth magnetic adult toy is defiant, and Reason.tv has a video [earlier here, here, and here]. “We’re the first company in 11 years that has said no to the Consumer Product Safety Commission.”

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CPSC’s Buckyballs ban

by Walter Olson on August 13, 2012

Buckyballs are highly popular supermagnetic desktop toys for adults and labeled against use by kids. Nonetheless, some kids obtain the tiny balls and swallow them, with harmful or even lethal results. The Consumer Product Safety Commission has responded with an unusually aggressive show of legal muscle to force the product off the market: while suing the manufacturer, it strong-armed retailers into suspending Buckyball sales, thus cutting off the manufacturer’s revenue while a court decides whether the commission had an adequate basis in law and fact for its action. [Nick Farr, Abnormal Use; manufacturer statement; Time; ABA Journal; Michelle Malkin; Point of Law]

More: “CPSC wants to put a child-proof cap on your life.” [@radleybalko]

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Woot.com has a daily offering today (may disappear tomorrow) discussing the CPSC policy on swallowable magnets in tones of less than complete respect.

Plus: How dangerous exactly is this loose-magnet toy that CPSC saw fit to recall? [Amend The CPSIA]

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After BuckyBalls surrendered to the Consumer Product Safety Commission the Denver-based company Zen Magnets was the last standing in the tiny-recreational-magnets field, and its founder, 27-year-old Shihan Qu, isn’t planning to go quietly. [WestWord]

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GuyFawkesMaskMagnets Zen Magnets, the last producer left standing after the agency vanquished BuckyBalls and its maker, says it will fight in court. [Denver Business Journal, Nancy Nord; picture credit, Zen Magnets Facebook page] More: Nick Farr, Abnormal Use.

August 4 roundup

by Walter Olson on August 4, 2014

  • Administration tees up massively expensive regulation docket for after election [Sam Batkins, American Action Forum]
  • More on FedEx’s resistance to fed demands that it snoop in boxes [WSJ Law Blog, earlier]
  • Ethics war escalates between Cuomo and U.S. Attorney Preet Bharara, but is sniping in press suitable role for prosecutor? [New York Post, Ira Stoll]
  • “Mom Hires Craigslist Driver for 9-Year-Old Son, Gets Thrown in Jail” [Lenore Skenazy]
  • One-way fee shifts, available to prevailing plaintiffs but not defendants: why aren’t they more controversial? [New Jersey Lawsuit Reform Watch]
  • Water shutoff woes sprang from Detroit’s “pay-if-you-want culture” [Nolan Finley, Detroit News]
  • “CPSC Still Trying to Crush Small Round Magnet Toys; Last Surviving American Seller Zen Magnets Fights Back” [Brian Doherty]

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According to the Consumer Product Safety Commission:

The U.S. Consumer Product Safety Commission (CPSC) is announcing a voluntary recall of all Buckyballs and Buckycubes. … Refunds will be processed through a Recall Trust that will be funded by Mr. Zucker, but created and controlled by CPSC.

According to Zucker in a press release:

The settlement amount is less than 1% of the original $57 million that the CPSC estimated a recall to cost and is not a fine or penalty….

In February of 2013, the CPSC took unprecedented action by naming Zucker personally under the controversial Park Doctrine as an officer of the company that sold Buckyballs®.

This happened after Zucker, in what was itself an unusual if not unprecedented stand for an executive at a firm subject to CPSC regulation, took a vigorous public stand defending his product against the commission’s recall demands and even employed jokes and caricatures to make fun of CPSC commissioners. Earlier coverage here. More: Nancy Nord.

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March 5 roundup

by Walter Olson on March 5, 2014

  • U.S. Commission on Civil Rights commissioners Gail Heriot, Peter Kirsanow: Administration’s new policy on race and school discipline likely to make schools more chaotic [Robby Soave, Daily Caller, 2011 related, earlier here, etc.]
  • French court: fan club members suffered legally cognizable emotional damage from Michael Jackson’s death [Lowering the Bar, earlier]
  • “The Newkirk incident demonstrates why cameras in the courtroom are a bad idea” [James Taranto, includes bonus New York Times disgrace]
  • Claim: advocates stymied firearms research over most of past two decades. Accurate? [Fox News]
  • Another look at the CPSC’s war on former Buckyballs CEO Craig Zucker [Jim Epstein, Reason, earlier]
  • Chris Christie use of monitorships in white-collar prosecutions draws renewed scrutiny [New Republic, earlier]
  • In which I am included in a list with George Will and Heather Mac Donald, all very flattering etc. etc. [Charles C. W. Cooke, NRO]
  • D.C.: disbarred lawyer sat for years as workers comp judge [Washington City Paper]
  • “German home-school family won’t be deported” although Supreme Court declines to hear asylum appeal [AP; discussion in comments earlier]

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Free speech roundup

by Walter Olson on December 19, 2013

  • After Rolling Stone interview comments on race in America, Bob Dylan hit with hate speech proceeding in… France? [Popehat]
  • “The Buckyballs Guy Is Suing the Feds Over Free Speech” [Bloomberg BusinessWeek]
  • “Reconsidering Citizens United as a Press Clause Case” [Michael McConnell, YLJ via Volokh] “Freedom for the Press — Protection for an Industry/Profession, or for All Users of a Technology?” [Eugene Volokh, more]
  • Liability for content posted by third parties? “Ex-cheerleader’s defamation suit puts Internet giants on edge” [CBS News]
  • Forced expression tramples freedom: Cato asks SCOTUS to review ruling against New Mexico wedding photographer [Ilya Shapiro, earlier here, etc.] Related: Mike Masnick questioning why the ACLU is on the wrong side, a topic I’ve covered here too;
  • “Three puzzling things about NYT v. Sullivan” [Len Niehoff, Communications Lawyer]
  • “Why can’t we admit we’re scared of Islamism?” [Nick Cohen, Spectator]

There are so many reasons to resist the FDA on this action — really, as many reasons as there are individual 23andme users. Some of us want to seek out distant relatives and clues about national origins, or satisfy curiosity about patterns of disease in our family lines. For adoptive families, home genome testing can be hugely valuable in cases where one knows little about the medical history of an adoptee’s birthfamily. It’s our body, and our right to inform ourselves about it — or so we thought.

Some are blaming the company for rolling out the popular service in the absence of a clear regulatory go-ahead, and, in recent months, ignoring repeated signals of the FDA’s wish that it submit to comprehensive regulation that would greatly drive up the cost of its service. But other commentators have suggested that the firm has some pretty decent legal arguments that its service is not subject to regulation as a diagnostic test or “medical device” (genetic predispositions are not diagnoses). As an information-based service, it might even enjoy protection under the First Amendment. Admittedly, the company waved a red flag in front of regulators when it launched a marketing campaign that stressed the possible health benefits of knowing one’s genetic predispositions. But as Timothy Lee argues at the Washington Post:

Having more information about your health status is never dangerous by itself. It only becomes dangerous if patients use it to make dangerous medical decisions. But most dangerous medical decisions can’t be made unilaterally; they generally require the assistance of licensed medical professionals who will do their own assessment of the situation before performing procedures that could harm patients.

The FDA very likely has decent legal grounds to forbear from a crackdown should it choose to. But the key takeaway sentence from Matthew Herper’s piece in Forbes criticizing the company is: “This is not the way to deal with a powerful government regulator.” Disrespectful, anti-authority attitudes from someone an agency intends to regulate? Ask former Buckyballs CEO Craig Zucker where that gets you.

What can users, potential users, and well-wishers do?

* “First, download your 23andMe raw results now if you have them,” warns Razib Khan at Gene Expression.

* If you like signing Change.org petitions, there’s one here asking the FDA to back off.

* In a separate piece for Slate, Khan suggests where the situation might head before long: services like this can move offshore. All the relevant information consumers want from them can be delivered via the web. In the mean time a highly innovative and valuable enterprise will have been pushed out of the U.S. to some freer part of the globe, but maybe we need to get used to that happening.

And then? It may take a while before our government works up the nerve to ban mailing a saliva sample to a foreign address. Based on existing trends, I’d guess the more likely intervention, circa 2018 or so, would be for the Treasury to direct credit card companies not to process payments from U.S. residents to genome kit providers. Would we have the spirit to resist then? And if then, why not now? More: Alex Tabarrok, Slate Star Codex (by analogy, “banning people from weighing themselves without a prescription is neither clinically nor ethically sound,” although weight awareness sometimes leads patients into unwise health decisions), Nita Farahany, Brad Warbiany, earlier 2011. Alex Tabarrok’s post is especially worth reading, an excerpt:

…Indeed, genetic tests are already regulated. To be precise, the labs that perform genetic tests are regulated by the Clinical Laboratory Improvement Amendments (CLIA) as overseen by the CMS (here is an excellent primer). The CLIA requires all labs, including the labs used by 23andMe, to be inspected for quality control, record keeping and the qualifications of their personnel. The goal is to ensure that the tests are accurate, reliable, timely, confidential and not risky to patients. …

…the FDA wants to judge not the analytic validity of the tests, whether the tests accurately read the genetic code as the firms promise (already regulated under the CLIA) but the clinical validity, whether particular identified alleles are causal for conditions or disease. The latter requirement is the death-knell for the products because of the expense and time it takes to prove specific genes are causal for diseases….

The FDA also has the relationship between testing and clinical validity ass-backward. The FDA wants to say no to testing until clinical validity is established but we are never going to discover clinical validity until we have mass testing.

More: Richard Epstein/Point of Law, BoingBoing, more from Ron Bailey.

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November 11 roundup

by Walter Olson on November 11, 2013

  • Incoming Australian attorney general: we’ll repeal race-speech laws that were used to prosecute columnist Andrew Bolt [Sydney Morning Herald, Melbourne Herald-Sun, earlier]
  • Texas sues EEOC on its criminal background check policy [Employee Screen]
  • After Eric Turkewitz criticizes $85M announced demand in Red Bull suit, comments section turns lively [NYPIAB]
  • If only Gotham’s official tourism agency acted like a tourism agency [Coyote on NYC's official war against AirBnB; Ilya Shapiro, Cato; earlier here and here, etc.]
  • “Lawmaker wants Georgia bicyclists to buy license plates” [WSB]
  • Religious liberty implications of European moves to ban infant circumcision [Eugene Kontorovich]
  • Video on CPSC’s quest for personal liability against agency-mocking Craig Zucker of Buckyballs fame [Reason TV, earlier]

November 4 roundup

by Walter Olson on November 4, 2013

“Ratings agency Standard and Poor’s (S&P) has claimed the lawsuit filed against it by the US Justice Department was ‘retaliation’ against its decision to downgrade the US’s credit rating.” [BBC; earlier here, here] My Cato colleague Mark Calabria, a specialist on banking and finance issues, sees a pattern at work in which businesses that make life hard for the government get hit with enforcement actions:

Maybe S&P can compare notes with Craig Zucker of Buckyballs fame.

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