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U.S. v. TOYS "R" US

January 9, 1991

UNITED STATES OF AMERICA, PLAINTIFF,
v.
TOYS "R" US, INC., CHARLES LAZARUS AND MICHAEL GOLDSTEIN, DEFENDANTS.



The opinion of the court was delivered by: Barry, District Judge.

  OPINION

I. INTRODUCTION

Plaintiff United States of America alleges that defendant Toys "R" Us, Inc. ("Toys `R' Us"), an importer, distributor, and retailer of children's toys and other articles; defendant Charles Lazarus ("Lazarus"), Chairman of the Board and Chief Executive Officer of defendant Toys "R" Us; and defendant Michael Goldstein ("Goldstein"), Executive Vice-President of defendant Toys "R" Us with supervisory responsibility, inter alia, for the importation and distribution of children's toys and other articles, violated the Federal Hazardous Substances Act ("FHSA"), 15 U.S.C. § 1261 et seq., and the Consumer Products Safety Act ("CPSA"), 15 U.S.C. § 2051 et seq.

Plaintiff now moves for an injunction,*fn1 pursuant to Federal Rule of Civil Procedure 65, prohibiting defendants from (1) introducing or delivering for introduction in interstate commerce, or receiving in interstate commerce and delivering or proffering delivery of children's toys and other articles which qualify as banned hazardous substances under the FHSA; and (2) offering for sale, distributing in commerce, or importing into the United States children's toys and other articles which are banned hazardous products as defined by the CPSA.*fn2 Defendants move for summary judgment, pursuant to Fed.R.Civ.P. 56, and for sanctions, pursuant to Fed.R.Civ.P. 11. For the reasons that follow, plaintiff's motion for an injunction will be denied and, because no further relief is sought, the complaint will be dismissed. Defendants' motion for sanctions will be denied, and defendants' motion for summary judgment will be denied as moot.

II. THE ALLEGED VIOLATIONS

Plaintiff alleges two violations of the CPSA and eleven violations of the FHSA. More specifically, it contends that defendants offered for sale, distributed in commerce, and imported into the United States (1) the "Music Maker;" and (2) the "Music Master Xylophone," musical children's toys that are coated with "lead-containing paint" and, thus, are banned hazardous products under the CPSA, in violation of 15 U.S.C. § 2068(a)(2). It contends, as well, that defendants introduced or delivered for introduction into interstate commerce or received in interstate commerce (1) the "Cutie Pie Deluxe Gift Set;" (2) "Pop Up Pals;" (3) "Sesame Street, Wind Up Ernie the Drummer;" (4) the "Pull Back Plane;" (5) the "Pull Back Train;" and (6) the "Pull Back Truck," a selection of children's toys that fail to comply with the CPSC's regulation concerning the production of small parts after prescribed use and abuse tests and, thus, comprise banned hazardous substances under the FHSA, in violation of 15 U.S.C. § 1263(a) & (c). Finally, plaintiff contends that defendants introduced or delivered for introduction into interstate commerce or received in interstate commerce (1) the "Crib Pals Shake & Twist Rattle;" (2) the "Crib Pals Kitty Cat Lion Rattle;" (3) the "Crib Pals Tiny Tinkers 3 Piece Rattle Set" of which the "Crib Pals Tiny Tinkers Rattle Copter" is a part; (4) the "Baby Toy `Wooden Shaky Head' Rattle;" and (5) "Crib Pals Play Shapes," an assortment of rattles that fail to comply with the test criteria for rattles as promulgated by the Consumer Products Safety Commission ("CPSC") and, thus, constitute banned hazardous substances under the FHSA, in violation of 15 U.S.C. § 1263(a) & (c).

Where, as here, an injunction is sought pursuant to statutory provisions, the movant must establish (1) a violation of the statute sued upon; and (2) a reasonable likelihood of future violations of the statute in the absence of injunctive relief. United States v. Focht, 882 F.2d 55, 57 (3d Cir. 1989).

A. Statutory Violations

1. Consumer Products Safety Act

A person violates the CPSA by "manufactur[ing] for sale, offer[ing] for sale, distribut[ing] in commerce, or import[ing] into the United States any consumer product which has been declared a banned hazardous product by a rule under this chapter." 15 U.S.C. § 2068(a)(2). Any children's toy or related article bearing "lead-containing paint" — i.e. "paint . . . containing lead or lead compounds and in which the lead content (calculated as lead metal) is in excess of 0.06 percent by weight of the total nonvolatile content of the paint or the weight of the dried paint film," 16 C.F.R. § 1303.2(b)(2) — constitutes a banned hazardous product under the CPSA. 16 C.F.R. §§ 1303.1(a)(1) & 1303.4(b). Defendants do not dispute laboratory reports submitted by plaintiff which indicate that the "Music Maker" and the "Music Master Xylophone," toys imported into the United States and offered for sale and distributed in commerce by defendant Toys "R" Us, were covered with paint containing in excess of 0.06% lead by weight in a dry paint film. See Nelson Decl. at Exhs. 19 & 21.

Instead, defendants rely upon a statutory exception to 15 U.S.C. § 2068(a)(2). Subsection (a)(2) does not apply to

  any person . . . who holds a certificate issued in
  accordance with section 2063(a) of this title to
  the effect that such consumer product conforms to
  all applicable consumer product safety rules,
  unless such person knows that such consumer
  product does not conform. . . .

15 U.S.C. § 2068(b). Therefore, 15 U.S.C. § 2068(a)(2) is inapplicable where the alleged violator, in addition to lacking actual knowledge of non-compliance with the safety rules, possesses a certificate which

  shall certify that such product conforms to all
  applicable consumer product safety standards, and
  shall specify any standard which is applicable.
  Such certificate shall accompany the product or
  shall otherwise be furnished to any distributor or
  retailer to whom the product is delivered. Any
  certificate under this subsection shall be based
  upon a test of each product or upon a reasonable
  testing program; shall state the name of the
  manufacturer or private labeler issuing the
  certificate; and shall include the date and place
  of manufacture.

15 U.S.C. § 2063(a).

Defendants do not hold certificates for the "Music Maker" and the "Music Master Xylophone" which meet the detailed requirements of 15 U.S.C. § 2063(a). Indeed, the "certificates" proffered by defendants are merely generic form letters which address some, but not all, of the concerns of the statute. Compare Carey Aff. at Exh. C with Carey Aff. at Exh. B and Nelson Decl. at Exh. 23. Although the "certificates" certify that items referenced on certain numbered purchase orders — which apparently correspond to shipments of these musical toys*fn3 — meet or surpass all applicable CPSC standards, they provide only this blanket representation and fail to specify compliance with the Lead-Containing Paint Regulation or, for that matter, any other applicable safety regulation. Moreover, these "certificates" fail to include the date and place of manufacture of the "Music Maker" and "Music Master Xylophone" toys shipped to defendant Toys ...


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