News & Updates

DOJ and CPSC File Rare Civil Penalty Lawsuit Against Retailer Alleging Misrepresentation of Status and Late Reporting May 5, 2015

In a rare move, the U.S. Department of Justice (DOJ) and Consumer Product Safety Commission (CPSC) have filed a lawsuit seeking civil penalties against Michaels Stores Inc., and its subsidiary, Michaels Stores Procurement Co. Inc., one of the largest arts and crafts retailers in the United States. This lawsuit concerns vases that Michaels sold from 2006-2010, which were ultimately recalled in 2010. The CPSC claims the vases had thin walls and could shatter when a customer was handling it in a normal manner.  

According to an April 21, 2015 press release from the Department of Justice, the complaint charges that Michaels knowingly violated the reporting requirements of the Consumer Product Safety Act with respect to the glass vases that shattered in customers’ hands, sometimes as the customer lifted the vase from the Michaels Store’s shelf.

The complaint alleges that the vases were procured by the Gershan Company — manufactured by two different entities in China — and shipped directly to Michael’s freight forwarder in China, which shipped them to Michaels’ distribution centers in the United States. The complaint alleges that “Michaels was listed as the ‘importer of record’ of the vases on U.S. custom forms,” and that Michaels failed “to identify itself as the manufacturer or importer” of the vases.          

Importers, manufacturers, distributors, and retailers of consumer products are required by law to self-report certain safety issues to the CPSC within 24 hours. In addition to its claims that the report was untimely, the CPSC claims when Michaels notified the CPSC, it conveyed the false impression that Michaels did not import the vases, even though the company was the importer of record on U.S. customs forms. The complaint asserts that in its initial report, Michaels provided the more limited information retailers are typically permitted to provide to the CPSC, rather than the more extensive information that manufacturers and importers are required to provide to the CPSC. The complaint also alleges that Michaels was required to submit a full report “as the manufacturer of the vases,” containing more extensive information regarding test reports, design changes, and changes in quality control.

The DOJ and CPSC are seeking civil penalties and permanent injunctive relief requiring Michaels to establish compliance monitoring systems. The complaint was filed in the U.S. District Court for the Northern District of Texas.

We will continue to monitor this case and provide relevant updates as it develops.

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