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STATE ATTORNEYS GENERAL AND THE RESPONSE TO THE 2007 RECALLS OF CHILDRENS’ TOYS
PART I: THE PROVENANCE OF DANGEROUS TOYS AND THE YEAR OF THE RECALL
The United States imports a great variety of consumer products from overseas, many from developing countries, particularly China. Toys, games, and jewelry directed at children make up a considerable amount of total imports. Unfortunately, not all of these children’s products meet U.S. safety standards. Imports constitute over eighty-five percent of recalled products. While defective toys do not, of course, solely originate in China,  this paper focuses in large part on the imported children’s products from China for two reasons.
First, China dominates the supply of imported toys. China is the primary trade partner of the United States. Total U.S.-China trade rose to $387 billion in 2007. According to the CPSC, forty percent of all consumer products imported into the United States last year were manufactured in China, totaling $246 billion worth of goods. From 1997 to 2004, the CPSC noted that the share of all U.S. imports of consumer products from China more than quadrupled, a trend that is likely to continue. China’s dominance has been particularly strong in the production of toys: In 2007, China accounted for 89% of toys imported into the U.S.
This economic reality is, in part, due to China’s ability to mass produce cheap consumer products. Chinese manufacturers can significantly undercut the prices offered by their foreign competitors. China’s practice of currency manipulation allows their products to appear relatively cheaper than those from other countries, fueling export-led growth. The cost of manufacturing goods in China is also significantly less than it is in the United States. In China, unions are practically nonexistent and the poor labor conditions under which these toys are frequently produced have been well documented. Low wages and excessive hours in the production of toys go far in reducing some manufacturer’s costs. Together, cheap labor and currency manipulation, coupled with massive state investment in infrastructure and manufacturing has allowed China to come to dominate the toy market in the United States. Chinese-manufactured products of all types have had their problems. In sum, 95% of jewelry recalled since 2005 has come from China. More than 40% of recalls conducted by the CPSC, including 79% of toys in 2006 and 98% in 2007, involved products from China. In 2007, the “year of the recall,” millions of toys manufactured in China were recalled for design defects as well as the presence of dangerous of amounts of lead. Second, regulatory enforcement of safety standards in China is significantly less stringent than enforcement in the United States. This is partially due to the diffuseness of production. The Chinese production system is unique in its reliance on a great number of specialized producers: On average, it takes China seventeen different parties to produce a product that would take three parties to complete in the United States. The varied production chain hinders direct oversight of the manufacturing process, and makes it unlikely that a substandard component part used at one of many production points will be noticed. A particular problem concerns products containing lead, which is inherently difficult to detect, that may be produced in China and unknowingly shipped to the United States. On-line advertising and specialized commodity trading websites both increase pressure to lower prices and make it easier for Chinese-manufactured components of products to slip through the cracks and be incorporated into children’s products. A U.S.-based importer usually deals only with the primary supplier in what is oftentimes a huge supply chain in the production of a good like a toy. Even if a U.S. toy company sought to have its toys constructed in Cambodia, that manufacturing company would probably have to source paint or screws from a Chinese manufacturer. To further augment the problem of supervising the manufacturing process, Chinese companies supplying the U.S. toy market usually do not have assets in the U.S., and cannot be made subject to the U.S. legal system. China’s rise to prominence in the export trade is not solely a product of currency manipulation and low production costs, but can be also be attributed to lax oversight regarding manufacturing regulations. China has had difficulty enforcing both international and domestic law, particularly in the manufacturing realm. When a regulatory law is passed in Beijing, mayors and governors, who are primarily being judged on the economic success of their region, have a vested interest in looking the other way. To do otherwise and enforce the law would raise the costs associated with production and would decrease the profit margins upon which political support is predicated. While fiscal and administrative decentralization helps spur economic growth, the inability of the central governmental to effectively enforce enacted laws, coupled with the incentives of regional governors to achieve economic growth, inevitably leads to the skirting of best practices and undermining of international legal agreements. The judicial system in China is also ill-equipped to provide a check against regional interests. Not only is there an insufficient number of judges, but the system itself suffers from a lack of independence and professionalism.
This Part discusses the origins of the problem toys in China and elsewhere, and why regulators in the United States necessarily play a reactive role, where their main goal is to detect defective products as quickly as possible. It further highlights why the primary mechanisms in place to protect domestic consumers of children’s products are ineffective or inadequate, thus leaving a safety enforcement vacuum that has been partially filled by state attorneys general (Part II), and further augmented by the CPSIA (Part III).
Addressing China’s lax regulation and emphasis on profits would require improving China's food and product safety at the source. This is not, unfortunately, a primary focus of U.S.-China trade relations. U.S. lobbying efforts have focused more on getting China to open its markets to U.S. goods and increasing intellectual property protections. The U.S. has largely relied on importers to monitor and be responsible for the fitness of children’s products. The effectiveness of this strategy has suffered from obvious limitations, namely the strong countervailing pressure to produce goods quickly and at low cost. As a result, there are less than ideal incentives on producers to maintain high product standards while reducing their costs. Coupled with relatively lax oversight in the producing region, this requires enhanced regulation in the U.S. to ensure that a reasonable level of import safety is reached.
A. Detecting Dangerous Toys and Jewelry in the U.S.
The CPSC is the sole federal agency charged with protecting the American public from unreasonable risks of death and injury of consumer projects. The CPSC was created in 1972 by the Consumer Product Safety Act (CPSA) to identify and act on a wide range of consumer products hazards. The CPSC administers six other consumer protection laws. The CPSC’s budget in 2007 was $62 million to regulate the $1.4 trillion product industry.
The focus of the CPSC is necessarily on detecting dangerous toys and getting them off the shelves rather than stopping the dangerous production at the source. The CPSC does not regularly perform inspections of manufacturers at home or abroad: U.S. manufactures sent toys that do not meet domestic safety standards abroad. The CPSC is small by design. Rather than relying on an army of inspectors, the CPSA requires that firms report dangerous products to the CPSC. Prior to the 2007 recalls and CPSIA, the CPSC maintained only fifteen inspectors at U.S. ports. Fewer than 100 inspectors have responsibility for the rest of the country. For the first time, in 2008, the CPSC hired permanent, full-time investigators at key ports of entry in the U.S. The total staff of the CPSC was approximately 400 in 2007, roughly half of the 800 staff employed by the Agency in the 1980s. These relatively small numbers of inspectors are unable to examine a meaningful percentage of products that are imported into the United States.
Due to its small size, the CPSC is necessarily a “data-driven” agency. When first enacted, the CPSA provided the CPSC with two primary methods of enforcement: the ability to promulgate mandatory product safety standards and the ability to initiate product recalls. The CPSC has issued only fifteen such standards in its existence, instead relying far more on its ability to recall dangerous products. The Agency’s primary source of information is the companies themselves. Companies must report to the CPSC if they find that one of their products is dangerous within twenty-four hours of learning about the condition. Companies need not report all hazards: The CPSC requires companies to report potential hazards only if a reasonable person would conclude that the product poses an unreasonable risk of serious injury of death. In addition to requiring companies to report dangerous products to the CPSC, the CPSC uses the collection of information from hospitals and field investigators to identify product hazards. The CPSC has been working with Customs and Border protection to develop best practices, and has begun to share information.
Even when it identifies risks, the CPSC is able to investigate only 10 to 15 percent of reported injuries and deaths related to consumer goods. After the hazard has been reported, the CPSC will not automatically recall the product, instead it will work with the company to determine whether a recall is necessary. The CPSC may also bring civil and criminal enforcement actions against companies that fail to voluntarily inform the Agency when they discover that their toys are unsafe.  Prior to the 2007 recalls, this amount was capped at $1.83 million, a relatively small sum compared with the potential for millions of dollars in daily sales achieved by some companies like Mattel.
Even when this information is reported to the CPSC, it may not reach the public until after there is evidence of a sufficient risk to warrant a recall. When faced with a Freedom of Information Act (FOIA) request, the CPSC has a “reverse-FOIA” provision that limits its ability to release information about dangerous products to the public. The statute requires that the Commission’s public disclosure of any information be “accurate,” and “fair in the circumstances and reasonably related to effectuating the purposes of” the Act. This protection is in addition to that of trade secrets or other data submitted to the CPSC under the Act with the understanding that it would not be publicly disseminated. Whenever the CPSC plans to release data on its own initiative or in response to a FOIA request, it must notify manufacturers at least 30 days before disclosing information relating to their products. During the 30 day period the company is entitled to review any material that references it, submit comments to the CPSC, and seek to have the information withheld. This process is often used by companies, making it difficult to uncover information about potential risks prior to the determination by the CPSC to undertake a recall.
Further compounding the challenge of protecting children is the difficulty of determining whether a product contains a potentially poisonous chemical like lead. The presence of lead was the second leading cause of recalled China-related consumer products in 2007. Even if the product is tested when it is initially produced, lead tainted products may still make it into toys. While a manufacturer may be able to oversee some of its subcontractors, the supply of other component parts may be sourced from other producers. As a result, individualized testing of all parts of a representative sample of all goods is very difficult. Though goods may be tested at the start of production, they may not be tested again as repeated batches are produced. Together, this makes it virtually impossible to determine where individual components of each toy are from, and it makes it very difficult to test the entire toy beforehand.
Thus, it often takes a tragedy before the CPSC becomes aware of the dangerous condition. For example, Reebok charm bracelets that contained 99% lead were offered as gifts with the purchase of children’s shoes for nearly two years. In the Reebok recall, the charm bracelet was only tested after a child died of lead-induced brain swelling after ingesting a piece of the bracelet. Hospital and newspaper reports of such tragedies are often required before such a dangerous condition comes to the attention of the CPSC.
Though additional funding for the CPSC is included in the CPSIA, there is little chance that the role of the CPSC in preemptively detecting dangerous products will substantially increase. This is largely a result of the extraterritorial regulation required to prevent the manufacture of dangerous products in the first place. Extraterritorial inspection is, of course, extremely expensive as it requires inspectors to travel overseas. It also usually requires the cooperation of the country where the inspectors are visiting the factories, which has not been readily forthcoming in China. In the absence of such cooperation, there is nothing compelling manufacturers to grant inspectors access. Even if the government inspectors were to detect a problem, they are legally unable to demand anything from the firms they are inspecting. Thus, the CPSC remains a largely reactive agency that must rely on market incentives, its agents, other law enforcement bodies, companies, and individual complainants when regulating dangerous toys and jewelry.
Individual suits brought by injured victims provide an additional important backdrop to consumer protection in addition to informing the CPSC about dangerous products. Private suits can serve a regulatory function in their own right. Some commentators have argued that but for torts, it is unlikely that any toys would be recalled at all. Yet there is reason to doubt the efficiency of tort suits in regulating product safety. Not all individuals who are injured typically file a claim. The injuries involved may not be significant enough to prompt an individual plaintiff to bring suit. The Class Action Fairness Act of 2005 further limited the effectiveness of consumer product class actions as a means of regulation. Furthermore, a great many of these cases end in settlement, oftentimes with confidentiality as a required provision. As such, key information concerning public health and safety may be kept from government regulators and from the scientific community, removing important consumer issues from the scrutiny of the judicial system.
Further, the effectiveness of torts suits to highlight dangerous toys is undermined by the problem of proving causation. In the case of lead poisoning in particular it can be difficult to determine where the exposure originated from. Also difficult to prove is the injury itself, which includes loss of mental function and developmental delay. With the sizeable presence of lead paint in homes, schools, playgrounds, and other public areas, it can be difficult to prove a causal link between lead paint on a toy and the subsequent harm. Lead paint in homes remains the principle method of exposure, further complicating the process of identifying the source and holding the corporation ultimately responsible.
B. 2007: The Year of the Recall
These theoretical concerns manifested themselves in a number of prominent recalls of children’s products in 2007. The identification of dangerous components in toys imported from China drew national attention to the problem of safety concerns related to imported products. In the United States, increased scrutiny led to the identification of more classes of tainted Chinese products. These included dangerous fish products; pet food ingredients; lead-tainted toys; car tires, and children’s toys; all pulled off of the shelves.
The toy recalls were the most publicized and prominent of the 2007 recalls. On June 13, 2007, RC2 Corp. voluntarily recalled 1.5 million Thomas the Tank railway toys whose surface paint contained lead. Later, in November of 2007, JSSY Ltd. was forced to recall poisonous toy beads that were marketed in North America and Europe. When the beads were ingested, the glue ingredient broke down in the body into GHB, the illegal date rape drug that can cause unconsciousness and death. Other recalls included propane grills, high chairs, computer batteries, lawn trimmers, children’s jewelry, and tool kits.
Perhaps the most illuminating recalls in 2007 involved those facing the popular American toy company Mattel. Mattel was plagued by two principle recalls, each driven by a very different flaw—the first was the presence of lead in toys, the second was the existence of a dangerous design defect. Taken together however, the two recalls each represent the difficulty of curbing dangerous products when they are produced overseas and imported abroad. Without an efficient oversight body, the disparity in the root causes of product flaws—whether due to faulty operations of the foreign manufacturer or the misguided design developed by a domestic company—is irrelevant. The point is that any product flaws are likely to persist because there is no one charged with detecting dangerous products at the source when a good is manufactured abroad.
The first recall faced by Mattel came on August 2, when approximately one million Sesame Street, Dora the Explorer, and other toys were voluntarily recalled due to the presence of lead. On August 14, an additional 250,000 toy cars were also recalled for excess levels of lead in the surface paints. These recalls are indicative of a breakdown in the well-defined division of labor that has helped drive China’s export success. The company that produced the toys recalled on August 2 was a longtime supplier for Mattel run by an owner who had operated his factory for over a decade and had a good record for treatment of his employees. Mattel’s vendors were contractually required to use paint that was either preapproved by Mattel or independently tested. The owner accepted the lead paint from a neighboring paint factory without testing it, and applied it to the toys.
The second recalls followed shortly thereafter, on August 14, 2007, when the first batch of 7.3 million Polly Pocket dolls were recalled by Mattel due to small magnets that could dislodge from the dolls and be swallowed by children. Similar magnets were used on a number of Mattel toys prompting a total of 18.2 million recalled toys for the dangerous magnets. The magnets were so strong that if two were swallowed together, they could seriously injure a child’s intestines. This recall did not occur until three children had been hospitalized after ingesting the magnets. The presence of dangerous detachable magnets have nothing to do with shoddy parts or poor assembly, but rather with the design flaw of including such strong yet small detachable magnets. Ultimately, in order to salvage their relationship with the Chinese government, where Mattel produces approximately two thirds of their toys, Mattel was required to publicly apologize to the Chinese people for their design error that led to the negative publicity associated with the recalls. The presence of lead paint is representative of the use of substandard, dangerous components in overseas manufacture. The detectable magnets are indicative of both design failure. Together, the detection of these risks represents the principle problem faced by the CPSC.
C. The Federal Response to the 2007 Recalls in China and the U.S.
1. China’s Response.
China quickly and publicly responded to the negative publicity surrounding the recalls. In the immediate aftermath, the Chinese government sought to shore up its image by conducting inspections, increasing standards, and revoking licenses of underperforming companies. China’s General Administration for Quality Supervision, Inspection and Quarantine imposed an export ban on the company behind the August 2 Mattel recall. Ultimately, 700 trade licenses were revoked. A strong message was sent to government regulators who had been perceived as lax and corrupt when the former Chief of the Chinese FDA was executed for corruption, ostensibly for accepting bribes to relax standards. These changes, along with increased demands from importing companies, have sharply increased costs facing Chinese producers. Following the recalls of 2007, the testing fees required to get an export license in China increased by approximately 25%. Whether these changes will lead to overall safety improvements remains to be seen. As it stands, over 50% of the country’s toy exporters shut down in 2008. Trade policy both at home and abroad, as well as the appreciation of yuan and decreased demand in the United States and Europe, contributed to this decline.
There has also been some preliminary movement towards joint U.S.-China cooperation designed to increase scrutiny of goods as they are produced. On September 11, 2007, the CPSC and its Chinese counterpart, the General Administration of Quality Supervision, Inspection and Quarantine, signed a Joint Statement on enhancing consumer product safety. This agreement embodies a ban on lead, which has been in effect in the U.S. since 1978, but does little beyond outlining general principles, such as the need to take steps to increase understanding of U.S. standards and an agreement to hold regular product safety talks, including monthly discussions of recall activity and trends, between U.S. and Chinese regulators. Chinese authorities have been reluctant or unwilling to take on some of the systemic problems in the toy manufacturing industry. While symbolic steps abound, regulation nonetheless remains weak or largely symbolic. For example, according to a foreign ministry spokesman, the Chinese government now asks toy manufacturers to check for flaws in the designs provided by foreign buyers. There is little oversight in place to ensure that companies comply with this new mandate, no defined steps a company can take if it does detect a design defect to mediate the potential harm, and no effective guidance as to what constitutes a design defect at all. In terms of lead, China’s problem runs far deeper than toys, including leaded gasoline and a range of other consumer products. There are little signs of the comprehensive reform required to address these problems.
In the long run, if these problems persist, major toy companies will either outsource to other countries or take more control of the plants in China. Still, many of the component parts will likely come from China for the foreseeable future, regardless of where the final product is assembled. Even if China was able to dramatically increase its regulatory ability and crack down on faulty assembly and the use of lead paint or other toxic chemicals, many dangerous products would still enter the U.S. owing to the general problem of lack of effective supervision, oversight, and communication between the two countries. Even if the lead were removed, the U.S. would still face a problem of dangerous toys due to design defects. Over 75% of the 550 recalls occurring since 1988 have been attributed to dangerous design flaws. The total amount of recalls only appears to be increasing. Beyond the difficulty of enacting and enforcing international safety standards, there is little motivation for individual domestic companies to heavily regulate the products they import into the U.S. Though Mattel had to recall millions of toys, a recent study conducted by NERA concluded that economic impact of the recalls and related events had no impact on Mattel’s stock price. Thus, there seems little hope that the total number of unsafe products being imported into the U.S. will decrease any time soon.
2. CPSC’s Response.
Despite the apparent breakdown in the consumer product safety net, the CPSC was initially reluctant to engage in large-scale reform. The CPSC did request additional funding, but planned to cut its staff by an additional 18 members prior to congressional involvement. The CPSC seemingly wanted to maintain the status quo of an honor system, with companies testing their own products for contaminants and setting their own safety standards.
Thus, there products continue to be produced overseas and there persists a danger that they will be imported without being checked. As it stands, toys are not regularly inspected by regulators for dangerous conditions as they enter the country. Whether by design defect, shoddy manufacturing, substandard component parts, the presence of lead, or any number of risk factors, some of those being imported will be dangerous when used by children. As a result, the CPSC largely operates in a post-hoc fashion. The agency must detect a systemic pattern of injuries or deaths before a product is recalled, thereby ensuring that a great number of units are already in use before a recall may begin. The end result is that the U.S. is largely constrained from impacting the safety of goods throughout the production process.
PART II: THE STATE ATTORNEYS GENERAL AND DANGEROUS CHILDREN’S PRODUCTS
The principle problem that emerged from the recalls of 2007 was the lack of sufficient incentives to ensure that all toys imported into the United States were safe, and the unlikelihood that there would be increased enforcement moving forward. One group, however, did have the ability and initiative to attempt to hold Mattel accountable for the imposition of risk. State attorneys general, acting in different states, together pursued an action against Mattel, ultimately achieving a settlement that included an agreement to abide by higher standards than those that emerged in the CPSIA, and a cash settlement for the states to further combat lead ingestion. This settlement was the outgrowth of the common law powers of the State Attorneys General, who, acting in concert, stepped into the regulatory void left by the federal government and private bar. The CPSIA, discussed in Part III, seeks to augment the powers of the state attorneys general by allowing them to enforce the CPSA in federal court. In this section, I will discuss the already-present tools in the state attorney general toolbox when dealing with dangerous children’s products, as well as how these powers manifested themselves in the Mattel settlement. I will then turn to the CPSIA in Part III to consider whether allowing state Attorneys General to enforce the federal law substantially adds to their enforcement power, thereby making consumers safer in the long run.
A. The Common Law Powers of the State Attorney General
The state Attorney General is the chief law enforcement officer in her state.  As such, she is responsible not only for advising and defending state agencies and officials, but also for representing the citizenry in any suit where the state is a real party in interest. The state attorney general’s authority to litigate in the public interest has its roots in English common law. Though ostensibly members of the executive branch, state attorneys general have long maintained a limited independence. This is partly because the state attorney general is a popularly elected position in the majority of states. Such traditional autonomy from the executive branch has allowed the state attorney general to maintain her ultimate duty to protect the interests of the people of her state and ensure that justice is done. However, this power is not limitless: While the state attorney general’s powers and duties at common law are largely left undefined, they can be limited by legislative action. Virtually all state attorneys general are responsible for enforcing the consumer protection statutes enacted in their state. State attorneys general have only recently become leading consumer protection advocates. The state attorney general’s ability to set and enforce state product standards is an area rife for conflict with the legislature and governor of a state. Indeed, in light of separation of powers concerns, a minority of states constrict the state attorney general’s ability to file suits independently of the rest of the executive branch. Protecting consumers from dangerous toys takes up a relatively small amount of already scarce state attorney general resources.
The doctrine of parens patriae provides standing for a state to sue on behalf of its own citizens. This allows the state attorney general to bring suit when its quasi-sovereign interests have been infringed. The violation must be of an “interest apart from the interests of particular private parties” in order for parens patriae to apply. These interests have been defined as an “interest in the health and well-being-both physical and economic-of its residents in general.” In a parens patriae suit, the harm alleged must be borne by society as a whole. State attorneys general are able to sue products manufacturers as “super plaintiffs” on behalf of the residents of the state if the harm is significant enough that the state’s quasi-sovereign interests are implicated. The role of the state attorney general is to protect the public, so their goal may be achieve through the public awareness by bring the case at all rather than just monetary recovery.
B. State Attorney General Enforcement Authority
Where not preempted by federal law, a state attorney general can also bring a consumer protection action under the Unfair or Deceptive Acts and Practices (UDAP) statutes that exist in every state and the District of Columbia. UDAP statutes generally give broad authority to the attorney general to combat virtually any type of behavior that injures consumers in the state. States have not, for the most part, crafted detailed statutes that define unfairness, leaving it up to the state attorney general. States were able to extend the definition of “unfair acts and practice” to encompass breach of an implied warranty, failure to protect customers from unnecessary dangers, and violations of existing laws. Courts have acquiesced to the state attorneys general’s definition of “unfairness” that applies to the sale of defective products. Some states have statutes that define unsafe children’s products as those that violate federal standards for the purposes of UDAP actions.
If enacted, state attorneys general are also able to bring actions based on specific hazard statutes. In the realm of children’s products, such statutes can only exist in areas not preempted by federal regulations. In response to the perceived lack of federal action, legislators in twenty-one states recently passed laws raising standards for lead, phalates, and other dangerous chemicals in children’s products. Should the state standard conflict with the federal standard, it would necessarily be preempted unless the state was purchasing the material itself or had obtained a waiver from the CPSC.
Despite the general statutory authorization, consumer protection actions in the children’s products arena are relatively uncommon. This may be explained, in part, by the ability of state Attorneys General to instigate civil investigative demands (CID). This allows the attorney general to serve subpoenas and obtain discovery prior to filing any complaints. The notification of the possibility of a full investigation and subsequent filing of charges provides some measure of deterrent. Such actions are, by their nature, limited to in-state manufacturers and retailers. This form of voluntary recall further poses no penalties and is therefore not ideal for the dangers presented by defective toys.
One of the principle ways state attorneys general have been able to regulate entire industries is through the use of UDAP statutes in multistate litigation. Multistate litigation has been called the “most significant development in state consumer protection enforcement.” The consumer protection statutes enacted in most states provide a foundation for a significant amount of multistate litigation. The state attorneys general’s parens patriae standing allows them to amalgamate the claims of individual victims. These cases became more prevalent in the 1980s, as underfunded state attorneys general began prosecuting large, well-funded corporations. In each participating state, assistant attorneys general file similar complaints against a corporation, all alleging similar deceptive or unfair conduct. The threat of pending litigation in multiple states provides an extremely strong incentive for companies to settle. State attorneys general were notably able to achieve major regulation of the tobacco industry through the use of multistate litigation. State attorneys general attained a milestone settlement with the major tobacco companies, a gain that was previously unimaginable when the claims were filed. In addition to recovering millions of dollars, the states achieved major concessions, including the prohibition of marketing to children and other limitations on tobacco advertising. Indeed, the educational and public sanctioning effect of the tobacco settlement has had further ancillary benefits.
Still, the victory over tobacco has not translated into success in other areas of public product regulation. Enforcement actions brought under UDAP have limited effectiveness when applied to products that are sold nationally. Federal law preempts the States from regulating many consumer products. While the Consumer Product Safety Act exempts some products from coverage, many of these are still regulated by other comprehensive federal schemes. Thus, product safety standards are largely driven by the determinations of federal agencies. Though the broad UDAP statutes are largely able to avoid preemption challenges, in practice their use is largely limited to conspicuous actions on behalf of sellers and manufacturers that rise to the level of fraud. On a fundamental level, because “unfair and deceptive” is so broadly defined, in practical terms courts will only apply it to the most egregious conduct--like that of the tobacco industry’s years for misinforming consumers about the threats of smoking cigarettes. Furthermore, the rules that emerge from adjudication are oftentimes specific to the facts of the case rather than a clear articulation of a single standard. As with torts suits, adjudication is necessarily backwards-looking. While adjudication can act as a deterrent, basic civil procedure ensures that only the parties before the court are bound by the immediate decision. 
More than half of the state attorneys general are also able to promulgate rules and regulations under these statues in addition to bringing government enforcement actions. This rulemaking process does provide more certainty than ad hoc enforcement, but likewise suffers from some important limitations. The rulemaking process, on both the state and federal level, is time consuming and costly. An inherent aspect of rulemaking is the notice and comment process to ensure the fairness of promulgated rules. This allows the participation of all those affected, not just the parties to a specific dispute. This is, however, very expensive. As it stands, virtually every state attorney general lacks the necessary resources to develop their own cases under their own statutes. Most attorneys general hold popularly elected offices. With the inevitable reelection campaign, it is difficult to sacrifice current enforcement for prospective results. Due to the necessary time constraints of rulemaking, unless the process is started at the beginning of the attorney general’s term, there is no guarantee that they will still be in office to reap the benefits of any ensuing regulations.
There are several distinct disadvantages to this reallocation of authority to state attorney generals. First, one of the proffered benefits of rulemaking is that it takes standard setting ability from judges, who are not politically accountable or possess any measure of expertise in the regulated agency, and places it in the hands of administrative agencies. Though they are usually politically accountable, attorneys general are unlikely to be experts in the particular field in which they are regulating. Second, the “political question” doctrine has been used to dismiss some regulatory rulemaking that sought to increase regulatory standards. For example, in American Shooting Sports, the Attorney General of Massachusetts sought to impose strict performance and safety requirements on handguns sold in the commonwealth. The court noted:
[t]he Attorney General may not use his regulatory authority to pursue general policy goals or public issues that limit or ban the sale of lawful products under the general rubric that purchasers of the products, or third parties who may come into contact with them, would be better off if the products were not marketed at all. Questions concerning whether such products should be sold, or their sales restricted, are primarily legislative in character.
Thus, the Attorney General’s power was limited to regulating deceptive and unfair practices of products that “fail fundamental requirements of safety and performance.” Third, the power of attorneys general is inherently limited to areas where standards do not already exist. If another agency on the state or federal level has acted in a particular area, most state attorneys general are precluded to act. Fourth, private plaintiffs may be able to use regulatory violations as proof in private UDAP claims. Unlike in the federal system, state laws generally do not reject a private right of action. However, state attorney general enforcement of federal law addresses many of these concerns as discussed in Part.III infra.
C. State Attorney General Enforcement in Action
The Mattel settlement provides an example of state attorneys general working together to achieve a multistate settlement. State attorneys general launched a sixteen month investigation of circumstances surrounding the recalls. In this multistate litigation Massachusetts led an Executive Committee, consisting of Assistant Attorneys General from Arizona, Florida, Kentucky, Missouri, Ohio, Pennsylvania and Vermont. In sum, 39 state Attorneys General joined in the settlement, with the potential for more states to join as they evaluate the claims. The complaints filed by the state Attorneys General included claims of unfair and deceptive trade practices. After some of the products were tested, it emerged that some of the paint in the toys was up to 11% lead, a gross violation of the then federal standard of 0.06% lead. The “unfair and deceptive” practice occurred when the defendants allowed a deceptive “Certificate of Compliance” indicating that the toys met federal standards as required by federal law, to be issued. Because this certificate was based on a single past test, it was unfair and misleading in regard to all the batches of toys that were imported after it was issued, but which it nonetheless purportedly represented. The complaint further alleged that the introduction of products that contained lead, the failure to have adequate safeguards in place or conduct adequate investigations, and the issuance of the faulty certificate further violated the UDAP statutes.
The terms of the settlement not only obtained money for the states, but also required Mattel to agree to abide by additional product safety standards. Ultimately, Mattel had to pay $12 million, to be divided among the participating states, to reimburse investigative costs and to fund consumer education on the issue. The greatest impact of the negotiated settlement lies in the standards Mattel has henceforth agreed to follow. Mattel agreed to what amounts to a strict liability standard for future violations where Mattel is required to phase in more stringent standards than those in the CPSIA for all toys manufactured after November 30, 2008. Mattel must also keep records on file for at least four years concerning the manufacturing of surface coatings and substrates used on its products, report to the Attorneys General within three days if it discovers lead in its products, and work with the state Attorneys General to remedy such violations. All of this was agreed to without the existence of proof of a single injury directly caused by the toys.
The terms of this settlement virtually ensure that should Mattel experience another recall event, the information will not be confined to the CPSC. Indeed, because this is a consent judgment, the higher standards will not be subject to the preemptive force of the new regulations required by the CPSIA. While this settlement represents a solid victory in the fight against lead, the other threat of toy magnets remains unregulated by the agreement. Though toy magnets represented approximately 90% of the recalled products by Mattel, the state Attorneys General only brought claims based on the lead-tainted toys. Unlike the faulty issuance of a certificate and the clear standards prohibiting lead paint, there is no law limiting the sale of toys with strong magnets. Magnets fall into the vague description of a design defect, but have still proven to be a persistent problem. Thus, the states focused on the clear-cut case, and did not attempt to argue that there was something unfair or deceptive about selling toys with strong magnets. It is also notable that this settlement is limited to Mattel and its subsidiary Fisher-Price. The higher standard agreed to will not apply to any other toy producers, thus limiting its regulatory impact.
There are, however, some additional limitations to the success of state Attorney General offices pursuing consumer products actions under their own statutes. A concern is that other States may not have the laws or the will to bring a similar action. For example, in 2007, Consumer Reports tested a number of children’s toys and found that the popular Fisher-Price toy blood pressure gauge strap contained 10,000 ppm of lead, and cautioned parents to take it away from their children. The state Attorney General office in Illinois began an investigation into this product and found that the cuffs contained seven to nine times more than the allowable amount of lead. As this lead was in the armband itself, it was not considered a surface coating and therefore not preempted by federal law. Illinois law ostensibly differed with the implication of the federal standard that if the lead was not accessible, then it was not dangerous. That the band itself contained the large amounts of lead was sufficient to violate the Illinois statute.
In response to the investigation by the Illinois Attorney General’s office, Mattel recalled the toy in Illinois December of 2007. Though Mattel accepted the cuffs back from all consumers nationwide, they did not recall the toy throughout the country, nor publicize it as they would be required to in a national recall. As the cuffs did not violate the federal standard and no other states sought to hold Mattel responsible, potentially dangerous blood pressure cuffs remain on the market. Consumer protection advocates would argue that even if lead does not exist on surface paint, there is still a chance that a young child will chew on the arm band, thereby exposing herself to lead. Business advocates could conversely argue that when only a small number of states impose a regulation that is not preempted by federal regulation, patchwork problems may result leaving manufacturers uncertain about what standards apply, and effectively driving a “race to the top,” where potentially the strictest standards are the ones enforced. Had Fisher-Price not agreed to the corrective action and a court found that the absence of action by the CPSC did not entail preemption of the standard, the Illinois Attorney General could have commenced litigation in state court alleging a violation of Illinois law. Mattel would thus be faced with the choice of pulling its product from Illinois, having a separate production operation just for Illinois and other similarly situated states, or producing all of its products at the highest standard. While consumer protection advocates may be pleased, the end result is that a single state can affect nationwide commerce. This results in an inherent patchwork problem that the creation of a national enforcement agency was supposed to correct. Understandably, courts have been willing to find that such state standards are preempted when conflicting with a federal standard. In sum, despite the substantial power of SAGs to protect their citizens, when it comes to products that are increasingly sold in the national market, there is reason to be believe that state Attorney General enforcement alone will not result in optimal protection for consumers of children’s products.
PART III: STATE ATTORNEY GENERAL ENFORCEMENT UNDER THE CPSIA
Though the failures of the system are not in dispute, the best way to repair the holes in the consumer product safety net have been much debated. The recall system as it stands is not enough to ensure that unsafe toys get off the shelf. As recalls are necessarily reactive, the ultimate goal of the CPSC and other enforcement groups is to stop the production of unsafe toys in the first place. That will require additional cooperation and enforcement on behalf of developing countries like China that is not readily forthcoming. In light of the regulatory reality, one the main focuses of Congress has been increasing product safety standards and the ability of regulators to enforce these on a national level.
A. CPSIA Debate: Whether State Attorneys General Should Enforce Federal Law
After the recalls of 2007, it became clear that new legislation reauthorizing the CPSC was required. After all, the CPSC was created in 1972 precisely because of the perceived failure of the marketplace, couple with private litigation and the then-existing federal rules, to keep consumers safe. The CPSC’s stated mission is to “protect the public against unreasonable risks of injury associated with consumer products.” After the 2007 recalls it became clear that it was not able to do so. In July of 2007, President Bush created the Interagency Working Group on Import Safety to “ensure that the executive branch takes all appropriate steps to promote the safety of imported products.” In a congressional hearing investigating the origins of the recalls, Thomas Moore, the Commissioner of the CPSC, stated:
[The 2007 recalls] brought to light, especially for Congress, the woeful state of the agency’s resources, from its declining staffing levels to its aging and inadequate laboratory facilities. For too many years the agency had been forced to put a brave face on its situation by claiming it could do more with less. When we stopped getting enough resources to meet our basic needs that claim began to ring hollow and the agency was left without the necessary tools to properly police the consumer product marketplace.
As a result, the CPSC faced change unique in government, with significant budget increases and comprehensive reauthorization on the horizon, coupled with unprecedented national attention. In the run-up to the CPSIA, consensus soon emerged that the agency would receive additional funding and enforcement authority. In response to these concerns, Congress passed the Consumer Products Safety Improvement Act of 2008. The Act notably includes higher standards for lead content, whistleblower protection, creation of a database for sharing of safety information, and increased penalties for failure to report, among other things. The CPSIA also mandates third party testing and accreditation. The empowerment of state Attorneys General to enforce actual provisions of the act was one of the more controversial aspects of the CPSIA. It did not appear in every version of the act passed by the House and Senate, and remained controversial in the debates of the Act.
Opponents argue that the ramifications of state enforcement extend beyond the state’s boundaries, thereby fostering the inconsistent application of federal law. The fear is that even more significant patchwork problems would result, instigating an effective “race to the top” that would usurp legislative functions in deciding the optimal level of regulations—in this context, overregulation is problematic because it would stifle industry and innovation. A major reason why the National Association of Manufacturers (NAM) supported the initial CPSA in 1972 was grounded in the frustration of having to contend with myriad and complex state laws. The current proposal was strongly lobbied against by NAM. Their principle concern was that enabling state Attorneys General to bring lawsuits for failure to comply with the federal law would create a new field of litigation and threaten the industry’s history of cooperation with the CPSC. An ancillary concern is that confusion could arise if different state attorneys general had different interpretations of the law. The Executive Branch also opposed this increase in state attorney general enforcement power. In a letter to the Senate Committee considering the Bill, the White House argued that “allowing individual states to enforce the statutes on their own will cause significant uncertainty in the marketplace as the safety status of individual products may vary depending on the jurisdiction.” Even the acting chairman of the CPSC, Nancy A. Nord, opposed the provision enabling state Attorneys General to enforce aspects of the federal law. Nord wrote to Congress that such empowerment of state attorneys general would “undoubtedly lead to the inconsistent application of federal law . . . where states may effectively develop their own unique product safety systems and standards."
In general, proponents of this law and others like it argue that enabling state Attorneys General to enforce federal law allows fifty-one enforcement offices to police consumer safety issues and eradicates the need to rely solely on a single centralized enforcement office. This provision to have state Attorneys General monitor compliance with federal law was vocally supported by consumer advocacy groups, such as the Consumer Federation of America. Such groups reasoned that in the face of a failed domestic policy, allowing state Attorneys General to enforce the federal law would strengthen the safety scheme where the CPSC would not. Giving the power to state attorneys general further appealed to some members of Congress in that it allowed for greater enforcement without requiring additional appropriations of taxpayer money. Some Senators also note that states and state attorneys general are better situated to learn about and act on potential product threats in light of the well-documented flaws in the recall system. Though an item has been recalled, it is virtually impossible to ensure that it is entirely removed from the marketplace. For example, in a 2006 recall, Twentieth Century Fox Home Entertainment offered a free DVD to people who returned silver-coated metal charms that contained lead. Fifteen months after Fox’s recall of the 746,621 charms, only about 50,000 charms, amounting to 6.7 percent, were sent back. Though it is likely that many of the charms were thrown away, some of the unaccounted for charms surely remain on dressers and in jewelry boxes. Others may continue to be sold in second-hand stores. The potential for products to remain for sale on the shelves of discount stores is greater when a single centralized office is in charge of enforcement. The CPSC’s focus, as a data driven agency, is necessarily on uncovering the next product needed to be recalled, not scouring the shelves for already past recalls. They simply do not have the resources to do both. An assistant state attorney general will understandably be better able to learn about and act upon such persistent problems.
This debate regarding state attorney general enforcement of federal standards is a microcosm of a larger debate about the role of the state attorney general in the legal system. Some argue that the role of state Attorney General should be limited to defending state agencies in court and providing legal advice. They argue that by regulating through lawsuits, the state attorneys general have usurped the power of state legislatures and Congress to make law. If the state attorney general is entitled to forge regulations on her own, she is free from the checks and balances inherent in traditional law making to the detriment of interstate commerce.
Proponents argue that this regulation is a natural extension of the traditional powers of the state attorneys general. Faced with poor enforcement in the children’s products areana, some state Attorneys General have relished and expanded upon their role as defender of the public’s interests. It is the state Attorneys General’s job to defend the health, safety, and welfare of the people. That responsibility is at the heart of her powers in parens patriae. It is well established that the state Attorney General is no ordinary advocate; rather, she serves as a constitutional officer with a duty to both the people and to serve justice. There was no guarantee that Congress would pass the CPSIA, as well as a significant time lag between congressional action funding and authorizing the CPSC to fulfill its duty and when those gains would be seen. State attorneys general have expanded upon their traditional powers to fill a void created by lack of a federal regulatory presence.
It is important to note that this debate occurred during the prolonged “year of the recall.” Practical concerns related to detecting dangerous children’s products make the prospect of having “more cops on the beat” particularly attractive. The process of consumer protection is primarily driven by consumer complaints.  A key concern is how to enable consumers to efficiently register complaints, allow that information to be processed by the appropriate agency, and then acted upon by the appropriate regulatory body. For example, if a child choked on a small button her parents could contact the CPSC if they knew it existed, the manufacturer of the toy, the Better Business Bureau (to complain about the store who sold them the toy), their state attorney general, or even the local police or prosecutor’s office. There is a possibility that the parents may not link the isolated incident to a larger design defect that may potentially affect many children around the country. In this scenario, the more eyes on the ground with the ability to coordinate information, the more effective the response will likely be.
In light of increased demands placed on the CPSC in the CPSIA, there is a chance that the agency will actually be able to screen fewer products, at least in the short term. Despite the increase in authority and budget, there is some doubt that the CPSC will be able to respond quickly to the challenges facing it. The bill itself will require the CPSC to implement a host of new requirements and regulations. With the current staffing of full time employees at approximately 400 members, the CPSC will be required to hire, by its estimate, 125 additional full-time employees. This additional staff requirement is on top of the attrition of many of the top people after years of reduced funding and neglect. The apex of CPSC staffing came in 1980 when the Agency employed 978 people. The CPSC had only 420 full-time employees during 2007. This number was set to decline further to 400 employees prior to the publicized recalls and passage of the CPSIA. Furthermore, as the CPSC’s budget is largely dependent on Congress, so there is a possibility that a future Congress could reinstitute the shrinking of the Agency that has occurred in the past eight years.
B. The CPSIA Compromise
Ultimately, the House and Senate passed the CPSIA with a compromise: endowing state Attorneys General with some limited authority to enforce the provision of the act. This provision empowers state Attorneys General to seek injunctive relief to prevent the sale of dangerous products:
“[A] State, as parens patriae, may bring a civil action on behalf of its residents . . . whenever the attorney general of the State has reason to believe that the interests of the residents of the State have been or are being threatened or adversely affected by a manufacturer, distributor, or retailer entity that violates this Act.”
This power to seek an injunction is somewhat constrained in that state attorneys general are required to provide the CPSC with at least 30 days notice unless the State determines that it must protect the residents of its State from a “substantial product hazard” that must be acted upon immediately. The CPSC further has the right to become a party to any suit filed by the state attorneys general under the Act. State attorneys general cannot file a duplicative suit if a suit has already been filed by the CPSC, except in very limited circumstances. Together, these provisions provide a limited empowerment for state attorneys general, while maintaining CPSC oversight over the litigation. In its final form, the CPSIA offers a unique compromise to some of the potential problems of State enforcement. First, States are only able to seek “appropriate injunctive relief” for violations of the Act. Monetary damages may not be collected by States under the Act. States must also give the CPSC advance notice of their intention to initiate such an action before it is filed, unless faced with a “substantial product hazard” that must be immediately addressed. Should the state action conflict with a federal policy, the Act provides that the CPSC the right to intervene in any action filed by states under the Act. This ensures that enforcement will be uniform throughout the country as the CPSC may intervene if one state pushes the envelope too far. Additionally, if the CPSC already has a pending action against a company, states may not file a separate suit. Finally, on its terms, the act does not limit state Attorneys General from bringing the traditional actions discussed in Part II.B. According to Thomas Moore, a Commissioner of the CPSC, the Agency “will always be at a disadvantage in policing this huge import market,” but can “do a better job” than they currently do with more resources. The further empowerment of the state Attorneys General reflects the will to add to those resources. Furthermore, having state attorneys general assist federal agencies in enforcement of their power is not a novel concept. In light of the clear failure to adequately protect consumers, Congress erred on the side of empowering state attorneys general while avoiding the potential for the “patchwork” problems with some CPSC oversight. This compromise was essential to gaining bi-partisan support for this provision of the CPSIA. Importantly, however, the CPSIA left the state Attorneys General empowered to pursue the common-law remedies that had developed organically in the absence of strong federal regulation, thus begging the question of whether this new power will substantively add anything to that of state Attorneys General at all.
C. A Lasting Solution or More of the Same?
While the CPSIA adds another tool to the proverbial toolbox of a state Attorney General when facing a report of a dangerous children’s product, a separate question is whether the state Attorney General will actually use this injunctive power when all of her traditional tools are still available under state law. Some commentators believe that the state attorney general enforcement provision will not substantively add to the tools available to state attorneys general. They argue that the injunctive power embodied in the statute does not change how state attorneys general will fundamentally conduct product safety actions. As it stands, states may not enforce regulatory standards that are inconsistent with federal standards, but are allowed to enforce identical standards under state laws; nothing in the CPSIA changes this ability. State attorneys general will instead file actions in state court as they are more familiar with doing. Where there remains a regulatory vacuum, states will remain free to create new regulations.
There is some potential that enforcement under the CPSIA could evolve along the lines of state attorney general enforcement with the FTC. For example, in response to consumer complaints, more than twenty States compiled “Do Not Call” databases in the 1980s to prevent unwanted telemarketer calls. Residents could indicate that they did not want to receive calls from any companies. In order to make calls in the state, companies were required to access these lists and refrain from calling anyone on them. During this period, the size of the FTC was cut in half and the Agency saw the amount of fraud cases it brought dwindle. In this environment, state attorneys general stepped up their enforcement to compensate for the lack of federal presence. In the early 1990s, Congress passed the ineffective Telephone Consumer Protection Act (TCPA). This was a company specific list that proved to be less effective than individual state action.
When federal regulation seriously takes on a problem, state Attorneys General can be effectively utilized to enforce it efficiently. A national “Do Not Call” registry was not implemented until 2003. Unlike the TCPA, the new registry was structurally similar to those that states had been implementing for the past decade. The FTC coordinates the list, making determinations such as who qualifies as a “solicitor,” the times telemarketers can call, and the use of autodialing technology. The FTC has since had a successful history of working with the state attorneys general and generally welcomes their support. Though states are allowed to maintain their own lists, since the creation of the national registry more than thirty states have signed on and merged their lists with that of the FTC. The FCC, FTC, and the states are all able to enforce its provisions. State Attorney General offices are able to, and sometimes do, obtain nationwide injunctive relief. Like the sale of dangerous toys, telemarketing fraud is not confined to a particular state. An integrated state approach is far more efficient than waiting for federal action or proceeding on a state by state basis. Together, states and the FTC have virtually reduced unwanted telemarketer calls for those who opt-in to the program. Unlike determinations of telemarketing fraud, it is far less clear what about to a “substantial product hazard.” The injunctive power granted to state Attorneys General does not require the 30-day notice if the complaint alleges a “substantial product hazard.” CPSA § 15(a) defines a “substantial product hazard” as a failure to comply with an applicable consumer product safety rule which creates a substantial risk of injury to the public, or a product defect which creates a substantial risk of injury to the public. While the state attorney general must still notify the CPSC about such a determination, the filing of such an action and its attendant publicity does involve a substantial increase in power for a state attorney general. This increase in power threatens to undermine the limitation, embodied in the CPSIA, that allows state attorneys general to issue injunctions only with requisite notice to the commission. In light of the relatively few rules and standards enacted by the CPSC in its history, this power has been used by the Agency as its primary means of regulating manufacturers, importers, and vendors.
Some state attorneys general have been critical of the CPSC’s failure to use this power in the past. For example, Illinois Attorney General Madigan’s office identified hundreds of recalled bassinets that were still available on Craig’s List. Madigan chided the CPSC for the Agency’s slow response and not doing more to publicize the recall. Now, were the state Attorney General in Illinois to file a claim against the company, she could bring both the state and federal claims together, thus affecting a nationwide boycott while protecting consumers in her state.
Ultimately, the CPSIA did more than leave the organic evolution of the role of the state attorneys general intact. It further validated their role as key players in regulating children’s products by explicitly not preempting their common-law powers and enabling them to enforce the injunctive authority under the CPSIA. At the heart of the state attorney general enforcement of federal law is the relationship between the federal and state regulators. As sources of information of potential risks, particularly after a risk has been identified and a recall has been issued, the collaborative efforts of state Attorneys General working with the CPSC will put the U.S. in a better position to catch dangerous products.
In the long run, the best solution would be to stop the dangerous products from being manufactured in the first instance. Stronger and more consistent regulations in the places where the products are produced and designed are needed.[249 The heightened standards and penalties on manufacturers, vendors and importers represent a good first step. A major additional step involving the CPSC would be for Congress to pass legislation that would provide the Agency with more authority to work with the Chinese government. As the somewhat fragile trade relationship with China continues to develop, the U.S. must focus on working together with the Chinese to enact thorough standards. That, however, remains a long-term solution. In the short run, greater penalties, more enforcement, and increased publicity will provide a strong economic incentive for business to become as diligent as possible.
Until this can happen, the CPSIA is a solid first step towards empowering the CPSC to fully carry out its responsibilities. How the provision for state attorney general enforcement will work in practice remains to be seen. It could go follow either of two paths: state attorneys general could form a cooperative relationship with the CPSC like that with the FTC, or the provision may not be used at all as state attorneys general choose to stay with the organically developed common law actions they have been using to make up for the perceived void in federal regulatory presence, actions that remain largely isolated to their individual states or require the time, effort, and expense for cooperation. If the state attorneys general are able to make use of their new injunctive power along with the common-law action, then the benefits of local protection and deterrence may be coupled with nationwide publicity and effectiveness. For the benefit of consumers, greater cooperation and coordinated enforcement will pave the way towards increasing product safety and avoiding another “year of the recall.”
1 See The Office of Trade and Industry Information, TradeStats Express, at http://tse.export.gov/ for analysis of U.S. trade partnerships.
2 See U.S. Census Bureau and U.S. Bureau of Economic Analysis, U.S. International Trade in Good and Services, October 2008, available at http://www.census.gov/foreign-trade/Press Release/current_press_release/ft900.pdf. In total, the U.S. imported $29,909,000,000 worth of “toys, games and sporting goods” from January, 2008 to October, 2008. Id. at 13. This represents a substantial increase from the $28,528,000,000 imported during the corresponding period in 2007, although one can speculate that the economic troubles that emerged in October and November of 2008 will mean that fewer of these goods will actually be consumed. It would be premature to presume that the economic troubles would lead to fewer imports from China. Indeed, the strengthening dollar and ongoing economic turmoil may make importing goods from China even more attractive than it previously was.
3 U.S. Consumer Product Safety Commission, 2009 Performance Budget Request, at 14 (February 2008), available at http://www.cpsc.gov/cpscpub/pubs/reports/2009plan.pdf [hereinafter CPSC Budget Request].
4 In 2007 the U.S. imported more that $2 trillion worth of products. They entered the U.S. through more than 300 points of entry, and were transmitted by approximately 825,000 importers. Interagency Working Group on Import Safety, Import Safety—-Action Plan Update, Introductory Letter to President Bush (July 2008), available at http://www.importsafety.gov/report/actionupdate/actionplanupdate.pdf [hereinafter Import Safety Action Plan].
5 See The Office of Trade and Industry Information, TradeStats Express, at http://tse.export.gov/. The U.S. imported $321,507,785,000 worth of goods from China in 2007.
6 Wayne M. Morrison, Cong. Research Serv., RL32165, U.S.-China Trade Issues, May 22, 2008, [hereinafter Morrison, Trade Issues].
7 CPSC Budget Request, supra note 3, at 14.
f9. Morrison, Trade Issues, supra note 6, at 9.
10 See The Coming China Wars at 2, New York: FT Press, (2007).
11 See Charles B. Rangel, Moving Forward: A New, Bipartisan Trade Policy That Reflects American Values, 45 Harv. J. on Legis. 377, 409 (2008). China was able to accomplish this by devaluing their currency relative to the U.S. dollar, and then intervening in exchange markets to ensure that the value stayed at the level prescribed.
12 See National Labor Committee, Nightmare on Sesame Street, available at http://www.nlcnet.org/admin/media/document/China/KNEX_2008/SESAME_WEB_071508.pdf.
14 Peter Engardio (ed.), Chindia: How China and India Are Revolutionizing Global Business, at 60 (2006).
15 Eric Lipton & Louise Story, Bid to Root Out Lead Trinkets Falters in U.S., N.Y. Times, Aug. 6, 2007.
16 Lucy P. Allen, et. al., China Product Recalls: What’s at Stake and What’s Next, NERA Working Paper, at 2, Feb. 20, 2008, available at http://www.nera.com/image/PUB_ChinaProductRecalls_2.08_FINAL.pdf.
17 Jyoti Thottam, The Growing Dangers of China Trade, Time Magazine, Jun 28, 2007.
18 Morrison, Trade Issues, supra note 6, at 9.
19 Jeremy Haft, The China Syndrome, Wall St. J., July 16, 2007, at A12.
20 In this context, lead is an especially difficult problem as it is hard to detect and can enter the production stream in a number of ways. A recent study conduct at Ashland University found that lead-containing electronic waste is finding its way into Chinese produced consumer products such as toys and jewelry. See Jeffery D. Weidenhamr and Michael L. Clement, Leaded Electronic Waste is a Possible Source Material for Lead-Contaminated Jewelry, 69 Chemosphere 1111, 1111—15 (2007), available at doi:10.1016/j.chemosphere.2007.04.023 (finding that recycled circuit board solders are being used to produce some of the heavily leaded imported jewelry sold in the United States). The recycling process allows Chinese manufacturers access to low cost electronic component parts and provides an outlet for disposed of U.S. electronics. While both China and the United States may benefit from U.S. companies sending recycled electronics goods to China for extraction and use, the negative externalities are born by relatively defenseless third parties: the Chinese workers who produce the goods and the children who use the dangerous, lead contaminated toys. See Heather L. Drayton, Note, Economics of Electronic Waste Disposal Regulations, 36 Hofstra L. Rev. 149, 158 (2007) (arguing “negative transboundary externalities” exist from trade of recyclable materials to less developed countries). When these components contain lead or other toxins, there is a risk of death when ingested by children or handled by factory workers.
21 David Barboza, When Fakery Turns Fatal, N.Y. Times, June 5, 2007 (discussing the origins of melamine-contaminated pet food). A Chinese company shipped melamine-contaminated ingredients to middlemen in North and South America, who used the ingredients in manufacturing pet food. Melamine is difficult to test for and was not detected until after numerous pet fatalities.
22 Joe Nowlan, Distributors Eye Mattel Recalls; Experts Say Due-Diligence and Attention to Detail Are Vital When Developing Private-Label Programs With Overseas Partners, Indus. Distribution, Oct. 1, 2007.
23 See Shu-Ching Jean Chen, Trapped in the Chinese Toy Closet, Forbes, Aug. 21, 2007.
25 See Monique Hawthorne, Comment: Confronting Toxic Work Exposure in China: The Precautionary Principle and Burden Shifting, 37 Envtl. L. 151, 164 (2007) (Arguing that toy factories violate regulations for toxic substances in order to decrease costs).
26 See Gregory H. Fuller, Economic Warlords: How Defacto Federalism Inhibits China’s Compliance with International Trade Law and Jeopardizes Global Environmental Initiatives, 75 Tenn. L. Rev. 545, 553 (2008) (describing how diverse interests of China’s large population, localism, and de facto federalism make complying with international accords difficult).
28 Id. at 576. Fuller argues that “comprehensive reform” is required to reverse the process of increased economic fragmentation within China.
29 Chun-Hsien Chen, Enforcement Rates of Intellectual Property Protection in the United States, Taiwan, and the People’s Republic of China, 10 Tul. J. Tech & Intell. Prop. 211, 253 (2007). Chen’s article discusses a similar difficulty in enforcing intellectual property laws in China. Though stronger IP laws have been enacted in the past ten years, the presence of these regulations has not significantly reduced the prevalence of violations or the widespread availability of counterfeit products. Chen concludes that the level of IP protection is affected by multiple factors, with the factors relating to socio-economic development the most decisive. Id. at 257—58.
30 Jyoti Thottam, The Growing Dangers of China Trade, Time, Jun 28, 2007.
31 Chen, supra note 28, at 252—53.
32 Thottam, supra note 29.
33 Julia A. Phillips, Does “Made in China” Translate to “Watch Out” for Consumers? The U.S. Congressional Response to Consumer Product Safety Concerns, Penn St. Int’l L. Rev. 217, 226 (2008).
34 U.S. Consumer Product Safety Commission, 2008 Performance and Accountability Report, at 3 (Nov. 2008), available at http://www.cpsc.gov/cpscpub/pubs/reports/2008par.pdf [hereinafter CPSC Performance Report].
35 CPSC Budget Request, supra note 3.
36 The CPSC administers the Federal Hazardous Substances Act, the Flammable Fabrics Act, the Poison Prevention Packaging Act, the Refrigerator Safety Act, the Pool and Spa Safety Act, and the Children’s Gasoline Burn Prevention Act. CPSC Performance Report, supra note 33, at 3.
37 Eric Lipton, Safety Agency Faces Scrutiny Amid Changes, NY. Times, Sep. 2, 2007.
38 Renae Merle, Products that Miss Safety Standards Sent Overseas by U.S. Companies, Wash. Post, Sept. 1, 2007. This practice will be banned by the CPSIA.
39 CPSC Budget Request, supra note 3
40 See CPSA §15(b).
41 Michael Weisskopf, Who Regulates America’s Toymarkers?, Time, Aug. 18, 2007.
43 CPSC Budget Request, supra note 3, at vi.
44 Stephen Labaton, Senate Votes to Strengthen Product Safety Laws, N.Y. Times, Mar. 7, 2008.
45 15 U.S.C. §§2056, 2057.
46 See Glen Kaplan & Charles Barry Smith, Patching Holes in the Consumer Product Safety Net: Using Unfair Practices Laws to Make Handguns and Other Consumer Goods Safer, 17 Yale J. on Reg. 253, 255 (2000).
47 16 C.F.R. §1115.14(e).
48 David G. Wix & Peter J. Mone, Planning For and Implementing a Product Recall, 74 Def. Couns. J. 220, 229 (2007).
49 CPSC Budget Request, supra note 3, at 5. The IT budget is approximately $7 million, including twenty-seven CPSC IT staff members. The focus on IT is expected to grow as the electronic sharing of information has increased both internally and externally.
50 Import Safety Action Plan, supra note 4, at 7.
51 Lipton, supra note 36.
53 See Kenneth A. Bamberger & Andrew T. Guzman, Keeping Imports Safe: A Proposal for Discriminatory Regulation of International Trade, 96 Cal. L. Rev. 1405, 1412 (2008).
54 See Michael Weisskopf, Who Regulates America’s Toymakers?, Time, Aug. 18, 2007.
55 15 U.S.C. § 2055(b)(1) (2008). See Consumer Product Safety Commission v. GTE Sylvania, Inc., 447 U.S. 102, 111—12 (“The CPSA gave the Commission broad powers to gather, analyze, and disseminate vast amounts of private information. In granting the Commission such authority, Congress adopted safeguards specifically designed to protect manufacturers’ reputations from damage arising from improper disclosure of information gathered and received by the Commission.”).
56 15 U.S.C. § 2055(b)(1) (2008).
57 Id. at § 2055(a)(2).
58 See 15 U.S.C. § 2064(b); see also Reliance Elec. Co. v. Consumer Product Safety Com’n, 924 F.2d 274, 276 (D.C. Cir. Jan 22, 1991) (stating basis of Reliance Co.’s objections to FOIA request).
59 Id. See also GTE Sylvania, Inc., 447 U.S. at 105.
60 E. Marla Felcher, Product Recalls: Gaping Holes in the Nation’s Product Safety Net, 37 J. of Consumer Affairs 170, 173 (2003) (describing experience submitting FOIA requests to the CPSC and ramifications on regulation).
61 Allen, et al., supra note 15, at 7. In the end, design defects were responsible for the most recalls.
62 See Lipton & Story, supra note 17.
63 See Chris Reidy, Reebok Recalls Bracelets After Boy Dies, Boston Globe, March 24, 2006. The safety threshold for lead content in jewelry is 0.06 percent.
64 See U.S. Consumer Product Safety Commission, Reebok Recalls Bracelet Linked to Child’s Lead Poisoning Death, Release #06-119, March 23, 2006, available at http://cpsc.gov/cpscpub/prerel/prhtml06/06119.html.
65 See Bamberger & Guzman, supra note 52, at 1420.
67 Id. Though the U.S. could condition access to its market upon the allowance of inspections, the prospects for this are remote in light of higher priorities regarding trade with China.
68 Marc R. Stanley, When Bad Companies Happen to Good People, 56 Drake L. Rev. 517, 526 (2008) (arguing against tort reform by noting, in part, that the CPSC has “too few inspectors, investigators, and scientists . . . and too little enforcement authority”).
69 See Alec Johnson, Vioxx and Consumer Product Pain Relief: The Policy Implications of Limiting Courts’ Regulatory Influence Over Mass Consumer Product Claims, 41 L.A. L. Rev. 1039, 1071—84 (2008).
70 James E. Rooks, Jr., Settlements and Secrets: Is the Sunshine Chilly?, 55 S.C. L. Rev. 859, 861—62 (2004).
71 See U.S. Dept. of Health and Human Services, Centers for Disease Control and Prevention, Lead Poisoning Prevention Program, Frequently Asked Questions, available at http://www.cdc.gov/nceh/lead/default.htm.
72 The Center for Disease Control and Prevention’s Lead Program indicates that some consumer products through which children may be exposed to lead include artificial turf, candy, ceramic ware, folk medicine, Sindoor (a food additive) in addition to toy jewelry and toys. See Id.
73 Prior to 2007, recalls of dangers children’s toys and jewelry occurred on a yearly basis, some involving millions of pieces, with generally less publicity. See e.g. U.S. Consumer Products Safety Commission, CPSC Announces Recall of Metal Toy Jewelry Sold in Vending Machines: Firms agree to stop importation until hazard is eliminated, originally issued July 8, 2004 revised on March 1, 2006 available at http://www.cpsc.gov/CPSCPUB/PREREL/PRHTML04/04174.html (announcing the recall of 150 million pieces of jewelry in an agreement with four importers); The Diddle Kingdom: Chinese Manufacturing, Economist, July 7, 2007.
74 See Patrick Woodall, Senior Policy Analyst, Food & Water Watch, Testimony Before the U.S.-China Economic and Security Review Commission Hearing on Chinese Seafood Imports: Safety and Trade Issues, (April 24, 2008) (testifying that publicity surrounding toy recalls led to increased scrutiny of fish imports).
75 See David Barboza, China Food Mislabeled, U.S. Says, N.Y. Times, May 3, 2007 (pet food); Andrew Martin, Chinese Tires Are Ordered Recalled, N.Y. Times, June 26, 2007 (defective tires); Louise Story & David Barboza, Mattel Recalls 19 Million Toys Sent From China, N.Y. Times, August 15, 2007 (children’s toys). 100 people in Panama died from drinking cough syrup tainted with diethylene glycol, a component of car antifreeze, that was produced in China. Subsequent tests in the U.S. found the same toxin in discount toothpaste.
76 See U.S. Consumer Product Safety Commission, RC2 Corp. Recalls Various Thomas & Friends™ Wooden Railway Toys Due to Lead Poisoning Hazard, Release #07-212, (June 13, 2007), available at http://www.cpsc.gov/cpscpub/prerel/prhtml07/07212.html. The affected toys were produced from 2005 to 2007 in China. This was particularly unsettling to some because Thomas the Tank Engine toys are generally seen as “high-end” toys, and cost between $10 and $100 per piece. See Angel Jennings, Thomas the Tank Engine Toys Recalled Because of Lead Paint, N.Y. Times, June 15, 2007.
77 See U.S. Consumer Product Safety Commission, Spin Master Recalls Aqua Dots – Children Became Unconscious After Swallowing Beads, Release #08-074, (Nov. 7, 2007), available at http://www.cpsc.gov/cpscpub/prerel/prhtml08/08074.html.
78 Keith Bradsher, Producer of Poisonous Toy Beads Issues Apology, N.Y. Times, Nov. 30, 2007.
79 See Lipton, supra note 36.
80 CSCP, Fisher-Price Recalls Licensed Character Toys Due To Lead Poisoning Hazard, Release #07-257, (Aug. 2, 2007), available at http://www.cpsc.gov/cpscpub/prerel/prhtml07/07257.html. The products were recalled by Fisher-Price, a subsidiary of Mattel.
81 CPSC, Mattel Recalls “Sarge” Die Cast Toy Cars Due To Violation of Lead Safety Standard, Release #07-270, (Aug. 14, 2007) available at http://www.cpsc.gov/CPSCPUB/PREREL/prhtml07/07270.html.
82 See supra notes 12—13, and accompanying text.
83 Shu-Ching Jean Chen, Subcontractor at Heart of Fisher-Price Toy Recall is Apparent Suicide, Forbes, Aug. 13, 2007 [hereinafter Chen, Subcontractor] The proprietor, Zhang Shuhong, died of an apparent suicide shortly after the recall.
84 Gabriel Allen, Get the Lead Out: A New Approach For Regulating the U.S. Toy Market in a Globalized World, 36 Ga. J. Int’l & Comp. L. 615, 620 (2008).
85 Chen, Subcontractor, supra note 82.
86 U.S. Consumer Prod. Safety Comm’n, Additional Reports of Magnets Detaching from Polly Pocket Play Sets Prompts Expanded Recall by Mattel, Release # (Aug. 14, 2007), available at http://www.cpsc.gov/cpscpub/prerel/prhtml07/07273.html.
87 Shu-Ching Jean Chen, A Blow to Hong Kong’s Toy King, Forbes, Aug. 15, 2007.
88 See Geoff Dyer, et. al, Mattel Apologises to “the Chinese People”, Fin. Times, Sep. 21, 2007.
89 See Half of China’s Toy Exporters Out of Business, Xinhua News Agency, Oct. 14, 2008, available at http://www.china.org.cn/business/news/2008-10/14/content_16611295.htm.
90 Chen, Subcontractor, supra note 82.
91 See 700 Toys Export Licenses Revoked, China Daily, June 10, 2008, available at http://www.china.org.cn/business/news/2008-06/11/content_15736795.htm.
92 See Joseph Kahn, China Quick to Execute Drug Official, N.Y. Times, Jul. 11, 2007, available at http:// www.nytimes.com/2007/07/11/business/worldbusiness/11execute.html.
93 See 50% of Toy Firms ‘Gone in 2 Years’, China Daily, Oct. 21, 2008, available at http://www.china.org.cn/business/2008-10/21/content_16641477.htm.
95 See Wayne M. Morrison, U.S.-China Trade Issues, CRS Report for Congress, RL 33536, available at http://ncseonline.org/NLE/CRSreports/08Mar/RL33536.pdf . at 11. Steps included increased inspections, educational programs for Chinese manufacturers, bilateral technical personal exchanges and training, informational exchanges with U.S. officials, and the development of a product tracking system.
96 See U.S. Consumer Product Safety Commission, U.S. and Chinese Product Safety Agencies Announce Agreement to Improve the Safety of Imported Toys and Other Consumer Products, Release #07-305, Sept. 11, 2007, available at http://www.cpsc.gov/cpscpub/prerel/prhtml07/07305.html. See also Associated Press, China Signs Pact to Ban Lead Paint in Export Toys, N.Y. Times, Sept. 12, 2007.
97 Nicole J. Kaplan, Analyzing the Recall of Chinese-Made Products: Understanding the Problems and Creating Effective Solutions, 4 Bus. L. Brief (Am. U.) 39, 40 (2007).
98 See Toy-Makers Advised to Check Foreign Design Flaws, Xinhua News Agency, Nov. 26, 2008, available at http://www.china.org.cn/business/news/2008-11/26/content_16832904.htm.
99 By definition a design defect from a risk that emerges from regular use of the product. There is no reason to think that a manufacturer would be better situated than a product designer or tester to uncover a defect.
100 Joe McDonald, China’s Lead Problems Go Beyond Toys, USA Today, Aug. 16, 2007. Researchers have found that up to one-fifth of Chinese children tested have unsafe levels of lead in their blood.
101 Barboza, supra note 75. Mattel produces about half of its toys in plants that it operates, while the other half—typically holiday toys and other limited run items—are produced by subcontractors.
102 See supra note 23 and accompanying text.
103 Paul W. Beamish & Hari Bapuji, Toy Recalls and China: Emotion v. Evidence, 4 Management and Organization Review 197, 202 (2008) (discussing their analysis of toy recalls in the U.S. between 1988 and 2007). This further indicates that the public outcry against Chinese-manufactured goods is disproportionate as the designs for the goods overwhelmingly originate in the United States. This mistake was not helped by the media’s reporting of the 2007 recalls. Reports were litter with inflammatory article titles, see e.g. Shu-Ching Jean Chen, Trapped in the Chinese Toy Closet, Forbes, Aug. 21, 2007, and basic factual mistakes, see e.g. Joe McDonald, China’s Lead Problems Go Beyond Toys, USA Today, Aug. 16, 2007 (claiming that the 18.2 million toys recalled by Mattel were for lead paint, not a design defect).
105 Allen et. al, supra note 15, at 10—11.
106 See infra Part III.A
107 Stephanie Desmon, Rising Tide of Unsafe Imports: Reform is Sought at Federal Level, Balt. Sun, Aug. 15, 2007.
108 See Bamberger & Guzman, supra note 52, at 1416.
109 Felcher, supra note 59, at 174.
110 See Part II.D infra.
111 Justin Davids, State Attorneys General and the Client-Attorney Relationship: Establishing the Power to Sue State Officers, 38 Colum J. L. & Soc. Probs. 365 (2005).
112 See State ex rel. Shevin v. Exxon Corp., 526 F.2d 266 (5th Cir. 1976). As the Fifth Circuit noted, “[t]he office of the attorney general is older than the United States.” Id. at 268 n.4.
113 Id. See also William P. Marshall, Break Up the Presidency?: Governors, State Attorneys General, and Lessons from the Divided Executive, 115 Yale L.J. 2442, 2446 (2006).
114 Nat’l Ass’n of State Attorneys Gen., State Attorneys General: Powers and Responsibilities 15 (Lynne M. Ross ed., 1990) [hereinafter State Attorneys General]. The Attorney general is elected in forty-three states and appointed by the governor in five states (Alaska, Hawaii, New Hampshire, New Jersey, and Wyoming). Id. The AG of Main is elected by the legislature and the AG of Tennessee by the supreme court. Id.
115 See State v. Lead Industries Association, Inc., 951 A.2d 428, 470-72 (S.C. R.I. 2008). In Lead Industries, the court analogized the responsibilities of the state attorney general to that of a federal prosecutor: “It is the duty of the Attorney General to see to it ‘that justice shall be done’ not only in the context of criminal prosecutions, but also while he or she carries out all the functions of that high office—including engagement in litigation in the civil arena.” Id. See also State Attorneys General, supra note, at 6.
116 Shevin, at 268-69. See also State Attorneys General, supra note 113, 31-35 (discussing state constitutional and statutory underpinnings of attorney general power).
117 State Attorneys General, surpa note 113, at 207.
118 Steven Paul Mahinka & Kathleen M. Sanzo, Multistate Antitrust and Consumer Protection Investigations: Practical Concerns, 63 Antitrust L.J. 213, 214. See also State Attorneys General, supra note 113, at 207.
119 See Marshall, supra note 112 at 2456 (giving as an example a governor who ran for office by promoting the creation of a strong business climate but once elected finds himself hampered by an aggressive state Attorney General who is aggressive in maintaining consumer actions).
120 State Attorneys General, supra note 113.
121 According to a recent survey of complaints conducted by the Consumer Protection Project of the National Association of Attorneys General (NAAG), “retail sales” were ranked eighth and “internet sales” ninth. NAAG Consumer Protection Project, National Top 10 List of Consumer Complaints for 2007, NAAGazette, at http://www.naag.org/naag-issues-national-top-10-list-of-consumer-complaints.php (last visited Nov. 10, 2008). The unscientific study reflects a compilation of reports filed by office of the Attorneys General around the country. The most reported complaint was for debt collection, followed by auto sales, home repair/construction, telecommunications/slamming/cramming, automotive (general), telemarketing/do-not-call, and financial/investments. Of the reported complaints, only contests/sweepstakes/promotions generated fewer complaints than sales. In light of the low emphasis on consumer product enforcement, NAAG’s training institute recently created a “Consumer Protection Fellowship Program.” According to the project director, it was created shortly after the 2007 recalls to address “emerging consumer issues,” such as “product safety,” in order to produce research and policy advocacy from the Attorney General perspective. But for this newly enacted fellowship, the only other source for research and policy develop is the National State Attorneys General Program at Columbia Law School, “which the NAGTRI/State Center Consumer Protection Fellow’s research would complement.” See Dennis Cuevas, NAAG, NAGTRI Announces New Consumer Protection Fellowship, NAAGazette, at http://www.naag.org/nagtri-announces-new-consumer-protection-fellowship-program.php (last visited Nov. 10, 2008).
122 State of Fla. ex. rel Shevin v. Exxon Corp., 526 F.2d 266, 2268—70 (1976). See also Donald G. Gifford, Impersonating the Legislature: State Attorneys Generals and Parens Patriae Product Litigation, 49 B.C. L. Rev. 913, 934 (2008).
123 Alfred L. Snapp & Son, Inc. v. Puerto Rico ex rel. Barez, 458 U.S. 592, 607 (1982). See also State Attorneys General, supra note 113, at 92.
124 Snapp, at 607. See also Missouri v. Illinois, 180 U.S. 208, 240-241 (1901) (finding jurisdiction when the “substantial impairment of the health and prosperity of the towns and cities of the state” are threatened).
125 Gifford, supra note 121, at 934. Gifford notes that this line of argument forecloses strict products liability, negligence, implied warranty among other more common products liability theories. Id.
126 Id. at 939
127 See Allan S. Brown and Larry E. Hepler, Comparison of Consumer Fraud Statutes Across the Fifty States, Comparison of Consumer Fraud Statutes Across the Fifty States 55 Fed’n Def. & Corp. Couns. Q. 263 (Spring 2005) (presenting an analysis of each state’s consumer fraud and deceptive business practice acts). California’s Unfair Competition Law, Cal. Civ. Code § 17200, is one of the most well know. It is available online at http://www.leginfo.ca.gov/cgi-bin/displaycode?section=bpc&group=17001-18000&file=17200-17210. § 17200 is indicative of the relaxed requirements of UDAP actions relative to traditional common-law tort claims. There was no standing requirement nor a requirement that the plaintiff show particularized injury. Brown & Hepler at 266. All that had to be shown was that the public was likely deceived by the conduct in question. In 2004, Proposition 64 amended the Statute to require the showing of a particularized injury. The contours of reliance are still being litigated in California. See In re Tobacco II Cases, 142 Cal. App. 4th 891 (2006). The California Supreme Court has since granted review. Other statutes are based federal acts like Uniform Deceptive Trade Practices Act, the Uniform Consumer Sales Practices Act, or the Federal Trade Commission Act, but vary substantially from State to State in terms of what particular activities are prohibited. Id.
128 See Gifford, supra note 121, at 939. The broad statutes that combat fraud are universally supplemented by more specific legislation that empowers Attorneys General to investigate and litigate particularly troublesome industries.
129 Kaplan & Smith, supra note 45, at 315. See also Travis P. Nelson, Trends in Subprime Lending, 17-AUG Bus. L. Today 27, 28 (2008) (“Plaintiffs may allege that a lender’s practices are immoral, unethical, oppressive, or unscrupulous, and offensive to public policy—generally, an ‘unfair’ practice. Plaintiffs may also argue that the terms of a given loan are deceptive or confusing to an average consumer, such as offering very-short-term ‘teaser’ rates, advertising that rates ‘may’ increase when in fact they undoubtedly will, or providing exotic ARMs that are too complex for the borrower to comprehend—generally, a ‘deceptive’ practice.”).
130 Kaplan & Smith, supra note 45, at 293.
131 Kaplan & Smith, supra note 45, at 277.
132 See Unsafe Children’s Products Prohibition, VT. Stat. Ann. tit. 9, Ch. 63 § 2470b, available at http://www.leg.state.vt.us/statutes/fullsection.cfm?Title=09&Chapter=063&Section=02470b. This statute requires the department of health to create and maintain a comprehensive list of children’s products that do not conform to federal standards, have been recalled, or have had a warning issued about their use which constitutes a safety hazard. The statute further defines as an “unfair or deceptive act or practice” the act of selling any product that appears on that list. Vermont’s UDAP statute is VT. Stat. Ann. tit 9, §2453, and is available at http://www.leg.state.vt.us/statutes/fullsection.cfm?Title=09&Chapter=063&Section=02453.
133 Doug Farquhar, 2007-2008 State Environmental Public Health Legislation, 71 Journal of Environmental Health 54, 55 (Oct. 2008). An example of permissible state action is making CPSC voluntary recalls mandatory. For an example of an Act that limits lead content in children’s products see S. 152 2008 Vt. Acts, Act 193, available at http://www.leg.state.vt.us/docs/legdoc.cfm?URL=/docs/2008/acts/ACT193.HTM (lowering the allowable amount of lead in children’s products).
134 The CPSA provides that “no State or political subdivision of a State shall have any authority either to establish or to continue in effect any provision of a safety standard or regulation which prescribes any requirements . . . unless such requirements are identical to the requirements of the Federal standard.” 15 U.S.C. 2075(a) (2008).
135 It is of note that the CPSIA authorizes the CPSC to authorize stricter state standards so long as they do not unduly burden interstate commerce. The CPSIA also allows states to continue to enforce state standards for toys and children’s products that were in effect before August 13, 2008. See, John B. O’Loughlin Jr., Consumer Product Safety Improvement Act: Not the Last Word on Preemption, 36 Product Safety & Liability Reporter 1037, 1039 (2008).
136 See supra notes and accompanying text.
137 State Attorneys General, supra note113, at 208.
138 Id. This power, or its equivalent in a client agency, is available in all jurisdictions except Nevada, Utah, and Puerto Rico. Id. at 208.
139 The CPSC also uses this tactic on the federal level. The potential cost of recalls and product redesign has allowed the CPSC to use “suggestions” to effect large scale voluntary industry compliance. See Kaplan & Smith, supra note 45, at 259.
140 State Attorneys General, supra note 113, at 215.
141 See Jason Lynch, Note, Federalism, Separation of Powers, and the Role of State Attorneys General in Multistate Litigation, 101 Colum. L. Rev. 1998, 2024 (2001).
142 See supra notes and accompanying text.
143 Lynch, supra note 140, at 2003—04
144 NAAG has often helped coordinate these efforts by helping develop strategy, providing logistical support such as model complaints, and holding meetings of serving Attorneys General and their deputies.
145 See Gifford, supra note 121, at 915—16.
146 See Ricard Ieyoub & Theodore Eisenberg, State Attorney General Actions, the Tobacco Litigation, and the Doctrine of Parens Patriae, 74 Tul. L. Rev. 1859 (2000). See also Martha A. Derthick, Up in Smoke (2002).
147 See Robert L. Rabin, The Tobacco Litigation: A Tentative Assessment, 51 Depaul L. Rev. 331 (2001).
148 Id. at 351.
149 American Shooting Sports Council, Inc. v. Attorney Gen, 711 N.E.2d 899, 903 (Mass. 1999).
150 American Shooting Sports, at 903 n.8. (listing examples of other regulatory schemes that limit states’ ability to regulate despite exemption from preemption by CPSA).
151 Kaplan & Smith, supra note 45, at 257—58.
152 Lynch, supra note 140, at 2024.
153 See David Shapiro, The Choice of Rulemaking or Adjudication in the Development of Administrative Policy, 78 Harv. L. Rev. 921 (1965).
154 Peter L. Strauss, Administrative Justice in the United States, 259 (2d. ed. 2002).
155 Id. at 260—61.
156 Kaplan & Smith, supra note 45, at 295.
157 American Standard, Inc. v. U.S., 602 F.2d 256, 267 (Ct. Cl. 1979).
158 Shapiro, supra note 152, at
159 James F. Barger, Jr. et al., States, Statutes, and Fraud: An Empirical Study of Emerging State False Claims Acts, 80 Tul. L. Rev. 465, 485 (2005).
160 Strauss, supra note 153, at 259.
161 Giffin, supra note, at 47.
162 American Shooting Sports, at 903.
163 Id. at 904. In this case, the court found that the Attorney General had not overstepped his bounds by imposing strict regulations on handguns.
164 Kaplan & Smith, supra note 45, at 309. For an example of a consumer fraud rule issued by a SAG, see Vermont CF 120: Representations of Vermont Origin, available at http://www.atg.state.vt.us/upload/1225834225_Representations_Of_Vermont_Origin_CF_120.pdf (regulating representations and company names indicating food products are of Vermont origin).
165 Though state Attorneys General do not generally have the authority to litigate on behalf of individual consumers, in some cases a state may be able to bring suit as a subrogee of a resident’s claim against a manufacturer. See State Attorneys General, supra note, at 210. Subrogation is a traditional tort doctrine by which a State can bring a claim on behalf of its residents. Unlike suits in parens patriae, the state is constrained by the inherent limitations of the client’s case in subrogation actions. See American Nat’l Fire Ins. Co. v. Yellow Freight Sys., Inc., 325 F.3d 924, 936 (7th Cir. 2003) (“It is settled that, as a general rule, an insurer steps into the shoes of the insured and “acquires no greater or lesser rights than those of the insured.”) (Internal quotations and citations omitted). See also R. Keeton & A. Widiss, Insurance Law § 3.10(a)(1) (1988) (The subrogee steps “into the shoes” of the subrogor). For example, in pursuing tobacco litigation, Attorneys General did not use subrogation suits because they wanted to avoid traditional defenses such as assumption of risk. See Michael Debow, The State Tobacco Litigation and the Separation of Powers in State Governments: Repairing the Damage, 31 Seton Hall L. Rev. 563, 571-72 (2001). The subrogation power is better suited to claims where the defendants are unable to afford a private attorney or their potential recovery is not enough to inspire a contingency fee lawyer to take their case than the typical products liability tort. Instead, subrogation is more often used by the state Attorneys General to seek reimbursement from a tortfeasor whose actions harmed a Medicaid recipient or when an insurer brings claims on behalf of their insured to recover payments. At the state level, these suits are statutorily authorized both under the federal statutes governing Medicaid and similar state statutes. Id. at 25-26. Subrogation suits are also common as accompaniments to criminal actions. Many states authorize the Attorney General to bring suit to recoup compensation paid from crime victims’ funds. See e.g. Missouri Revised Statutes §595.040(1).
166 Kaplan & Smith, supra note 45, at 310.
167 See Office of the Attorney General of Massachusetts, Massachusetts Attorney General Martha Coakley and 38 Other AGs Reach $12 Million Settlement with Mattel Regarding Toys Recalled for Excessive Lead Paint, Press Release, Dec. 15, 2008, available at http://www.mass.gov/?pageID=cagopressrelease&L=1&L0=Home&sid=Cago&b=pressrelease&f=2008_12_15_mattel_multistate_agreement&csid=Cago.
168 The states were Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Iowa, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Vermont, Washington, West Virginia, Wisconsin, and Wyoming. See Final Judgment By Consent, State of Mississippi ex rel Jim Hood v. Mattel, Inc., filed Dec. 15, 2008, Chancery Court of Hinds County, MS, available at http://www.ago.state.ms.us/images/uploads/forms/matteljudgement.pdf [hereinafter Mattel Consent Judgment]. California also took part in negotiations, reached a separate agreement under its Safe Drinking Water and Toxic Enforcement Act. California alleged that Mattel had violated Proposition 65, the state’s safe drinking water and toxic enforcement law by failing to warn about the risk of lead.
169 See e.g. Complaint, State of Mississippi ex rel Jim Hood v. Mattel, Inc., filed Dec. 15, 2008, Chancery Court of Hinds County, MS, available at http://www.ago.state.ms.us/images/uploads/forms/mattelcomplaint.pdf [hereinafter Mississippi Complaint]; Complaint, Milgram v. Mattel, Inc., filed Dec. 15, 2008, Superior Court of New Jersey, Chancery Division, Mercer County, available at http://www.nj.gov/oag/newsreleases08/121508-mattel-complaint.pdf [hereinafter New Jersey Complaint]. It is of note that the complaints differ in the particular authorizing statutes, parties, and overall format. The two complaints do have the same substantive language in some sections. See “Background” in Mississippi Complaint and “Statement of Facts” in New Jersey Complaint. The Mississippi Complaint alleges a violation of that state’s unfair and deceptive trade practices law, whereas the New Jersey Complaint alleges a violation of its law prohibiting unconscionable commercial practices, illustrating differences in the UDAP statutes reference supra.
170 Jayne O’Donnell, Mattel Toys’ Lead Was 180 Times the Limit, USA Today, Sep. 18, 2007.
171 Mississippi Complaint, at ¶22.
172 Id. at ¶¶25—26.
173 Mattel Consent Judgment, supra note 167, at ¶4.0. Massachusetts, the lead state, will receive $625,000. Most of the money will be used for lead prevention. The state Attorney General will work with the DPH to issue grants to community groups to test homes and toys and increase the number of referrals of children who were exposed to lead. See Attorney General of Massachusetts Press Release, supra note 166
174 See Mattel Consent Judgment, supra note 167, at ¶3.1.
175 See Mattel Consent Judgment, supra note 167, at ¶¶3.2—3.4.
176 See Mississippi Complaint, supra note 169.
177 See Center for Disease Control, Morbidity and Mortality Weekly Report, available at http://www.cdc.gov/mmwr/ (Dec. 8, 2006).
178 Consumer Reports, Lead in Children’s Products Report, What We Found, at http://www.consumerreports.org/cro/babies-kids/child-safety/indoors/kids-and-lead/lead-in-childrens-products-12-07/what-we-found/test-findings.htm (last visited Jan. 2, 2008). By contrast, the new federal standard embodied in the CPSIA for lead in children’s products is 600ppm.
179 Office of the Illinois Attorney General, Attorney General Warns Consumers of Potential Lead Poisoning Hazard in Fisher Price Toy Kits, Press Release, Dec. 3, 2007, available at http://www.illinoisattorneygeneral.gov/pressroom/2007_12/20071203.html [hereinafter Cuff Recall Press Release]. See also O’Loughlin, supra note 134, at 1042.
180 It is of note that the CPSIA implemented a federal standard of 600 ppm for led content in similar products.
181 Cuff Recall Press Release, supra note 178.
182 Louise Story, Lawmakers Say Mattel Broke Word on Lead, N.Y. Times, Jan. 30, 2008.
183 O’Loughlin, supra note 134, at 1043.
184 One attorney advocates using the Alien Tort Claims Act to bring suits alleging a violation of international law for injuries caused by the production and dissemination of hazardous products from China. See Joel Slawotsky, Liability for Defective Chinese Products Under the Alien Tort Claims Act, 7 Was. U. Global Stud. L. Rev. 519, 541(2008).
185 In response to the 2007 recalls, a spokesman for the CPSC told the New York Times, “We want to get to a point of not having to do recall after recall, and simply make the marketplace safe.” Eric Lipton & Louise Story, Bid to Root Out Lead Trinkets Falters in U.S., N.Y. Times, Aug. 6, 2007.
186 Nancy A. Nord, Acting Chairman, U.S. Consumer Product Safety Commission, Testimony, Submitted to the Subcommittee on Financial Services and General Government, House Committee on Appropriations, March 11, 2008, available at http://www.cpsc.gov/pr/nord03112008.pdf. [hereinafter Nord, Testimony]
187 15 U.S.C. § 2051(b)(1).
188 See Action Plan, supra note 4; Exec. Order No. 13439, 72 Fed. Reg. 40,053 (July 18, 2007). See also Interagency Working Group on Import Safety website at http://www.importsafety.gov/.
189 Thomas Moore, Commissioner, Consumer Product Safety Commission, Statement Submitted to the Senate Subcommittee on Financial Services and General Government, Senate Committee on Appropriation, April 30, 2008, available at http://www.cpsc.gov/pr/moore04302008.pdf.
190 Nord, Testimony, supra note 186.
191 See Action Plan, supra note 4;
192 Pub. L. 110-314, 122 Stat. 3016 (2008) [hereinafter CPSIA]. An additional indication of Congressional concern is that for the 2008 financial year, the CPSC’s budget was increased by 28% to $80 million. Bruce Mulock, Consumer Product Safety Commission: Current Issues, CRS Report for Congress, RS 22821, at 3, June 17, 2008.
193 CPSIA § 101. The lead paint limit will be lowered to 90 ppm on August 14, 2009. The lead content limit of 600ppm for all children’s products goes into effect on February 10, 2009. It will be lowered to 300ppm on August 14, 2009.
194 CPSIA § 219.
195 CSPIA § 212. The specifics on what this database will include, how information will be uploaded, and how it will be monitored are not definite yet. Some commentators have raised concerns that it will be abused by plaintiff’s lawyers. See William A. Ruskin, CPSC’s New Database: An Opportunity for Abuse?, to Toxic Tort Litigation Blog, http://www.toxictortlitigationblog.com/ (Oct. 31, 2008).
196 CPSIA § 217. The CPSIA does not change the requirement that any company that manufactures, distributes, imports or sells consumer products in the US must notify the CPSC if it obtains information that reasonably suggests a product fails to comply with an applicable consumer product safety regulation, contains a defect that could create a substantial product hazard to consumers, or creates an unreasonable risk of serious injury or death. See supra note and accompanying text. The CPSIA does increase potential fines for failure to report to $100,000 with a cap of $15 million.
197 CPSIA § 102. This section of the Act requires that third party testing be conducted and safety certification for certain children’s products. See U.S. Consumer Product Safety Commission, 16 CFR Part 1110, available at http://www.cpsc.gov/businfo/frnotices/fr09/certification.pdf (requiring for international products the importer to issue the certificate required by § 14 of the CPSA). See also U.S. Consumer Product Safety Commission, Third Party Conformity Assessment Body Accreditation Requirements for Testing Compliance with 16 C.F.R. Part 1501 (Small Parts Regulations), Nov. 4, 2008, available at http://www.cpsc.gov/library/foia/foia09/brief/smallparts.pdf (CPSC staff memorandum discussing accreditation requirements). There is some doubt about the potential success of these “self-regulatory” initiatives. Such plans have had success only where there has been a credible threat of government regulation to provide industry groups with an incentive to act. Such pressure has almost uniformly been lacking in the children’s product safety context. See Bamberger & Guzman, supra note 52, at 1428—32.
198 S. 2045 would have authorized giving state attorneys general the right to seek injunctive relief for unsafe products. This authority was not initially included in H.R. 4040. Mulock, supra note 192, at 6.
199 Mulock, supra note 192, at 1—2.
200 Consumer Product Safety Commission Reform Act 2007: Hearing on S. 2045 Before S. Commerce, Science and Transportation Comm., 110th Cong. (2007) (testimony of Joseph M. McGuire, President of the Association of Home Appliance Manufacturers on behalf of NAM).
202 Letter from Allan B. Hubbard, Assistant to the President for Economic Policy and Director, National Economic Council to Daniel Inouye, Chairman, Committee on Commerce, Science, and Transportation, U.S. Senate (Oct. 29, 2007).
203 Letter from Nancy A. Nord, Acting Chairman, CPSC to Daniel K. Inouye, Chairman, Committee on Commerce, U.S. Senate, and Mark Pryor, Chairman, Subcommittee on Consumer Affiars, Insurance, and Automotive Safety, U.S. Senate (Oct. 24, 2007).
204 See testimony of Rachel Weintraub before the House Committee on Energy and Commerce, May 15, 2007.
205 See Gabriel Allen, Get the Lead Out: A New Approach for Regulating the U.S. Toy Market in a Globalized World, 36 Ga. J. Int’l & Comp. L. 615, 640 (2008).
206 154 Cong. Rec. S1570 (2008) (statement of Sen. Pryor).
207 See Office of the Illinois Attorney General, Press Release, Madigan Calls on CPSC to Create Secondary Market Recall Strategy (Oct. 1, 2008), available at http://www.illinoisattorneygeneral.gov/pressroom/2008_10/20081001.html.
208 Eric Lipton & Louise Story, Bid to Root Out Lead Trinkets Falters in U.S., N.Y. Times, Aug. 6, 2007. The Fox charms were manufactured in China.
209 See 154 Cong. Rec. S1670 (2008) (statement of Sen. Pryor).
210 See Hans Bader, The Nation’s Top Ten Worst State Attorneys General, at 22, Competitive Enterprise Institute, Jan 24, 2007. This argument, as it is here, is usually crouched in orignalist terms, such as the “historical function” of the state attorney general. While this subservient role has been that of the Attorney General of the United States, State attorneys general have traditional possessed much more authority and autonomy. See supra notes and accompanying text.
211 Bader, supra note, at 22.
213 For example, in 1907 Missouri Attorney General Herbert S. Hadley called a meeting of his fellow State AGs to coordinate a strategy to challenge the monopolistic behavior of Standard Oil. This meeting, and subsequent enforcement strategy, was in part a response to a perceived lack of effort by the federal government. Hadley believed that together, state Attorneys General could be as effective as the federal government in enforcing actions in the public interest.
214 Florida ex rel. Shevin v. Exxon Corp., 526 F.2d 266 (5th Cir. 1976).
215 See supra notes and accompanying text.
216 State v. Lead Indus. Ass’n, 951 A.2d 428, 471 (S.C. R.I. 2008) (“In view of the grave responsibilities of attorneys general vis-a-vis the public, the holder of that high office, as distinguished from the usual advocate, has a special and enduring duty to ‘seek justice.’”)
217 See supra Part II.
218 David Adam Friedman, Reinventing Consumer Protection, 57 DePaul L. Rev. 45, 51 (2007).
220 Nord, Letter, supra note 203.
221 Thomas Moore, Commissioner, Consumer Product Safety Commission, Statement Submitted to the Subcommittee on Commerce, Trade, and Consumer Protection House Committee on Energy and Commerce, November 6, 2007 [hereinafter Moore, Statement] (“We have lost many experienced and talented people in the last few years—people who knew instinctively when they saw a product whether it was badly designed or if it was just plain a bad idea from a safety standpoint. We have increased our information technology spending as a way to compensate for the reduction in the size of our staff, but no computer that I am aware of can look at a product and know that it should be removed from the marketplace. Only experienced, trained people can do that. The real backbone of the agency is its staff: our toxicologists, our pharmacologists, our mechanical engineers, our human factors specialists, our chemists, our investigators and yes, even our lawyers. We need to retain our current employees and recruit additional staff. They are the key to the agency’s ability to fulfill its role as protector and enforcer. This bill will allow us to rebuild our staff and should send a signal to current employees that the agency will be around for a long time and that they should stay and rebuild with us.”)
222 Mulock, supra note 192, at 3.
225 CPSIA § 218. State Attorneys General may stop the sale of products that violate CPSC issued safety standards; recalled products as announced by the Commission; banned hazardous substances; children’s products that have not been certified as tested by third-party laboratories once those certification requirements go into effect; children’s products that lack tracking labels once that requirement goes into effect; and stop the sale of products with safety marks if the use of those marks is unauthorized. State Attorneys General may also enforce the prohibitions against stockpiling products in advance of regulatory changes. See CPSIA § 218(a).
226 Moore, Statement, supra note 221.
227 For example, the Fair Credit Reporting Act, the Telephone Disclosure and Dispute Resolution Act, the Children’s Online Privacy Protect Act, the Telemarketing and Consumer Fraud and Abuse Prevention Act, the Credit Repair Organizations Act, the Controlling the Assault of Nonsolicited Pornography and Marketing Act, and a section of the Truth in Lending Act all provide for State attorneys general to have a role in enforcement.
228 Popular movements based on a recent publication that call attention to a particular issue are sometimes the impetus behind the institution of regulatory regimes. See Kaplan, supra note 96 (citing the publication of The Jungle by Upton Sinclair as “spearhead[ing] a grassroots movement that brought about reform in the United States”).
229 See 154 Cong. Rec. H7586 (2008) (statement of Rep. Whitfield).
230 See O’Loughlin, supra note 134, at 1043. Mr. O’Loughlin provides a strong practical summary of how he believes the enforcement of the CPSIA by state attorneys general will work once enacted.
233 See Lynch, supra note 140, at 2005.
234 Id. See also David J. Morrow, Transporting Lawsuits Across State Lines, N.Y. Times, Nov. 9, 1997.
235 Pub. L. No. 102-243, 105 Stat. 2395 (1991). See generally Robert R. Biggerstaff, State Courts and the Telephone Consumer Protection Act of 1991: must States Opt-in? Can States Opt-out? 33 Conn. L. Rev. 407 (2001).
236 See e.g. Timothy J. Muris, Prepared Statement of the Federal Trade Commission Before the Subcommittee on Commerce, Justice, State, the Judiciary and Related Agencies of the Committee on Appropriations, United States House of Representatives (Apr. 10, 2002), available at http:// www.ftc.gov/os/2002/04/041002budgettestimony.htm (state attorneys general used by FTC to help fight internet fraud).
237 Do-Not-Call Implementation Act of 2003, Pub L. 108-10, 117 Stat. 557 (2003). See generally Jacquelyn Trussell, Is the Can-Spam Act the Answer to the Growing Problem of Spam?, 16 Loy. Consumer L. Rev. 175 (2004).
238 See Prepared Statement of the FTC on The Joint Federal-State Enforcement Model Established by the Telemarketing and Consumer Fraud and Abuse Prevention Act, Before the Subcommittee on Highways and Transit of the Committee on Transportation and Infrastructure, U.S. House of Representatives (July 12, 2001).
240 See Press Release, Fed. Trade Comm’n, National Do Not Call Registry Celebrates One-Year Anniversary (June 14, 2004), http:// www.ftc.gov/opa/2004/06/dncanny.shtm.
241 CPSIA § 218(a)(2)(C).
242 CPSA § 15(a).
243 CPSIA § 218(a).
244 See supra note 46, and accompanying text.
245 See Illinois AG Press Release, supra note 207.
246 Id. See also Maurice Possley, “Missteps delayed recall of deadly cribs,” Chicago Tribune, Sept. 24, 2007.
247 See supra note and accompanying text.
fn248.According to the FTC Commissioner Pamela Jones Harbour, “Relations between state and federal enforcement officials regarding vertical restraints have been characterized by conflict and, at times, outright hostility.  More recently, federal and state vertical enforcement philosophies substantially have converged. Relations between federal and state enforcers, while not perfectly tranquil, now seem both cordial and mutually productive. As a former state antitrust enforcement official, I am among those who lived through the most tumultuous years. I remember when federal-state relations degraded from enthusiastic cooperation to straight-out antagonism, then witnessed their improvement to studied indifference and, finally, grudging respect and cooperation.” See Pamela Jones Harbour, Vertical Restraints: Federal and State Enforcement of Vertical Issues, ALI-ABA Course of Study Product Distribution and Marketing (March 18-20, 2004), available at http://www.ftc.gov/speeches/harbour/0403vertical.pdf.
249 See Laurel R. Hyle, et. al, International Legal Developments in Review: 2007 Public International Law, International Health Law, 42 Int’l Law. 745, 754 (2008).
250 See Phillips, supra note 32, at 268 (27 Penn St. Int’l L. Rev. 217)
251 See Bryan Bachner, Bull in a China Shop, 4 Bus. L. Brief (Am. U.) 4, 10 (2008).
252 Kaplan, supra note 96, at 42.
June 21, 2013
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