Amicus Curiae Brief — Emerson Electric Co. v. Swenson

No. 85-1617

IN THE

Supreme Court of the United States

OCTOBER TERM, 1985

EMERSON ELECTRIC Co.,

Petitioner,

JANET SWENSON,

Respondent.

MOTION AND BRIEF OF AMICI CURIAE IN SUPPORT

OF THE PETITION FOR WRIT OF CERTIORARI

WILLIAM C. BRASHARES

CHARLES A. SAMUELS

MINTZ, LEVIN, COHN, FERRIS,

GLOvskY & PoPEo, P.C. -

1825 Eye Street, N.W.

Suite 1201

Washington, D.C. 20006

Counsel for Association of Home

Appliance Manufacturers

JOSEPH M. MATTINGLY

General Counsel and Director

of Governmental Affairs

GAS APPLIANCE MANUFACTURERS

ASSOCIATION

1901 North Moore Street

Suite 1100

Arlington, Virginia 22209

Counsel for Gas Appliance

Manufacturers Association

STEPHEN A. BOKAT *.

Vice President

NATIONAL CHAMBER LITIGATION

CENTER, INC.

1615 H Street, N.W.

Washington, D.C. 20062

(202) 463-5337

Counsel for Chamber of

Commerce of the United States

DALE R. SCHMIDT

Manager of Legal Services

NATIONAL ELECTRICAL

MANUFACTURERS ASSOCIATION

2101 L Street, N.W.

Suite 300

Washington, D.C. 20037

Counsel for National Electrical

Manufacturers Association

* Counsel of Record

[List of Counsel Continued on Inside Cover]

WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

DANIEL N. MYERS

Vice President for Government

Relations and General Counsel

NATIONAL LP-GAS ASSOCIATION

1235 Jefferson Davis Highway

Suite 702

Arlington, Virginia 22202

Counsel for National LP-Gas

Association

May 1986

Mac S. DUNAWAY

HOLLAND & KNIGHT

888 Seventeenth Street, N.W.

Suite 400

Washington, D.C. 20006

Counsel for Portable Power

Equipment Manufacturers

Association

AARON LOCKER

LOCKER, GREENBERG & BRAININ

One Penn Plaza

Suite 4828

New York, New York 10001

Counsel for Toy Manufacturers

of America

IN THE

Supreme Court of the United States

OCTOBER TERM, 1985

No. 85-1617

EMERSON ELECTRIC Co.,

. Petitioner,

JANET SWENSON,

Respondent.

MOTION FOR LEAVE TO FILE BRIEF AMIC{i CURIAE

IN SUPPORT OF PETITION FOR WRIT OF CERTIORARI

Pursuant to Supreme Court Rule 36.1, the Chamber of

Commerce of the United States, American Home Appli-

ance Manufacturers (AHAM), Gas Appliance Manufac-

turers Association (GAMA), National Electrical Manu-

facturers Association (NEMA), National LP-Gas Asso-

ciation (NLPGA), Portable Power Equipment Manufac-

turers Association (PEMA), and Toy Manufacturers of

America (TMA) hereby seek leave to file the accompany-

ing brief as amici curiae in support of Emerson Electric

Co.’s petition for certiorari. Counsel for petitioner has

consented to the filing of the brief. The consent of coun-

sel for respondent was requested but not obtained.

The amici are nonprofit organizations that represent a

broad range of business interests affected by the Con-

sumer Product Safety Act (CPSA) :

—The Chamber of Commerce of the United States

represents a cross-section of the business community

throughout the United States.

—AHAM represents 26 major and 38 portable ap-

pliance manufacturers engaged in the manufacture

of products for kitchens, home laundry, personal

care, and home comfort.

—GAMA has approximately 230 members who are

engaged in the manufacture of gas and oil furnaces,

gas boilers, gas and electric water heaters, gas con-

trols, gas ranges, and direct heating equipment.

—NEMA has 550 members who are engaged in

the manufacture of electrical equipment, including

components and end-use equipment for the genera-

tion, transmission, distribution, control, and use of

electricity.

—NLPGA is composed of 4,000 members repre-

senting producers, transporters, wholesalers, and re-

tailers of liquified petroleum gas, and manufacturers

and distributors of associated equipment and ap-

pliances.

—PPEMA has 23 members who are engaged in

the manufacture of chain saws, brush cutters, hand-

held and backpack blowers, and related products.

—-TMA has 255 members who are engaged in the

manufacture of toys, games, and ornaments.

The interest of the amici in the petition for certiorari

derives from the urgent need to clarify their members’

rights and liabilities under Section 23 of the CPSA, 15

U.S.C. § 2072.

Many of the amici’s members manufacture consumer

products and are subject to the substantial product re-

porting requirements prescribed by Section 15(b) of the

CPSA. For this reason, many of the amici’s members

have been named in suits brought under Section 23

of the CPSA. In these actions, private plaintiffs have

asserted a cause of action under Section 23 for alleged

violations of the reporting obligations embodied in the

CPSC regulations implementing Section 15(b).

ee

The decision of the Minnesota Supreme Court recog-

nize a private remedy under Section 23 for alleged non-

compliance with the CPSC interpretative regulations un-

der Section 15(b). The amici believe their members

would be exposed to unnecessary and unjustified litiga-

tion if the decision below is allowed to stand. At a time

of rising public concern about the mushrooming costs of

product liability litigation, allowing personal injury plain-

tiffs to invoke the private remedy provisions of the CPSA

could have a serious adverse impact on the manufacturers

and sellers of consumer products that the amici represent.

For the foregoing reasons, the amici curiae seek per-

mission to file the accompanying brief in support of the

petition for writ of certiorari.

WILLIAM C. BRASHARES

CHARLES A. SAMUELS

MINTZ, LEVIN, COHN, FERRIS,

GLOvSKY & PoPEO, P.C.

1825 Eye Street, N.W.

Suite 1201

Washington, D.C. 20006

Counsel for Association of Home

Appliance Manufacturers

JOSEPH M. MATTINGLY

General Counsel and Director

of Governmental Affairs

GAS APPLIANCE MANUFACTURERS

ASSOCIATION

1901 North Moore Street

Suite 1100

Arlington, Virginia 22209

Counsel for Gas Appliance

Manufacturers Association

Respectfully submitted,

STEPHEN A. BOKAT *

Vice President

NATIONAL CHAMBER LITIGATION

CENTER, INC.

1615 H Street, N.W.

Washington, D.C. 20062

(202) 463-5337

Counsel for Chamber of

Commerce of the United States

DALE R. SCHMIDT

Manager of Legal Services

NATIONAL ELECTRICAL

MANUFACTURERS ASSOCIATION

2101 L Street, N.W.

Suite 300

Washington, D.C. 20037

Counsel for National Electrical

Manufacturers Association

* Counsel of Record

DANIEL N. MYERS

Vice President for Government

Relations and General Counsel

NATIONAL LP-GAs ASSOCIATION

1235 Jefferson Davis Highway

Suite 702

Arlington, Virginia 22202

Counsel for National LP-Gas

Association

May 1986

Mac 8. DUNAWAY

HOLLAND & KNIGHT

888 Seventeenth Street, N.W.

Suite 400

Washington, D.C. 20006

Counsel for Portable Power

Equipment Manufacturers

Association

AARON LOCKER

LOCKER, GREENBERG & BRAININ

One Penn Plaza

Suite 4828

New York, New York 10001

Counsel for Toy Manufacturers

of America.

QUESTION PRESENTED

Whether interpretative regulations issued by the Con-

sumer Product Safety Commission to explain the report-

ing requirements of the Consumer Product Safety Act

constitute a rule or order whose violation gives rise to

a private right of action under Section 23 of the Act.

(i)

TABLE OF CONTENTS

SEE SIIIIIUTT <nsiscisnninscnnisenseennsncecupsianicnanienminnennsataniniens

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SUMMARY OF ARGUMENT .....00....... eee

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I. THE DECISION OF THE LOWER COURT

II.

Ill.

SHOULD BE REVIEWED BECAUSE IT DIS-

TORTS THE ENFORCEMENT SCHEME

ESTABLISHED BY CONGRESS AND IM-

POSES NEW AND UNAUTHORIZED OBLI-

GATIONS ON MANUFACTURERS .................

THE AVAILABILITY OF A PRIVATE RIGHT

OF ACTION FOR BREACH OF THE CPSC

INTERPRETIVE REGULATIONS UNDER

SECTION 15(b) HAS FAR-REACHING IM-

PLICATIONS FOR PRODUCT LIABILITY

SRN TTI iccivconstntedietebsesiennsnneinnne seihanredlsasiniondivdawenniens

THIS CASE OFFERS THE COURT A RARE

OPPORTUNITY TO CONSIDER THE EXIST-

ENCE OF A PRIVATE RIGHT OF ACTION

FOR VIOLATION OF CPSC INTERPRETIVE

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CONCLUSION ......... sntinhalanentainananeensanioseeaeeennaesiitnnvenininnntniaitin

(iii)

iv

TABLE OF AUTHORITIES

CASES:

Batterton vy. Francis, 432 U.S. 416 (1977) —............

Chrysler Corp. v. Brown, 441 U.S. 281 (1979) -.......

Eickelberg v. Deere & Co., 276 N.W.2d 442 (lowa

a a ks

Johnson Vv. Amerco, Inc., 877 Ill. App. 3d 827, 42

Ill. Dec. 684, 409 N.E.2d 299 (1980) 0.0000...

Payne v. A.O. Smith Corp., 627 F. Supp. 226 (S.D.

RAE iS 5 eR aes Ber ee iano

Uitts v. General Motors Corp., 411 F. Supp. 1380

I aaa lareaii

STATUTES AND REGULATIONS:

i rrcniiccetemeneenpeenetpcreecomacatetiabetn

I cs ncntonlccenentareanicmenatintaies

Re sa ncevinienennieepernanitenvenienes

SI as cosidicaesicttagpapeuneeneniennamangiieiantiapstnnnit

I saclilimenliaamanantais

16 C.F.R. § 1115.12(e) _...... EE A aa ate ENA LITER

ne BO as 2 |: ea nee ene

MISCELLANEOUS:

Babij, Industry Fails to Report Product Hazards,

I Ns SO i ceili jedalieinsnation

Epstein, Failure to Warn, TRIAL, April 1986, at 67..

43 Fed. Reg. 34,998 (Aug. 7, 1978) -.....-....----------------

Gilbert, Target Product Update, Leader’s Product

Liability Newsletter, April 1986, at 5...

H.R. 4425, 99th Cong., 2d Sess. (1986) —.................

H.R. 4504, 99th Cong., 2d Sess. (1986) ...........0--.-..

Jury Verdict Research, Inc., Injury Valuation:

Current Awards Trends, No. 304 (1986) _..........

Karon, Application of the CPSA and Proof of

Failure to Warn in Product Liability Actions,

MINN. TRIAL LAW., Jan.-Feb. 1985, at 8.............

Note, Private Causes of Action Under the Report-

ing Rules of the Consumer Product Safety Act,

70 MINN. L. REV. 955 (1986) .........-.-222..2----ccecceco-e.

Vv

TABLE OF AUTHORITIES—Continued

Page

Report of the Tort Policy Working Group on the

Causes, Extent and Policy Implications of the

Current Crisis in Insurance Availability and

Miowanbility CP eb. 19GB) onan ccc ene 7,8

S. 1999, 99th Cong., 2d Sess. (1985) ........0 8

S. 2046, 99th Cong., 2d Sess. (1986) 8

In THE

Supreme Court of the United States

OCTOBER TERM, 1985

No. 85-1617

EMERSION ELECTRIC Co.,

Petitioner,

ve

JANET SWENSON,

Respondent.

BRIEF OF AMICI CURIAE IN SUPPORT OF

THE PETITION FOR WRIT OF CERTIORARI

This amici curiae brief is submitted by seven business

and trade organizations in support of Emerson Electric

Co.’s petition for a writ of certiorari to review the deci-

sion of the Minnesota Supreme Court.

OPINIONS BELOW

The opinions below are properly listed in and ap-

pended to the petition for a writ of certiorari.

JURISDICTION

The amici adopt the petitioner’s statement of juris-

diction.

STATEMENT OF THE CASE

The amici adopt the statement of petitioner.

cca aii iia

2

INTEREST OF AMICI

The amici are seven business and trade organizations

that represent industries engaged in producing and mar-

keting products used by consumers. The amici’s members

are subject to Section 15(b) of the Consumer Product

Safety Act (CPSA), which requires manufacturers, dis-

tributors, and retailers of consumer products to notify

the Consumer Product Safety Commission (CPSC) if

they obtain information which provides a reasonable

basis to conclude that a product contains a defect which

could create a substantial product hazard. 15 U.S.C.

§$ 2064. Increasingly, manufacturers and sellers of con-

sumer products have been named as defendants in pri-

vate suits seeking damages under Section 23 of the CSPA

for alleged violations of the CPSC regulations constru-

ing Section 15(b). The amici are deeply disturbed about

this trend, and have a strong interest in clarifying

whether their members can be held liable in private liti-

gation for noncompliance with the CPSC interpretative

regulations under Section 15 (b).’

SUMMARY OF ARGUMENT

The lower court’s decision should be reviewed because,

if allowed to stand, it will engraft new and unauthor-

ized remedies on a federa! regulatory statute and under-

mine longstanding principles of administrative law. Sec-

tion 23 of the CPSA limits private damage suits to “vio-

lations” of “rules or orders.” Although violations of

statutory provisions such as Section 15(b) are outside

the coverage of Section 23, the decision of the lower court

circumvents this limitation by recognizing a private rem-

edy for noncompliance with CPSC regulations interpret-

ing the statutory reporting duty. The effect of this

1The amici do not intend to address whether the petitioner

fulfilled its reporting obligation under Section 15(b) in this case.

The amici have joined in this brief only to address the legal issues

the petition raises.

3

hoiding is to give nonbinding regulations the force and

éffect of law, thereby violating the well-established doc-

trine that interpretive regulations are unenforceable.

The decision of the Minnesota Supreme Court also

should be reviewed because of its far-reaching practical

implications. The dramatic explosion in product liability

litigation is one of the most pressing problems facing

manufacturers and sellers of consumer products. If per-

mitted to stand, the decision of the lower court will

aggravate this problem by needlessly expanding the rem-

edies available to product liability plaintiffs, creating

additional incentives for suit, and increasing the cost and

complexity of litigation. Because these developments

would undermine the growing movement to bring needed

reform to the tort compensation system, there is a com-

pelling need for this Court to clarify whether private lit-

igants can maintain damage suits for alleged violations

of the CPSA’s reporting requirements.

ARGUMENT

I. THE DECISION OF THE LOWER COURT SHOULD

BE REVIEWED BECAUSE IT DISTORTS THE EN-

FORCEMENT SCHEME ESTABLISHED BY CON-

GRESS AND IMPOSES NEW AND UNAUTHOR-

IZED OBLIGATIONS ON MANUFACTURERS.

In violation of established administrative law princi-

ples, the decision of the court below converts regulations

that the issuing agency considered nonbinding into en-

forceable requirements. If allowed to stand, the decision

will seriously distort the regulatory scheme established

by Congress and retroactively impose new obligations on

manufacturers of consumer products.

The lower court recognized that noncompliance with

Section 15(b) could not provide the basis for a private

damage suit because the private remedy created by Sec-

tion 23 is available only for alleged violations of CPSC

dq

rules or orders (App. 17a).? However, the court then

permitted pr. vate claimants to seek damages for alleged

nonreporting on the basis of the CPSC regulations, 16

C.F.R. Part 1115, which construe the Section 15(b) re-

porting requirement. In essence, the court found that

these regulations are “rules” which can be “violated” for

purposes of Section 23.*

At the time it issued the regulations, the Commission

stressed that they would be strictly interpretive in char-

acter:

The Commission considered the difference between

promulgating the rule as substantive and interpre-

tive, sought public comments on the issue at the

public hearings in April and May of 1978, and has

decided to promulgate the rule as interpretive.

43 Fed. Reg. 34,990 (Aug. 7, 1978) (quoted at App.

2f}. The Commission emphasized that, in contrast to a

substantive rule, “an interpretive rule offers guidance

as to what a law means, but does not itself have the

force and effect of law.” Id.

Under this Court’s decisions, an interpretive rule such

as 16 C.F.R. Part 1115 may clarify how the agency

views the law, but it is not legally binding. See, e.g.,

Chrysler Corporation Vv. Brown, 441 U.S. 281, 301-02

(1979); Batterton v. Francis, 482 U.S. 416, 424-26

* References to “App.” are to the Appendix to the petition for a

writ of certiorari filed by Emerson Electric Co.

3 An article critical of the Swenson court analysis has noted that

“there cant be no violation of an interpretive rule per se; what ap-

pears to be a violation of an interpretive rule is in fact a violation of

the underlying statute... .”’ Note, Private Causes of Action Under

the Reporting Rules of the Consumer Product Safety Act, 70 MINN.

L. REV. 955, 968 (1986) (emphasis in original). The article, which

extensively examines the implications of basing a private right of

action on violation of interpretive rules, concludes that “there can

be no violation, and, by extension, no private cause of action for a

violation, of an interpretive rule.” Jd. at 969.

5

(1977). A court construing the statute may seek the

benefit of the agency’s experience and judgment as re-

flected in an interpretive rule, but conduct that departs

from the rule will be unlawful only if the court con-

cludes that the statute itself has been violated.

By holding that the CPSC’s regulations construing

Section 15(b) can provide a basis for damage awards,

the decision below accords these regulations the force

and effect of law. This result directly conflicts with the

Court’s repeated recognition that interpretive regula-

tions are nonbinding and, in and of themselves, cannot

give rise to enforceable duties and liabilities.

The availability of a private remedy for alleged re-

porting violations would fundamentally reshape the en-

forcement scheme that Congress established when it en-

acted the CPSA.* Although Congress limited the private

remedy provisions of Section 23 to violations of rules

and orders, private litigants could seek damages for non-

compliance with statutory requirements merely because

the Commission has issued interpretive regulations ex-

plaining how those requirements should be applied. Thus,

the Commission’s publication of nonbinding guidelines to

assist the regulated community in understanding Sec-

tion 15(b) would create far-reaching liabilities in pri-

vate suits that otherwise would not exist.

Equally troubling, since the Commission’s regulations

would constitute binding “rules” for purposes of Section

23, they would be enforceable by private litigants in

damage actions even though the CPSC could not enforce

the regulations directly in suits against manufacturers.

* As one commentator has noted: “The statutory scheme of the

CPSA indicates that Congress did not intend to create a private

cause of action for violations of rules that the Commission chose

to promulgate as its interpretation of the reporting requirements

of section 15(b).” Note, Private Causes of Action Under the Re-

porting Rules of the Consumer Product Safety Act, 70 MINN. L.

REV. at 978.

eT

6

It is plainly irrational to permit private litigants to en-

force regulations that the Commission itself could not

enforce, since the role of private litigants in implement-

ing the statutory scheme is necessarily more limited than

that of the Commission.

The lower court’s holding that the Commission’s regu-

lations are enforceable in private suits threatens to alter

dramatically the role of the regulations in day-to-day

compliance with Section 15(b). At the time of their

promulgation in 1978, the Commission specifically ac-

knowledged that firms “charged with violating section

15 through acts which are contrary to these rules will

always have an opportunity to urge the reasonableness

of [their] actions under the circumstances, thereby de-

feating the accusation.” 43 Fed. Reg. 34,990 (App. 3f).

Because of this assurance, amici and their members did

not seek judicial review of the regulations even though

several of their provisions reflected a questionable inter-

pretation of Section 15(b). The decision of the lower

court effectively nullifies the ability of manufacturers

and sellers to challenge the agency’s interpretation of

the statute in individual cases by declaring—with little

explanation or analysis—that the CPSC regulations rep-

resent “a reasonable interpretation of the CPSA” and

therefore should receive “authoritative effect” in private

damage suits (App. 25a). This holding retroactively

changes the character of the CPSC’s regulations, and im-

poses new obligations on manufacturers, by giving the

regulations a binding effect they were never intended to

have.

The distortion of a federal regulatory statute created

by the lower court’s interpretation of Section 23, and the

court’s disregard of basic administrative law principles,

provide important reasons why this Court should grant

review.

7

II. THE AVAILABILITY OF A PRIVATE RIGHT OF

ACTION FOR BREACH OF THE CPSC INTERPRE-

TIVE REGULATIONS UNDER SECTION 15(b) HAS

FAR-REACHING IMPLICATIONS FOR PRODUCT

LIABILITY LITIGATION.

In recent years, personal injury litigation involving

consumer products has mushroomed dramatically.*® This

trend has been accompanied by an explosive growth in

litigation costs and damage awards.® In response to these

developments, insurance premiums have risen steeply and

insurance coverage for some products has ceased to be

available.? Widespread concern has been expressed about

5 According to a recent report by a presidential task force, the

number of product liability cases filed annually in the federal courts

has increased 758 percent since 1974. See Report of the Tort Policy

Working Group on the Causes, Extent and Policy Implications of

the Current Crisis in Insurance Availability and Affordability 45

(Feb. 1986).

6 The size of jury verdicts awarding compensatory and punitive

damages has increased astronomically in many areas of tort law.

See Report of the Tort Policy Working Group, supra, at 47. The

average product liability jury verdict rose from $393,580 in 1975

to $1,850,452 in 1985, a 370 percent jump. See Jury Verdict Re-

search, Inc., Injury Valuation: Current Awards Trends, No. 304

(1986).

7™The presidential task force assigned to examine the crisis in

insurance availability and affordability cited reports by the Toy

Manufacturers of America, the Association of Home Appliance

Manufacturers, the National LP-Gas Association, the Portable

Power Equipment Manufacturers Association, and other trade

associations indicating that their members have had increasing

difficulty obtaining insurance in view of the dramatic increase in

the number and amount of product liability awards. See Report of

the Tort Policy Working Group, supra, at 10-13. For example, the

outdoor power equipment manufacturers have experienced premium

increases of from 50 percent to 70 percent during 1985, with some

renewals ranging 400 to 600 percent higher than last year. Jd. at

13. As a result of the high cost and unavailability of insurance,

nearly one-quarter of the transporters of liquified petroleum gas

have been forced to operate with less than the $5,000,000 in insur-

ance coverage that federal law requires for motor carriers. Id. at

8

the crisis in the insurance and tort compensation sys-

tems, and reform of product liability law has gained in-

creasing acceptance as a means of controlling litigation

costs and limiting the size of damage awards.*®

The private remedy upheld by the decision of the court

helow will exacerbate the crisis in product liability law

and undercut efforts to reform the tort compensation sys-

tem. Despite widespread recognition of the need to limit

the potential liability of manufacturers and sellers, the

decision below would significantly expand the range of

legal theories on which liability can be based by permit-

ting damage awards for nonreporting or late reporting

under Section 15(b) of the CPSA. Moreover, such re-

porting violations could be alleged whenever the defend-

ant manufactures or sells a consumer product which is

claimed to be defective but was not the subject of a timely

report under Section 15(b). Since a wide range of prod-

ucts can be classified as “consumer products” under the

Act,® and since the CPSC’s regulations interpreting Sec-

tion 15(b) are broadly framed, claims under Section 23

could be included in virtually any product liability suit.

11. Manufacturers of household appliances have found the avail-

ability of insurance curtailed significantly in recent years, and the

Association of Home Appliance Manufacturers recently lost the

group coverage it obtained in 1983. 7d. at 10.

8 These proposals are reflected in the recent report of the presi-

dential task force on insurance availability and the large number

of pending legislative proposals to establish a national product

liability law. Several members of Congress have proposed legisla-

tion to help remedy the proliferation in product litigation. See, e.g.,

S. 2046, 99th Cong., 2d Sess. (1986) (Litigation Abuse Reform Act

of 1986 introduced by Sen. McConnell); H.R. 4504, 99th Cong., 2d

Sess. (1986) (Federal Product Liability Act introduced by Rep.

LaFaice) ; H.R. 4425, 99th Cong., 2d Sess. (1986) (Product Liabil-

ity Uniform Standards Act introduced by Rep. Roth) ; S. 1999, 99th

Cong., 2d Sess. (1985) (Product Liability Voluntary Claims and

Uniform Standards Act introduced by Sen. Danfcrth).

®15 U.S.C. § 2052 (a).

9

Substantial incentives exist for product liability plain-

tiffs to augment their common law claims with allega-

tions of reporting violations under the CPSA. Under the

doctrine of pendent jurisdiction, plaintiffs asserting Sec-

tion 23 claims would be entitled to litigate in federal

court not just issues arising under the CPSA but com-

mon law tort claims that normally could be heard only

in state courts.'"© Moreover, Section 23 of the CPSA spe-

cifically authorizes the recovery of attorneys’ and expert

witness fees as well as litigation costs—a potential wind-

fall which is not available in conventional tort suits,

where fees and costs typically are deducted from any

damage award on the basis of negotiated “contingency”

arrangements.

These inducements for invoking Section 23 have not

escaped notice by the plaintiffs’ bar.'' Since the first re-

ported decision upholding a nonreporting claim in 1981,

the number of cases under Section 23 has steadily

mounted, and scores of Section 23 suits have been filed

against the amici’s members.

In addition to expanding the potential liability of man-

ufacturers and sellers, the assertion of Section 23 claims

would complicate greatly the trial of product liability

eases. Since the cause of action recognized by the lower

court is predicated on an alleged violation of the CPSC

10 Of the eight reported decisions construing the scope of Section

28, only Swenson was issued by a state court; the remainder were

decisions of federal district courts.

11 An article in the monthly publication of the American Trial

Lawyers Association, for example, urged plaintiffs’ attorneys in

product liability actions to include a count in their complaints (or

amend existing complaints to add a count) alleging a private cause

of action under the Act. See, e.g., Babij, Industry Fails to Report

Product Hazards, TRIAL, Oct. 1984, at 62. Similar articles have

appeared in other publications. See, e.g., Epstein, Failure to Warn,

TRIAL, April 1986, at 67; Karon, Application of the CPSA and

Proof of Failure to Warn in Product Liability Actions, MINN.

TRIAL LAW., Jan.-Feb. 1985, at 8; Gilbert, Target Product Update,

Leader’s Product Liability Newsletter, April 1986, at 5.

10

regulations interpreting Section 15(b), the focus of a

Section 23 case necessarily would be on the defendant’s

compliance with the detailed procedures, interpretations,

and recommendations adopted by the Commission to pro-

vide guidance to industry.’ As a result, judges with no

regulatory experience would be responsible for explain-

ing a complex administrative scheme to lay juries, who

then would have to use that scheme to evaluate the con-

duct of defendant manufacturers.**

Complicating the task of judges and juries would be

the two-stage inquiry necessary to determine whether lia-

bility should be imposed under Section 23. Even if the

evidence shows that the defendant violated the Section

15(b) reporting duty, it must be demonstrated that the

plaintiff’s damages were caused by this failure to report.

Establishing this causal connection will require evidence

that, if a timely report had been filed, the Commission

would have ordered remedial measures that would have

removed the defendant’s product from the stream of com-

merce, alerted users to possible risks, or otherwise pre-

vented the plaintiff’s injury.

The Commission can require repair, replacement or

public notice concerning defective products only if it

makes the findings specified in Sections 15(c) and (d)

of the CPSA after conducting an adjudicative hearing

12 For example, the reguiations provide illustrations of the kinds

of information that firms should evaluate in determining whether

they have a duty to report (16 C.F.R. § 1115.12(e)); examples of

products that the Commission considers “defective” (16 C.F.R.

§ 1115.4); and criteria the Commission may use to determine

whether a defect presents a substantial product hazard (16 C.F.R.

§ 1115.12(f)).

13 In some cases, plaintiffs have sought to introduce the testimony

ef ex-CPSC employees with “expertise” in applying the Commis-

sion’s Section 15(b) regulations, but some courts have held such

testimony inadmissible on the ground that it usurps the role of the

judge and jury. See Payne v. A.O. Smith Corp., 627 F. Supp. 226,

228 (S.D. Ohio 1985).

11

and evaluating the whole record."* Thus, judges and

juries in a Section 23 case would have to interpret and

apply not just the CPSC regulations construing Section

15(b), but the statutory and administrative provisions

governing remedial action as well. Here too, judges and

juries would be required to determine complex questions

of fact and law that Congress committed to an expert

administrative agency. Moreover, predicting the Com-

mission’s probable course of action in response to a Sec-

tion 15(b) report would require multiple speculations

about a variety of difficult issues that judges and juries

are ill-equipped to address.'®

The complex factual issues raised by Section 23 claims

would necessarily broaden the scope of evidence that is

discoverable and perhaps admissible in product liability

actions. In order to prove that the defendant was in

possession of information that was reportable under Sec-

tion 15, the plaintiff may insist on pursuing broad-

ranging discovery concerning all phases of the design and

safety history of the defendant’s product as well as the

defendant’s decision-making process on safety issues.

Much of this evidence might be inadmissible in a normal

product liability case because it does not involve occur-

14 The submission of a report under Section 15(b) would not, in

and of itself, result in remedial action. The statute and the regula-

tions encourage companies to report safety problems that “may”

present a substantial product hazard, even if in fact, after a full

evaluation, no substantial product hazard would be found by the

Commission. See 48 Fed. Reg. 34,999. Before the Commission can

require corrective action under Section 15(c) or (d), substantial

evidence must be presented that a product in fact contains a

“defect” which “creates a substantial risk of injury to the public.”

15 U.S.C. § 2064 (a) (2).

15 Even in the best of circumstances, the prediction of Commis-

sion behavior is subject to a large margin of error. It depends on

variabies such as overall Commission priorities, the predilections

of individual commissioners, and the availability of agency

resources.

12

rences similar to the accident at issue.’* Moreover, where

a report was filed with the CPSC but the plaintiff alleges

it was untimely, communications between the defendant

and the Commission and internal CPSC documents also

would be an obvious target for discovery. These increased

discovery burdens would add to the time, effort and ex-

pense necessary to resolve product liability claims.

For these reasons, the private cause of action recog-

nized by the court below has disturbing implications for

the trial of product liability cases which merit the atten-

tion of this Court. Granting the petition for a writ of

certiorari would enable the Court to examine the legal

basis for a new remedy that threatens to impose addi-

tional liabilities and litigation costs on a tort compensa-

tion system that is already seriously overburdened and in

urgent need of reform.

III. THIS CASE OFFERS THE COURT A RARE OPPOR-

TUNITY TO CONSIDER THE EXISTENCE OF A

PRIVATE RIGHT OF ACTION FOR VIOLATION OF

CPSC INTERPRETIVE GUIDELINES.

As a result of the interlocutory appeal permitted by

the Minnesota courts, this case provides a rare occasion

to determine whether private litigants have a right to

sue for violation of the reporting requirements inter-

preted by the CPSC regulations. Although Section 23

16 In ordinary product liability cases, courts are extremely careful

to guard against the danger of “diverting the jury’s attention from

the instant occurrence and confusing the issues.” Johnson V.

Amerco, Inc., 877 Ill. App. 3d 827, 42 Ill. Dec. 684, 409 N.E.2d 299,

315 (1980). See also Uitts v. General Motors Corp., 411 F. Supp.

1880, 1383 (E.D. Pa. 1974) (plaintiff precluded from offering re-

ports of 35 other accidents because of potential for “unfair preju-

dice, consumption of time and distraction of the jury to collateral

matters”). Courts also carefully circumscribe plaintiffs’ attempts to

rely on evidence of warranty returns and other field performance

complaints absent proof that the complaints regarding the other

products are similar. See Eickelberg v. Deere & Co., 276 N.W.2d

442, 445 (Iowa 1979).

13

claims have been asserted in numerous product liability

cases, the opportunities for appellate review have been

limited because most of the cases have been settled be-

fore trial or tried but not appealed. Thus, if the Court

declines to grant review now, there may be no additional

opportunity to consider the issue in the near future.

In view of the split in authority in the lower courts,

further development of the case law is not likely to clarify

the private remedy provisions of the CPSA, and the ab-

sence of guidance from this Court will increase the con-

fusion and uncertainty among lower courts and litigants.

Because the scope of Section 23 has far-reaching conse-

quences for product liability litigation, the Court should

take the opportunity that this case offers to render a

definitive ruling on this important issue of federal law.

CONCLUSION

For the foregoing reasons, the amici urge that the peti-

tion for writ of certiorari be granted.

WILLIAM C. BRASHARES

CHARLES A. SAMUELS

MINTZ, LEVIN, COHN, FERRIS,

GLOvskKY & PoPEo, P.C.

1825 Eye Street, N.W.

Suite 1201

Washington, D.C. 20006

Counsel for Association of Home

Appliance Manufacturer

JOSEPH M. MATTINGLY

General Counsel and Director

of Governmental Affairs

GAS APPLIANCE MANUFACTURERS

ASSOCIATION

1901 North Moore Street

Suite 1100

Arlington, Virginia 22209

Counsel for Gas Appliance

Manufacturers Association

Respectfully submitted,

STEPHEN A. BoKAT *

Vice President

NATIONAL CHAMBER LITIGATION

CENTER, INC.

1615 H Street, N.W.

Washington, D.C. 20062

(202) 463-5337

Counsel for Chamber of

Commerce of the United States

DALE R. SCHMIDT

Manager of Legal Services

NATIONAL ELECTRICAL

MANUFACTURERS ASSOCIATION

2101 L Street, N.W.

Suite 300

Washington, D.C. 20037

Counsel for National Electrical

Manufacturers Association

* Counsel of Record

DANIEL N. MYERS

Vice President for Government

Relations and General Counsel

NATIONAL LP-GAS ASSOCIATION

1235 Jefferson Davis Highway

Suite 702

Arlington, Virginia 22202

Counsel for National LP-Gas

Association

May 1986

MAc §. DUNAWAY

HOLLAND & KNIGHT

888 Seventeenth Street, N.W.

Suite 400

Washington, D.C. 20006

Counsel for Portable Power

Equipment Manufacturers

Association

AARON LOCKER

LOCKER, GREENBERG & BRAININ

One Penn Plaza

Suite 4828

New York, New York 10001

Counsel for Toy Manufacturers

of America

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