The Consumer Product Safety Commission (CPSC) recently took the relatively rare step of filing a lawsuit to hold the former owner of an Internet sales sensation, Buckyballs, personally responsible for the cost of recalling the product, a prospect that could end up costing as much as $57 million.
Buckyballs is a small desk toy that is made up of many small but powerful magnetic pellets that can be shaped and stacked into any number of forms. The toy was developed in 2009 by serial entrepreneur Craig Zucker, and it sold so well, Zucker figured he’d hit the jackpot. Unfortunately, since Buckyballs hit the market, well over 1,000 children have been injured after swallowing the pellets from Buckyballs and a few other copycat brands that have popped up. Some of the injuries were severe enough to have required surgery to have them removed. The CPSC subsequently issued a recall aimed at Zucker, as well as two companies making similar products, Zen Magnets and Star Networks USA.
Zucker dissolved his company in December 2012, and that’s when the commission filed suit against him, personally. Besides the lawsuit, the CPSC also proposed a prohibition on sales of small toy magnets that exceeding an acceptable level of attractive force, which they will consider later this year.
Back in 2010, Zucker had actually worked with the commission to attempt to mitigate the dangers Buckyballs might pose to children. Besides adding “Keep away from children” labels to the product’s packaging, he also appeared in a CPSC-made video about the dangers of swallowing magnets and put together a Web site about magnet safety. After there was actually an increase in emergency room visits related to ingestion of small magnets, the commission determined that the measures weren’t enough.
According to a CPSC study, at least 1,700 incidents involving children and teens ingesting small magnets occurred between 2009 and 2011. In one infamous 2012 incident, doctors were forced to remove nearly all of a 2-year-old’s small intestine after he swallowed eight magnetic pellets. The child is now being fed through a chest catheter.
In July 2012, the CPSC asked for a voluntary recall of the toys, asking manufacturers, importers and retailers to cease distribution and offer refunds. According to Zucker, that effectively killed his business. He finally shuttered the doors in December of that year, and the agency responded by naming him in its lawsuit. In response, Zucker filed a complaint against the government, arguing that regulators cannot hold an individual responsible for alleged product-safety issues. The other companies involved in the CPSC lawsuit, Zen Magnets and Star Networks, also are fighting the lawsuit and they continue to sell their products online.
This case is extremely unusual. Before Buckyballs, the last time the CPSC litigated a matter at all was in 2003, when they sued air-gun maker Daisy Manufacturing. In most cases, businesses cooperate with recall efforts. Most recalls are technically voluntary. The only way for the agency to force a recall, agency staff need to obtain permission from the commissioners to file suit, and they also must convince an administrative judge that a product is defective.