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Silence is Golden

This past week the Chairman at the Consumer Product Safety Commission issued a statement disclosing the referral of a case to the Department of Justice. The matter involves an alleged reporting violation. As the Chairman pointed out in his statement, the vote on the referral was 4-1. Although I voted against this referral—as I have for several prior cases–I am not writing to address the merits of this case. Instead, my purpose in writing is solely to challenge the Chairman’s unhealthy break with Commission precedent.

It has been a longstanding tradition at the Commission that no statement is issued from the agency when a referral to Justice is made. There are various reasons for this. At the least, the announcement may create an awkward situation for the Justice Department, particularly where, as here, the vote was not unanimous. It is by no means a foregone conclusion that the Justice Department will file suit in such cases. Sometimes, they settle. Sometimes, the Department does not agree that a suit is justified. Sometimes the Department takes a different view of the merits than the Commission majority. By publicly announcing the referral, the Chairman may limit the flexibility that Justice has traditionally enjoyed in such cases.

A more troubling result of the premature statement is the impact on due process rights. It should come as no surprise that the company’s stock price fell after the Chairman’s referral statement was issued. Does this make it more likely that another company, facing a similar choice, will accede to an unreasonable settlement request by the agency?

When a company has the fortitude to stand up to the government, it should be allowed to have its day in court, not be punished by having its case tried in the media.

Given the uncertainty that surrounds the reporting obligation, as well as the Chairman’s demand for higher penalties, I would anticipate that more companies will decide to take their chances with Justice and the courts rather than agreeing to a multi-million dollar settlement.

If this is the case, the CPSC should not raise the stakes by making premature public statements. Instead, we should return to the agency’s prior practice, when we respectfully allowed the Department of Justice to review a case without the added pressure and sensationalism that occurs when the media becomes involved.

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