[Federal Register Volume 81, Number 232 (Friday, December 2, 2016)]
[Notices]
[Pages 87023-87025]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-29004]


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CONSUMER PRODUCT SAFETY COMMISSION


CPSC Litigation Guidance and Recommended Best Practices for 
Protective Orders and Settlement Agreements in Private Civil Litigation

AGENCY: U.S. Consumer Product Safety Commission.

ACTION: Notice.

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SUMMARY: The U.S. Consumer Product Safety Commission (CPSC or the 
Commission) is publishing this Litigation Guidance to provide 
recommendations for best practices to all parties in relevant 
litigation related to providing an exemption in protective orders and 
settlement agreements for reporting information to the CPSC.

FOR FURTHER INFORMATION CONTACT: Todd A. Stevenson, Secretary, U.S. 
Consumer Product Safety Commission, Office of the Secretary, 4330 East-
West Highway, Bethesda, MD 20814, Room 820, 301-504-7923; email 
[email protected].

SUPPLEMENTARY INFORMATION: 

I. Background 1
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    \1\ The Commission voted (3-2) to publish this notice in the 
Federal Register. Chairman Elliot F. Kaye and Commissioners Robert 
S. Adler and Marietta S. Robinson voted to approve publication of 
the notice. Commissioner Ann Marie Buerkle and Joseph P. Mohorovic 
voted against publication of the notice.
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    The CPSC is a public-health authority with a broad mandate to 
protect the public against unreasonable risks of injury associated with 
consumer products. See 15 U.S.C. 2051 (2014); See also Public Health 
Authority Notification, 79 FR 11769 (March 3, 2014). The Consumer 
Product Safety Act (CPSA) defines consumer products broadly, making the 
Commission responsible for ensuring the public's safety from thousands 
of different ever-evolving product lines. See 15 U.S.C. 2052 (2014). 
The timely collection of information regarding consumer product-related 
safety hazards is essential for carrying out the Commission's public 
health and safety mission.
    Mandatory self-reporting of potential product hazards by 
manufacturers (including importers), retailers, and distributors 
(Industry Stakeholders) is a key element of CPSC's ability to identify 
potential substantial product hazards and subsequently take corrective 
action to protect the public. Such Industry Stakeholders are best 
situated to discover a potential product hazard and, thus, are 
statutorily required to report immediately to the CPSC when they obtain 
information that reasonably supports the conclusion that a product 
fails to comply with an applicable rule or standard, contains a defect 
which could create a substantial product hazard, or creates an 
unreasonable risk of serious injury or death. 15 U.S.C. 2064(b) (2014).
    Despite the mandatory reporting requirement, the Commission 
believes Industry Stakeholders do not always meet their reporting 
obligations. Industry Stakeholders may fail to report potential product 
hazards altogether, may fail to report them in a timely manner and/or 
may fail to report new incidents that occur after the initial hazard 
has been reported.\2\
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    \2\ The CPSA recognizes that failures to report and delays in 
reporting may occur, and authorizes civil penalties up to 
$15,150,000 for any related series of violations for stakeholders 
who violate their reporting obligations. See 15 U.S.C. 2068-2069 
(2014).
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    If Industry Stakeholders fail to report, CPSC has limited 
alternative means of obtaining this critical safety information. It is 
therefore possible that a product hazard will never come to CPSC's 
attention. Information in private litigation could, thus, be a key 
resource for the CPSC when Industry Stakeholders have not satisfied 
their reporting obligations. However, in some instances, 
confidentiality provisions imposed or enforced by the courts or agreed 
upon by private litigants may have prevented parties that are not 
industry stakeholders from sharing with the CPSC important product 
safety information they have discovered. See S. REP. NO. 110-439, at 6-
8 (2008); see also Footnote 2 infra.
    The motions and hearings involved in obtaining protective orders in 
private litigation for specific documents may result in enormous 
associated costs both in terms of money and time. This often leads to 
the use of ``blanket'' or ``umbrella'' protective orders covering the 
entirety of pre-trial discovery. See Zenith Radio Corp. v. Matsushita 
Elec. Indus. Co., 529 F. Supp. 866, 879 (E.D. Pa. 1981) (finding that 
without blanket protective orders, a judge becomes a ``veritable 
hostage'' required to spend years on motions for individual documents). 
Rather than requiring a series of individual rulings for a large number 
of documents, blanket protective orders may create a presumption 
against disclosure for all or certain groups of information that then 
may be challenged individually for lack of good cause. See MANUAL FOR 
COMPLEX LITIGATION Sec.  11.432 (2004). Such umbrella protective orders 
have become fairly common. See Zenith Radio Corp, 529 F. Supp. 866, 889 
(E.D. Pa. 1981) (``We are unaware of any case in the past half-dozen 
years of even a modicum of complexity where an umbrella protective 
order . . . has not been agreed to by the parties); see also Jepson, 
Inc. v. Makita Elec. Works, LTD., 30 F.3d 854, 858 (7th Cir. 1994) 
(``stipulated protective orders are relatively common.''). 
Additionally, if incriminating documents outside the

[[Page 87024]]

scope of a protective order are discovered before trial, defendants 
often demand blanket protective orders as a condition of settlement. 
Pansy v. Borough of Stroudsburg, 23 F.3d 772, 785-786 (3rd Cir. 1994). 
In order to facilitate settlements, courts are often willing to grant 
these blanket orders without significantly analyzing the public 
interests involved. Id.
    The Commission believes that general acceptance of ``blanket'' or 
``umbrella'' protective orders in private litigation increases the 
likelihood that such agreements will bar the reporting to the 
Commission by those who are not Industry Stakeholders of consumer 
product safety information that the CPSC needs to protect the public. 
Although a party could pursue a good-cause challenge to allow the 
reporting of such information, the practicalities involved create a 
significant disincentive--the party's attorneys must first recognize 
the information's relevance to the CPSC and then pursue a potentially 
costly series of motions and hearings that are unlikely to benefit 
their client directly. See Nick Saccone, Comment, Somewhere Between 
Florida, Texas, and Federal Rule of Civil Procedure 26(c): A Balanced 
Approach to Protective Orders and Confidentiality Settlements, 39 U. 
Tol. L. Rev. 729, 740 (2008) (``Satellite litigation concerning 
contested discovery requests often has little or no bearing on the 
ultimate result of the lawsuit, other than increasing the cost of 
litigation for both injured plaintiffs and defendants.''). Few parties 
will therefore even attempt to lift protective orders in order to 
inform the CPSC of relevant product safety information.
    According to a report submitted by the United States Senate 
Committee on the Judiciary on the proposed Sunshine in Litigation Act 
of 2008, safety information related to dangerous playground equipment, 
collapsible cribs, and all-terrain vehicle design defects was kept from 
the CPSC by protective orders in private litigation. S. REP. NO. 110-
439, at 6-8 (2008). A cursory review of other civil product liability 
cases reveals that protective orders are in place in cases involving 
additional consumer products that fall under the CPSC's 
jurisdiction.\3\ These protective orders prohibit parties from 
reporting to the CPSC information they obtain in the course of 
litigation that concerns potentially hazardous consumer products, 
including incident reports.
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    \3\ For example, the following is a select (and by no means 
exhaustive) list of protective orders that have been entered into in 
ongoing litigation or settlements related to consumer products 
within the CPSC's jurisdiction. Any relevant information discovered 
in these cases is covered by the protective orders and plaintiffs 
would be prohibited from sharing such information with the CPSC. 
Hampton v. Crescent Cleaners, Inc., et al., USDC Western District of 
Tennessee, Case 2:08-cv-02696-SHM-cgc, Document 89, Filed 08/17/2009 
(infrared liquid propane wall-mounted heater); Miah v. Ames True 
Temper, Inc., et al., St Ct of DeKalb County, GA, Civ Action File 
No. 03A05859-7, Protective Order, 7/22/2013 (wheelbarrow); Tamayo v. 
Dollar Tree Stores., Inc., et al., USDC Eastern District of PA, Case 
2:13 cv-02062-GP, Document 41, Stipulated Protective Order, 
(Document 41), Filed 12/05/13 (markers); Williams v. Ideal 
Industries, Inc., et al., USDC Northern District of Georgia, Case 
1:14-cv-02883-LMM, First Amended Protective Order (Document 46), 
Filed 02/17/15 (multimeter device); Broughton v. Paoli, LLC, et al., 
NC Carteret County Sup Ct, 15 CVS 471, Stipulated Protected Order, 
12/21/2015 (office chair); and Gomez v. Harbor Freight Tools USA, 
Inc., Sup Ct of CA Los Angeles County, Case no. BC616712, 
Stipulation and Protective Order--Confidential Designations, Filed 
8/17/2016 (gas cans).
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    The Commission believes the best way to protect public health and 
safety is to preemptively exclude or exempt the reporting of relevant 
consumer product safety information to the CPSC (and other government 
public health and safety agencies) from all confidentiality provisions.

II. The Model: NHTSA's Enforcement Guidance Bulletin

    The Commission has reviewed the National Highway Transportation 
Safety Administration's (NHTSA) guidance on this issue. NHTSA is 
situated similarly to the CPSC with a public health and safety mission 
to reduce traffic accidents and the deaths and injuries resulting from 
them. See 49 U.S.C. 30101 (2014). NHTSA's ``ability to identify and 
define safety-related motor vehicle defects relies in large part on 
manufacturers' self-reporting.'' NHTSA Enforcement Guidance Bulletin 
2015-01: Recommended Best Practices for Protective Orders and 
Settlement Agreements in Civil Litigation, 81 FR 13026, 13026 (March 
11, 2016) (hereinafter NHTSA Enforcement Guidance Bulletin). NHTSA 
found that it does not always receive such information from their 
industry stakeholders. Id. NHTSA recently issued an Enforcement 
Guidance Bulletin in an attempt to address the use of ``protective 
orders, settlement agreements, or other confidentiality provisions'' 
barring reporting to the agency. Id.
    The NHTSA Enforcement Guidance Bulletin laid out a detailed, 
comprehensive and compelling legal analysis supporting the disclosure 
to public health authorities, notwithstanding confidentiality 
provisions in protective orders, settlements, and similar agreements. 
CPSC agrees with NHTSA that Rule 26 of the Federal Rules of Civil 
Procedure and various related state laws, as well as case law on public 
policy and contract law, all support the conclusion that government 
agencies with public health and safety missions should be excluded or 
exempted from the various relevant protective orders that are 
ubiquitous in private litigation today. NHTSA's legal analysis of this 
issue is available at: https://www.federalregister.gov/documents/2016/03/11/2016-05522/nhtsa-enforcement-guidance-bulletin-2015-01-recommended-best-practices-for-protective-orders-and.
    CPSC further agrees with NHTSA that nondisclosure provisions may be 
appropriately used by courts and litigants to ``promote full and 
complete disclosure, to prevent abuses of the discovery process, and to 
protect legitimate privacy and proprietary interests.'' 81 FR 13029. 
However, when such orders and agreements shield relevant and actionable 
safety information behind nondisclosure provisions, they violate the 
good-cause requirement of Rule 26 of the Federal Rules of Civil 
Procedure, its state corollaries, and the well-established public 
policy favoring protecting public health and safety.

III. Recommendation for Best Practices

    CPSC recommends, following the example set by NHTSA, that ``all 
parties seek to include a provision in any private protective order or 
settlement agreement that--despite whatever restrictions on 
confidentiality are imposed, and whether entered into by consent or 
judicial fiat--specifically allows for disclosure of relevant [consumer 
product] safety information to [the CPSC] and other applicable 
authorities.'' 81 FR 13029-13030. CPSC's proposed Litigation Guidance 
does not impose any new or additional requirements, but sets forth 
CPSC's recommendations for best practices when parties are considering 
confidentiality provisions in litigation related to consumer products 
within the CPSC's jurisdiction.
    Parties in the process of establishing or already subject to 
confidentiality provisions may use this Litigation Guidance and CPSC's 
standing as a public-health authority to support a reporting exception 
to these provisions. See 79 FR 11769. For example, the exception could 
explicitly state ``nothing herein shall be construed to prohibit any 
party from disclosing relevant consumer product safety information to 
the Consumer Product Safety Commission.'' Alternatively, a

[[Page 87025]]

clause might more generally state that ``nothing herein shall be 
construed to prohibit any party from disclosing relevant safety 
information to a regulatory agency or government entity that has an 
interest in the subject matter of the underlying suit.'' The CPSC, 
however, is not endorsing any particular language since the parties 
themselves are in the best position to determine how that may be 
accomplished.

IV. Conclusion

    The CPSC is publishing this Litigation Guidance to provide 
recommendations for best practices when drafting protective orders, 
confidentiality agreements, and settlement agreements. The Litigation 
Guidance should be reviewed by judges, plaintiffs, and defendants, as 
well as those parties wishing to submit amicus briefs relating to 
protective orders and confidentiality agreements in ongoing litigation.
    The Commission believes this Litigation Guidance is simple. 
Protective orders, confidentiality agreements and settlements (as well 
as other similar documents), should include language that allows any 
party to report consumer product safety information, incidents, 
injuries and deaths to the CPSC.\4\
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    \4\ The public is always encouraged to report relevant consumer 
product safety information to the CPSC via the CPSC's hotline [(800) 
638-CPSC (2772)]; the CPSC's online reporting tool: 
www.saferproducts.gov; and by contacting the CPSC's Office of 
Compliance and Field Operations directly [(301) 504-7547].
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    The Commission notes that this Litigation Guidance is not a binding 
or enforceable rule and would not change any person's rights, duties or 
obligations under the CPSIA or any other Act administered by the 
Commission.

    Dated: November 29, 2016.
Todd A. Stevenson,
Secretary, Consumer Product Safety Commission.
[FR Doc. 2016-29004 Filed 12-1-16; 8:45 am]
 BILLING CODE 6355-01-P