Gerber Legendary Blades, a division of Fiskars Brands, this week agreed to pay a $2.6 million civil penalty to the Department of Justice to settle allegations that it knowingly failed to immediately report to the Consumer Product Safety Commission a safety hazard associated with Fiskars’ Gator Combo Axe. As part of the settlement, Fiskars also agreed to establish and maintain a compliance program with internal recordkeeping and monitoring systems to keep track of information about product safety hazards.
Under the Consumer Product Safety Act (CPSA), manufacturers, distributors, and retailers must report product hazards to the CPSC. A knowing violation of the CPSA subjects a firm to civil penalties. In agreeing to the settlement, which is still awaiting judicial approval, Fiskars has not admitted that it knowingly violated the CPSA.
The Axe was a combination product that had a knife embedded in its handle that was supposed to be secured by two small magnets. In a complaint filed on behalf of the CPSC in U.S. District Court for the District of Oregon, the United States alleged that Fiskars became aware that the knife in the Axe handle could and did dislodge from the Axe’s handle when the Axe was in use, causing serious injuries to consumers.
“Fiskars received numerous reports from consumers who were harmed by this product,” Acting Assistant Attorney General Joyce Branda for the Justice Department’s Civil Division, said in a statement. “The company had an obligation to immediately report to the CPSC and it failed to do so.”
As early as 2005 and continuing over the next several years, Fiskars received consumer complaints and warranty claims indicating that the knife fell out of the Axe handle while the Axe was being used to chop, pound, or hammer, the complaint alleged. In several instances, the knife dislodged from the handle during use and caused injuries including lacerations requiring stitches, permanent nerve damage and surgery to repair severed tendons.
“The settlement not only addresses the product safety issue, but also holds the company accountable and sends a message to others that these violations will be taken seriously,” U.S. Attorney S. Amanda Marshall for the District of Oregon, said in a statement.
Under the terms of the consent order, Fiskars’ compliance program must contain at a minimum:
Written standards and policies;
A mechanism for confidential employee reporting of compliance-related questions or concerns to either a compliance officer or another senior manager with appropriate authority;
Procedures for reviewing compliance and reports of safety concerns, and for implementing corrective and preventative measures when compliance deficiencies or violations are identified;
Effective communication of policies and procedures through training programs;
Senior manager responsibility for compliance and accountability for violations;
Retention of all records reasonably related to compliance with the safety statutes and regulations for at least five years, and the availability of those records upon request.
Fiskars must also maintain and enforce a system of internal controls and procedures. That system must be designed to ensure that:
Information required by law to be disclosed by Fiskars is recorded, processed and reported in accordance with applicable law;
All reporting made to the CPSC is timely, truthful, complete, and accurate; and
Prompt disclosure is made to Fiskars’ management of any material deficiencies or material weaknesses in the design or operation of such internal controls that are reasonably likely to adversely affect in any material respect the company’s ability to record, process, and report to the CPSC.
Furthermore, Fiskars must provide to the CPSC upon request written documentation of such improvements, processes, and controls, including their effective dates. It must also make available all information, materials, and personnel reasonably necessary for CPSC to evaluate the company’s compliance with the terms of the consent decree.