CPSC and DOJ announce Wal-Mart civil penalty agreement

CPSC Monitor, April, 2003

Two years ago, CPSC sent a lawsuit against two companies to the Department of Justice (DOJ) alleging non-reporting of incidents involving home exercise equipment. On behalf of CPSC, DOJ filed the suits against Wal-Mart, the retailer, and Icon, the manufacturer.

On April 25, CPSC and DOJ announced that Wal-Mart had agreed to pay a $750,000 Civil Penalty for a "delay" in reporting the exercise equipment hazards.

Icon Health & Fitness manufactured the product involved, an exercise glider that allegedly had a defect that caused the user of the equipment to fall abruptly. The defect was said to be in the arm supporting the seat, which could disconnect during use.

In November 2001, Icon agreed to pay a $500,00 civil penalty in the matter, but Wal-Mart attorneys continued to fight the lawsuit.

CPSC charged that Wal-Mart knew of 46 incidents and 41 injuries and did not report them. Twenty-nine of the alleged injuries took place at Wal-Mart stores.

CPSC originally sought a $4.5 million penalty from both Wal-Mart and from Icon.

This is the first time a retailer has been sued and paid a penalty for failing to report under the CPSC statute, where the retailer was not also an importer or a private labeler.

Under the settlement with Wal-Mart, the company agreed to institute internal recordkeeping and monitoring systems to track information about product safety problems.

When CPSC Monitor first reported on this matter, in May 2001 (6), it noted that CPSC compliance officials sent the legal referral to DOJ during the transition period following the inauguration of President George W. Bush. Observers complained that at the time DOJ considered the referral, new political appointees were not in place and that career bureaucrats undertook the matter.

In the end, both Wal-Mart and Icon succumbed to the federal government. Nonetheless, the ultimate civil penalties, $500,000 for Icon and $750,000 for Wal-Mart, are a far cry from the original $4.5 million each demanded by CPSC at the start.

(6) See CPSC Monitor, May 2001, "CPSC Seeks Giant Civil Penalty from Wal-Mart and Icon for Non-Reporting of Alleged Injuries Associated With Exercise Equipment." Vol. 6, Issue 5, May 2001.