Jake's Fireworks Inc. v. U.S. Consumer Prod. Safety Comm'n, Case No.: PWG 19-cv-1161

• Decision Date: 30 October 2020
• Docket Number: Case No.: PWG 19-cv-1161
• Citation: 498 F.Supp.3d 792
• Parties: JAKE'S FIREWORKS INC., Plaintiff, v. UNITED STATES CONSUMER PRODUCT SAFETY COMMISSION, et al., Defendants.
• Court: U.S. District Court — District of Maryland

498 F.Supp.3d 792

JAKE'S FIREWORKS INC., Plaintiff,

v.UNITED STATES CONSUMER PRODUCT SAFETY COMMISSION, et al., Defendants.

Case No.: PWG 19-cv-1161

United States District Court, D. Maryland, Southern Division.

Filed October 30, 2020

Dwight W. Stone, II, Joshua Franklin Kahn, Timothy L. Mullin, Jr., Miles & Stockbridge P.C., Baltimore, MD, Erika Z. Jones, Adam C. Sloane, Pro Hac Vice, Ankur Mandhania, Pro Hac Vice, Mayer Brown LLP, Washington, DC, for Plaintiff.

Hilary Keith Perkins, James William Harlow, U.S. Department of Justice, Washington, DC, for Defendants.

MEMORANDUM AND ORDER

Paul W. Grimm, United States District Judge

Jake's Fireworks Inc. ("Jake's Fireworks") seeks injunctive and declaratory relief against the United States Consumer Product Safety Commission (the "Commission" or "CPSC") and Ann Marie Buerkle, in her official capacity as Acting Chairman of the Commission.¹ Am. Compl. ¶ 1, ECF No. 16. The Commission is a regulatory agency charged with enforcing the Consumer Product Safety Act ("CPSA"), 15 U.S.C. §§ 2051 et seq. , and the Federal Hazardous Substances Act ("FHSA"), 15 U.S.C. §§ 1261 et seq. Id. at ¶ 6. Jake's Fireworks, a nation-wide retailer of consumer fireworks, alleges that it received enforcement letters from the Commission requiring the impound of some of its merchandise for failure to satisfy certain regulations. Id. at ¶ 4. In its four-count complaint, Jake's Fireworks seeks this Court's declaration that the statutory and regulatory provisions enforced by the Commission that are at issue do not apply to their particular consumer fireworks or, alternately, that the Commission's enforcement of the statutes and regulations is arbitrary and capricious. Id.

Defendants filed the pending motion to dismiss all claims brought against them in the Amended Complaint for lack of jurisdiction under Federal Rule of Civil Procedure 12(b)(1). Mot. ECF No. 17. In the alternative, Defendants seek to dismiss the fourth cause of action—a Fifth Amendment void-for-vagueness challenge—for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) and argue that Jake's Fireworks’ requests for injunctive relief are moot. Id. ; Mot. Mem. 3, ECF No. 17-1. Because I conclude that this Court does not have subject-matter jurisdiction, Defendants’ Motion to Dismiss, ECF No. 17, is GRANTED,² and the Amended Complaint is DISMISSED WITHOUT PREJUDICE.

BACKGROUND

I. Regulatory Overview

The Consumer Product Safety Act ("CPSA") was enacted, in part, "to protect the public against unreasonable risks of injury associated with consumer products." 15 U.S.C. § 2051 (b). The CPSA created the Consumer Product Safety Commission and authorized it, among other things, to conduct research on and test consumer products, to promulgate consumer product safety standards, and to ban hazardous products. 15 U.S.C. §§ 2053, 2054, 2056, 2057. The Commission also inherited from the Food and Drug Administration responsibility for enforcing the Federal Hazardous Substances Act ("FHSA"), 15 U.S.C. §§ 1261 et seq. See 15 U.S.C. § 2079. The FHSA prohibits "the introduction or delivery for introduction into interstate commerce" of "hazardous substance(s)," 15 U.S.C. § 1263, and provides for penalties, 15 U.S.C. § 1264, and seizures of misbranded or banned products, 15 U.S.C. § 1265.³

The Commission works with importers and the United States Custom and Border Protection ("CBP") to sample imported fireworks devices and examine them for possible violations of the FHSA. 15 U.S.C. § 1273(a). The Commission's multi-step process for sampling, notifying the importer, and enforcing its statutes and implementing regulations is described in detail in The Regulated Products Handbook (the "Handbook"), which was developed to help importers understand their responsibilities and procedural options when informed of a violation. Mot. Ex. 4, ECF No. 17-6.⁴ The Handbook provides this summary in the Preface:

When CPSC staff determines that a product violates a specific statute or regulation, CPSC Office of Compliance and Field Operations generally notifies the responsible firm (the product manufacturer, importer, distributor, or retailer) of the violation and requests a specific remediation of the problem.

Notification to the responsible firm is usually in the form of an official letter, referred to in this Handbook as the Letter of Advice or a Notice of Noncompliance from the Office of Compliance and Field Operations (collectively referred to in this Handbook as LOA). Firms should review this Handbook in conjunction with the LOA sent by CPSC staff that identifies the applicable statutes and regulations violated. The LOA informs the firm of the specific product and violation that has occurred; requests that the firm take specific corrective actions (including stopping the sale and distribution of the product; recalling the product from distributors, retailers, and/or consumers; quarantining and disposing of inventory of the product; and changing future production of the product); and informs the firm of the legal actions available to the Commission (including civil and criminal penalties and injunctive relief). In addition, the LOA informs the firm that if it disagrees with CPSC staff's determination that a violation has occurred or believes the product is not subject to the Commission's jurisdiction, it may question staff's findings and present evidence to support its position. See Chapter 3 of this Handbook.

Handbook 5-6. Chapter 3 contains the procedures to be followed:

RESPONDING TO THE CPSC LETTER OF ADVICE (LOA)

When the CPSC staff notifies you in a LOA that a product that you manufacture, import, distribute, sell, or offer for sale fails to comply with a CPSC statute, rule, regulation, standard, or ban, you may present evidence supporting your view if you disagree with staff's determination.

The LOA will state that the firm may present evidence that a violation does not exist or that a product is not covered by the applicable statute or regulation. The letter will indicate to whom the response should be addressed and will give you a timeframe for the expected response. You may submit, to the indicated recipient, all evidence and arguments that support why you believe the product is not violative; not subject to a specific statute, rule, regulation, standard, or ban; or, should not be refused admission in the United States (if the violation involves an import detained at the port) or seized by CBP.

A firm may respond to a notice of noncompliance orally or in writing, and the firm may request an informal hearing to meet personally with Office of Compliance or Import Surveillance Division staff to present orally views and evidence. Such evidence may consist of:

• results from testing that supports certificates of compliance;

• results of tests indicating the product complies with the applicable regulation;

• marketing data indicating the product is not intended for the population group protected by the regulation or standard; or

• any other relevant data to support the claim of compliance.

CPSC RESPONSE TO FIRM RESPONSE

Any additional evidence or arguments that a firm presents are reviewed by the appropriate CPSC Office of Compliance or Import Surveillance Division staff, including appropriate technical and legal staff. If the information you present, in the staff's opinion, does not refute staff's claim that the product is violative or covered by a specific statute, rule, regulation, standard, or ban, Commission staff, as a general rule, will notify you in writing before staff pursues any enforcement action against the products or your firm.

If a firm continues to disagree with CPSC staff and declines to take corrective action, the staff may request the Commission approve appropriate legal proceedings, including the issuance of an administrative complaint, injunctive action, seizure action, or such other action as may be appropriate.

Id. at 18-19.

To enforce its statutes and regulations, the Commission prefers to work cooperatively with industry "but initiat[es] litigation when necessary." Id. at 7. It may impose sanctions for violations, including both civil and criminal penalties. Id. at 8. "In addition, firms and individuals may be enjoined from continuing to violate CPSC statutes and regulations, and pursuant to court order, violative products may be seized to prevent distribution in commerce." Id. ; see also id. at 14 (quoting 15 U.S.C. § 1267 to state that United States district courts have jurisdiction to restrain violations of the FHSA). As referenced above, Chapter 3 provides detailed procedures to follow if a firm disagrees with the Commission's staff's determination that a product is in violation of a statute or regulation, including how a firm may respond to a Letter of Advice ("LOA") or notice of noncompliance and the steps that follow such a response. Id. at 18. Ultimately, "[i]f a firm continues to disagree with CPSC staff and declines to take corrective action, the staff may request the Commission approve appropriate legal proceedings, including the issuance of an administrative complaint, injunctive action, seizure action, or such other action as may be appropriate." Id. at 19.⁵ Chapter 4 provides the details for handling of regulated products at ports of entry. Id.

II. Factual and Procedural Background

Jake's Fireworks is one of the nation's largest importers and distributors of consumer fireworks with distribution centers from coast to coast. Am. Compl. ¶¶ 5, 57. One of its best sellers is the Excalibur product line of small reloadable aerial shells,⁶ which it purchases and imports from a Chinese manufacturer. Id. at ¶ 57. When Jake's Fireworks imports these shells, it must certify that the fireworks comply "with all rules, bans, standards, or regulations applicable." Id. at ¶ 59 (quoting CPSA, 15 U.S.C. § 2063(a)(1)(A) ). Since about 2010, Jake's Fireworks has used American Fireworks Standards Laboratory, an independent non-profit third-party...