Relco, Inc. v. Consumer Product Safety Commission

• Decision Date: 24 March 1975
• Docket Number: Civ. A. No. 74-H-362.
• Parties: RELCO, INC. and Thomas H. Doss, Plaintiffs, v. CONSUMER PRODUCT SAFETY COMMISSION et al., Defendants.
• Court: U.S. District Court — Southern District of Texas

391 F. Supp. 841

RELCO, INC. and Thomas H. Doss, Plaintiffs, v. CONSUMER PRODUCT SAFETY COMMISSION et al., Defendants.

Civ. A. No. 74-H-362.

United States District Court, S. D. Texas, Houston Division.

March 24, 1975.

James E. Knox and Morris E. Belilove, Houston, Tex., for plaintiffs.

Edward B. McDonough, Jr., U. S. Atty., and Helen M. Eversberg, Asst. U. S. Atty., Houston, Tex., for defendants.

MEMORANDUM OPINION AND ORDER

NOEL, District Judge.

The facts essential to the disposition of the motion are not in dispute. Plaintiff. Thomas Doss, brought this action in his own behalf and in behalf of Relco, Inc., a corporation wholly owned by Doss, to permanently enjoin the Consumers Product Safety Commission (hereinafter called "the Commission" or "CPSC") from proceeding under or enforcing Sections 12(b)(1) and 15(a)(2), (b)(2), (c) and (d) with respect to plaintiffs' product, a low-cost electronic arc welder called the "Wel-Dex". In addition, plaintiffs request that a three-judge panel be convened pursuant to 28 U.S.C. § 2282 on the ground that portions of the Consumers Product Safety Act (hereinafter called "the Act") are unconstitutional. Defendants have filed a motion to dismiss the complaint for lack of subject matter jurisdiction and failure to state a claim upon which relief can be granted.

The Commission was created by Public Law 92-573, 15 U.S.C. § 2051, et seq. The purposes of the Commission are, among other things, to protect the public against unreasonable risks of injury and to assist consumers in evaluating the comparative safety of consumer products. 15 U.S.C. § 2051(b). The Commission receives and investigates numerous complaints from a variety of sources regarding consumer products.

In the instant case, on December 26, 1973, an electrical engineer employed by the General Services Administration, an agency of the United States government, complained to the Commission that the plaintiffs' product was unsafe. While the complainant had received no injury, he alleged that certain potential dangers inherent in the product's design warranted close inspection by the agency.

Motivated by this letter, the Commission began an investigation into the safety of the Wel-Dex are welder. Through the Commission's Bureau of Engineering Sciences, an initial report was compiled on February 14, 1974. Following the internal procedure of the agency, the Commission notified the plaintiff Doss of the investigation. Information on the Welder and its production history was requested. This information was immediately provided by plaintiff Doss. This data in general reflected that the welder had been manufactured by the Relco Corporation since 1968 under the trade name "Wel-Dex" at a price of $18.95. During the six years of its production, 200,000 units had been produced and distributed to customers nationwide with no known or reported injury or malfunction.

On February 21, 1974, after receipt of the above information, a meeting was held by the CPSC's Bureau of Compliance for the purpose of a coordinated follow-up investigation. At that meeting, the Deputy Director, Mr. Harry Garber, of the agency's Bureau of Compliance, relying upon the complaint and the internal technical evaluation conducted by CPSC technicians, ordered a national press release alerting the public to the potential hazards discovered within the plaintiffs' product. The Deputy Director, purportedly acting for the Commission, authorized the disclosure under the authority given to the Commission to protect the public from unsafe and imminently hazardous products.¹

On the same afternoon, following the meeting of the Bureau of Compliance, plaintiff Doss was notified of the Bureau's decision. The following morning plaintiffs, through their attorneys, contacted the Commission to protest the issuance of any public disclosure until a hearing or an informal meeting could be arranged for plaintiffs to respond to the Commission's engineering findings and its conclusions. The Commission was assured that if they would withhold releasing the proposed press release, plaintiffs would retain Washington counsel and appear at the agency's offices at the beginning of business on the next working day. Despite these protests over the lack of an opportunity to be heard, the plaintiffs were informed that the decision had been made and that the press release would be issued.

Accordingly, on the afternoon of February 22, 1974, the following press release was issued:

"CPSC ALERTS CONSUMERS TO POTENTIAL HAZARD IN ELECTRIC ARC WELDER

"WASHINGTON, D. C. (Feb. 22)—

The U.S. Consumer Product Safety Commission today warned that approximately 200,000 `Wel-Dex' are welders purchased by consumers over the past four to six years may contain defects capable of causing fatal electric shock.

"Consumers should immediately cease use of the product and take extreme care when disconnecting it from an electrical outlet.

"The terminals are exposed, creating a potential hazard of electric shock, and in addition poor connection of the line cord to the welder could render the entire outer frame electrically alive.

"The welders were manufactured by Wel-Dex Manufacturing Company, a subsidiary of Relco Industries, 2210 West 34th Street, Houston, Texas.

"Both the names of the welder and the manufacturer appear on a name-plate on the welder.

"The product was advertised through various media including organic gardening and farming magazines. All sales were by mail order.

"The Commission learned of the potential hazard as a result of a consumer complaint from an electrical engineer.

"The Commission is investigating alternatives open to it to insure that the product is corrected or removed from the market. Further information will be released to consumers as it is available."

Monday, February 25, 1974 (following the above press release), plaintiff Doss traveled to Washington, employed counsel there, and obtained an interview with officials in the agency. At that meeting, plaintiffs allege that the Commission demanded an immediate cessation of the distribution of the six-year-old product, and a recall or refund of all units previously sold. The plaintiff, upon these demands, consented to suspend production of the Wel-Dex "in its present form". No formal report of defects or engineering data sufficient to modify the product was presented by the Commission. However, a number of items were listed as being unsafe and in need of correction. On March 12, 1974 this suit was filed.

While the parties have raised many and varied contentions of liability and defense, the Court has distilled three primary issues. They are as follows:

(A) Does the Commission have the authority to delegate its power to waive the thirty-day notice requirement allowed by § 2055(b)(2)?

(B) Is the harm to plaintiffs so great and certain as to warrant preenforcement review instead of the initial judicially preferred method of utilizing the administrative adjudicatory process?

(C) Since the constitutional virtue of the Act has been questioned, must a three-judge court be impaneled?

A discussion of these issues follows.

A. DELEGATION

Section 2055(b)(1) of the Act provides a general statutory scheme to be followed before any public disclosure is issued by the agency.² The section attempts to balance the Commission's primary purpose of protecting the public from unsafe and dangerous products, with the fundamental fairness necessary to protect the manufacturer from administrative mistake and zealous oversight. The primary vehicle for this dictated balance is the statutory requirement that the Commission may take no action toward the release of any public disclosure until at least 30 days have passed since the manufacturer had been provided with a summary of the information relating to the scrutinized product. A reasonable opportunity must be provided within that period to allow the manufacturer to submit further information and to challenge such of the Commission's information as the manufacturer believes to be inaccurate. The Commission must further provide such procedural steps to insure its information is accurate and its publicity fair.³ Where, however, the agency discovers a product on the market that is so imminently hazardous as to constitute an immediate threat to the "public health and safety", a public warning may be issued without any safeguard, notice, or delay.⁴

Plaintiffs do not contest the constitutionality of the notice provisions of the Act, but challenge the legality of the agency subdelegation of that power and the manner in which the public health and safety exception was exercised. Plaintiffs contend that the overall Congressional purpose embodied in the Act reposes the responsibility for the disclosure of adverse publicity solely in the five Commissioners sitting as "the Commission",⁵ and as such may not be delegated down to agency subordinates. See United States v. Giordano, 416 U.S. 505, 94 S.Ct. 1820, 40 L.Ed.2d 341 (1974).

It is not disputed that the agency, embodied by the five Commissioners, must of necessity delegate a large portion of the responsibility for administrative fact gathering and fact finding responsibility to its employees. However, some functions are so primary and so basic to the implementation of the statute as to be nondelegable. Functions constituting final agency action, such as administrative adjudications and rule making, must be made or ratified by the Commissioners and may not be delegated to subordinates under broad grants of authority.⁶ Congress did not intend to provide the Commissioners with the right to effectively abdicate responsibility in any area. While intra-agency delegation is a necessity in carrying out some of its functions, such delegation cannot be excessive. As stated by Professor Davis:

The single administrator, or the three or five or seven or eleven commissioners, are not provided with a staff of five hundred or a thousand and then expected to take all

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