Products Liability Law Daily Keurig Green Mountain shoulders $5.8M civil penalty for failure to report defective coffee makers
Wednesday, February 22, 2017

Keurig Green Mountain shoulders $5.8M civil penalty for failure to report defective coffee makers

By Colleen Kave, J.D.

A settlement agreement pursuant to which Keurig Green Mountain, Inc., of Waterbury, Vermont, will pay a civil penalty of $5.8 million has been provisionally accepted by the Consumer Product Safety Commission (CPSC). The penalty agreement, which was approved by a 4 to 1 vote, settles charges that the company knowingly failed to report to CPSC immediately a defect and unreasonable risk of serious injury related to its Keurig MINI Plus Brewing Systems, as required by federal law. In addition to the civil penalty, Keurig has agreed to develop, implement, and maintain a compliance program that is designed to ensure that the company complies with the Consumer Product Safety Act. Keurig’s agreement to settle this matter does not constitute an admission of CPSC staff’s charges. Comments on the settlement agreement are due by March 9, 2017 (CPSC Notice82 FR 11348, February 22, 2017).

Between February 2010 and November 2014, Keurig received around 200 reports of hot water, coffee, and coffee grounds spraying out of the MINI Plus brewers. In more than 100 of these incidents, consumers suffered burn-related injuries to their faces, hands, and bodies; some of these injuries were severe and resulted in second and third-degree burns. The company began to investigate the brewers in June 2014, and in August 2014, Keurig began to consider developing a design modification to prevent injuries caused by the defect. Nonetheless, Keurig’s investigation took more than four months to complete, far exceeding the 10-day period provided in 16 CFR 1115.14(d) for conducting a reasonably expeditious investigation to evaluate reporting requirements. After filing a full report with CPSC in November 2014, Keurig recalled around 6.6 million MINI Plus brewers (CPSC Recall Notice, No. 15-054, December 23, 2014).

In a joint statement, CPSC Commissioners Robert S. Adler, Elliot F. Kaye, and Marietta S. Robinson expressed their concern that, although it was the second highest penalty ever obtained by CPSC, the $5.8 million settlement amount was not sufficient to deter Keurig or any other company from failing to report a defect. Specifically, the commissioners pointed to the financial gains realized by the company between the time it notified CPSC of the defect at issue and the date it announced the recall, explaining, "…this time period included Black Friday and a portion of the holiday shopping season. By continuing to sell the Brewers after committing to participate in a voluntary recall, Keurig completely disregarded what we have always understood to be a cardinal rule of the Commission’s Fast Track recall program: all firms electing to participate in the program must immediately stop sale and distribution of the product.A "stop sale" has important safety implications and should be in place before Commission staff ever agrees to forego a preliminary hazard determination. Keurig’s failure to implement a stop sale while negotiating the recall demonstrates that it put profits ahead of safety and provides further justification for a significant civil penalty." According to the commissioners, just as CPSC has been attentive to the statutory provisions directing it to mitigate penalties when they might have an adverse economic impact on small business, so should the agency seek to enhance penalties for large firms, particularly when those companies disregard consumer safety, such that they serve as a measureable deterrent for giant companies with billion-dollar bottom lines.

Companies: Keurig Green Mountain, Inc.

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