For those that have been following the litigation between Zen Magnets LLC (“Zen”) and the CPSC, the 10th Circuit Court of Appeals recently offered a surprising twist. Stemming back from 2012, when the CPSC filed a Complaint against Zen ordering them to stop selling their rare earth magnetic balls due to potential bodily harm from ingestion, Zen has been fighting back.
The most recent legal battle occurred at the 10th Circuit Court of Appeals where the Court vacated the CPSC’s 2014 rule that prohibits the importation and distribution of high-powered rare earth magnets to anyone. You may recall the earlier CPSC rulemaking prohibited the magnets from being designed, manufactured, or marketed as a toy for children under 14. The 2014 rule took the issue one step further and the new safety standard restricted the importation and sale of the rare earth magnets to anyone, not just children under 14. Zen argued that it was adversely affected by the rule and filed the petition with the U.S. Court of Appeals pursuant to U.S.C.§ 2060(a).
In its review of the CPSC rule, the 10th Circuit was required to measure the risk of injury from the product against the benefits of the product to the public. This analysis includes reviewing the nature of the injury sought to be prevented; the number and type of products subject to the rule; the public’s need for those products; and the effect of the rule on utility, cost and availability of the product. The Court must then determine whether the risk benefit from the product justifies the rule in place. Here the Court must look at whether the rule was necessary to reduce the risk of injury; whether the rule was in the public’s interest; and whether the rule imposes the least burdensome manner to eliminate the risk of injury.
The 10th Circuit vacated and remanded the safety standard back to the CPSC for further proceedings. The Court found that the CPSC did not properly take into account the degree of risk of injury caused by the magnets; and the CPSC did not address the public’s need for the magnets and the rule’s effect on their utility and availability.
While the 10th Circuit provided a unique win to Zen, this outcome cannot be seen as a trend. The CPSC will be more diligent in outlining its rationale and analysis for promulgating its safety standards going forward. It will be interesting to see what the CPSC does next with this rule.