DENVER, Nov. 25, 2016 /PRNewswire/ -- In a victory for small business, the United States Court of Appeals for the Tenth Circuit has ruled in favor of Zen Magnets LLC in a 2-1 ruling, vacating the rule the Consumer Product Safety Commission promulgated in September, 2014 that prevented the importation of magnets. The majority opinion concluded that "the Commission's prerequisite factual findings, which are compulsory under the Consumer Product Safety Act, 15 U.S.C. §§ 2051-2089, are incomplete and inadequately explained." As such, the Court ruled to "VACATE and REMAND to the Commission." The magnets in question are generally sets of high powered magnet spheres similar to Buckyballs, Zen Magnets, Neoballs, and Neocube. The full ruling is available at https://www.ca10.uscourts.gov/opinions/14/14-9610.pdf
Zen previously won a rare triumph in March 2016 by successfully contesting a CPSC Product Recall in court in at least 20 years1. Zen's new successful rule making appeal is also uncommon for the CPSC, representing the first time a CPSC rule has been vacated in what appears to be 33 years2. Zen has been represented by David Japha of Levin, Jacobson & Japha with the assistance of Evan House.
Regarding the ER injury statistics, which Zen refers to as the "CPSC Epidemiology Elephant in the room," the 10th Circuit wrote: "While the Commission is certainly free to rely on the emergency room injury report data set, it may not do so in a way that cloaks its findings in ambiguity and imprecision, and consequently hinders judicial review. "
Regarding the social and economic costs and benefits: "Although the Commission's evaluation of the costs of the rule to magnet distributors was adequate, its evaluation of the costs to consumers was incomplete."
Regarding the commission's simultaneous regulatory enforcement: "It appears that the Commission's regulatory activity was predicated at least in part on enforcing the preexisting toy standard... The Commission's benefits findings, however, do not adequately account for the reduced injury rate (and therefore reduced need for a new standard) resulting from its recent apparent enforcement...An agency may not simply ignore without analysis important data trends reflected in the record."
In the next couple of days, Zen will begin accepting pre-orders for the Zen Magnets upon which the business was built, and have not been in production since early 2015. Despite Zen's remarkable victories in the past year, the future of the business is still uncertain. The recall ruling in favor of Zen by Administrative Law Judge Dean Metry is being appealed by the CPSC, and the rulemaking is currently being sent back to the CPSC for further findings consistent with the Tenth Circuit's opinion.
"Once again, Zen has shown that it is possible to fight the federal government and win," says Former CPSC Commissioner Nancy Nord. "It may be that, through Zen's actions, the CPSC will come to understand that it can protect consumer safety without disregarding basic notions of due process.3"
Shihan Qu, Zen Magnets LLC
- Based on comments made by CPSC Complaint Counsel during the administrative hearing in December, 2014.
- From research, it appears that the last time a rule or ban was vacated was in Gulf South Insul.v. Consumer Product Safety Comm'n, 701 F.2d 1137(5th Cir. 1983).
SOURCE Zen Magnets, LLC