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Legal Update – McCarthy Tétrault LLP CCPSA demands compliance plan By Paul Fruitman he Canada Consumer Product Safety Act to disclose to the public without consent, multiple actors are accused of acting unlaw- T(CCPSA) has introduced fresh prohibi- confidential business information “essential fully by breaching a statute and causing injury tions and reporting obligations for manufac- to address”a“serious and imminent”danger as a result. turers, importers and sellers,new powers for to human health or safety.Though the min- government, and a new source of potential ister must notify the person/business of the Prepare, prepare, prepare litigation for all. Businesses subject to the disclosure by the next business day, there is Manufacturers, importers and sellers should CCPSA need a plan to ensure compliance no requirement of advance notice.There is act quickly to establish an internal process for with this new legislation. no notice requirement at all when the min- monitoring, documenting and reporting The CCPSA prohibits the manufacture, ister discloses confidential business informa- incidents. An ability to quickly respond is importation, sale or advertisement of any tion to a government or other person necessary to comply with the short two- and consumer product posing a health or safety charged with protection of human health or 10-day reporting windows, and to address risk. It also prohibits advertising consumer safety, provided the recipient agrees to keep incidents or potential dangers in a manner products known to be a danger to human the information confidential. that would obviate the need for public dis- health or safety, and deceptive advertising The CCPSA provides a review mecha- closure by Health Canada. relating to product safety in a manner similar nism, but only for recall orders. In particu- Those subject to the CCPSA should be to the Consumer Packaging and Labeling Act, lar, there is no review mechanism to chal- actively monitoring supply chains and the and the CompetitionAct.The CCPSA requires lenge product test orders. If such tests prove marketplace for potential events that manufacturers, importers and sellers to keep sufficiently expensive, businesses may seek could give rise to obligations under the leg- detailed information on the source of and redress through litigation. islation. This marketplace includes online purchasers of products.Retailers must record forums for consumer complaints such as location and time of sales. More litigation SaferProducts.gov, a recently launched site Manufacturers, importers and sellers must However, manufacturers, importers and sell- by the United States government. also report:incidents that resulted in or could ers will find themselves as defendants in most Manufacturers, importers and sellers have resulted in death or serious adverse CCPSA litigation.Those found in violation should also set up processes and procedures health effects; product defects that could of provisions described above,on indictment, for documenting and reporting potential result in death or serious adverse health face up to five years in prison and fines with- events, and ensure employees and partners effects; inadequate labeling or instructions in the court’s discretion. Penalties on sum- are familiar with these procedures.Someone that could lead to death or serious adverse mary conviction include prison terms up to in the enterprise should be charged with health effects;and recalls for human health or two years and fines up to $1-million. If an investigating and determining when and safety reasons in other jurisdictions.Business- offence continues for multiple days,it is con- whether to report the incident. es must report to Health Canada within two sidered a separate offence for each day. Businesses should also be prepared to days and provide a fulsome report 10 days It is also likely that the CCPSA will be used quickly employ “damage control”, as con- after becoming aware of the incident or issue. to support civil claims, in particular class sumer awareness increases with disclosure by actions. Product recalls may evidence a com- Health Canada of dangers posed by their New powers mon issue, and the record-keeping require- products and those of competitors. The CCPSA allows the Minister of Health ments could result in a treasure trove of docu- The CCPSA promises new scrutiny for to oversee and make orders in response to mentary evidence for class plaintiffs, provided manufacturers, importers and sellers. With- perceived health and safety issues.The minis- efforts are made to preserve the data within standing it will require an understanding of ter can order a recall, and can require manu- the six years records are required to be kept. the legislation’s powers, requirements and facturers and importers to test products and Though there is no tort of breach of statu- prohibitions, and having a plan in place to provide test results. In the case of non-com- tory duty,such breaches can serve as evidence address them. pliance with a recall order, the minister can that the standard of care in a negligence order “any measure” to prevent a danger to action has been breached. Courts, including Paul Fruitman is an associate at McCarthy human health or safety. in the class action context, have accepted the Tétrault LLP and a member of the firm’s products The CCPSA also empowers the minister tort of unlawful means conspiracy where liability group. 54 CCCA Canadian Corporate Counsel Association FALL 2011