Opinion ID: 443222
Heading Depth: 2
Heading Rank: 2

Heading: The Present Litigation--The Civil Penalty Suit

Text: 14 The civil penalty suit which is the subject of this appeal arises out of the Commission's unsuccessful attempts to also impose civil penalties administratively upon the manufacturer and distributor of the hazardous baseball pitching machine. 15 On May 24, 1979, the Commission notified Athlone, Dudley, and Advance of its investigation into their failure to provide information as mandated by the reporting requirement of section 15(b) of the Consumer Product Safety Act, 15 U.S.C. Sec. 2064(b). Harold Miller, the President of Athlone, was notified by letter that the Commission staff believed that the companies involved, Athlone and Dudley, as well as their respective presidents, had sufficient information as of May, 1973 upon which to make a consumer product safety report as required by Section 15(b)(2) of the Consumer Product Safety Act, 15 U.S.C. Sec. 2064(b)(2). J.A. at 29, 176-177. The May 24th letter stated that this could subject Athlone, Dudley and the president of each company to civil penalties up to $500,000. J.A. at 90-91. 16 On May 15, 1980, the Commission also notified Advance Machine that it had voted to issue an administrative complaint seeking a civil penalty for the violation of the reporting requirement at the expiration of 30 days, unless a settlement was reached. In response, Advance Machine and others filed suit on June 19, 1980, in the United States District Court for the District of Minnesota, to enjoin the Commission from issuing the administrative complaint and asking for a declaration that the Commission lacked the authority to administratively assess a civil penalty. The district court upheld the Commission's authority to proceed administratively. Advance Machine Company v. Consumer Product Safety Commission, 510 F.Supp. 360, 364-365 (D.Minn.1981). 17 The Eighth Circuit Court of Appeals, however, reversed the Minnesota district court's ruling on December 14, 1981, holding that the Commission did not have administrative authority under the Act to assess civil penalties. Advance Machine Company v. Consumer Product Safety Commission, 666 F.2d 1166 (8th Cir.1981). 18 Meanwhile, the Commission had also issued an administrative complaint against Athlone, Dudley, and their presidents in their individual official capacities on August 5, 1980, charging that by January, 1974 the defendants had information that the pitching machine had caused numerous injuries and that it contained a defect which could create a substantial product hazard, that they failed to provide the Commission with this information as mandated by the Act and that they should therefore be assessed a civil penalty in the amount of $500,000. J.A. at 61-67. 19 Athlone and its individual officers instituted suit against the Commission on August 26, 1981, in the United States District Court for the District of Columbia seeking to enjoin the administrative proceedings on the grounds, inter alia, that the Commission lacked the authority to assess a civil penalty and that the administrative complaint was barred by res judicata and the statute of limitations. 20 On March 4, 1982, the District of Columbia court granted the United States' motion to dismiss the case, holding that the issues raised were not ripe for review. The district court then ordered the plaintiffs to exhaust their administrative remedies, Athlone Industries, Inc. v. Consumer Products Safety Commission, No. 81-2023 (D.D.C.), and a notice of appeal was filed on March 18, 1982. 21 On May 13, 1983, the District of Columbia Court of Appeals held that the Consumer Product Safety Commission lacked the authority to assess a civil penalty administratively. Athlone Industries, Inc. v. Consumer Product Safety Commission, 707 F.2d 1485 (D.C.Cir.1983). In light of that holding, the Commission dismissed the administrative action against the defendants. 22 In the interim, the uncertainty surrounding the Commission's authority to assess civil penalties administratively prompted the United States to institute the instant action in the United States District Court for the District of New Jersey against Athlone, also doing business as Dudley Sports Company, on February 19, 1982. The government sought a civil penalty under section 20 of the Consumer Product Safety Act, 15 U.S.C. Sec. 2069, for Athlone's failure to comply with the reporting requirements of Section 15 of the Act, 15 U.S.C. Sec. 2064(b). A similar complaint was filed in the United States District Court for the District of Minnesota against Advance Machine. 23 In the Minnesota civil penalty action, the district court denied defendant Advance Machine's motion to dismiss or, alternatively, motion for summary judgment, on August 6, 1982. United States v. Advance Machine Co., 547 F.Supp. 1085 (D.Minn.1982). The Minnesota district court held that the prior action seeking to have the baseball pitching machines declared hazardous products did not preclude the action for violation of the reporting requirements. 24 The Minnesota decision is in direct contrast to the decision reached by the district court in this parallel civil penalty action. The New Jersey district court granted defendant Athlone's motion for summary judgment on September 9, 1983, and dismissed the United States' civil penalty suit on the ground that it was barred by the res judicata effect of the earlier declaratory and injunctive imminent hazard suit brought in 1977 by the Commission against Advance Machine and Athlone, among others, in the District of Columbia. 25 This appeal followed.