Safety commission moves to dismiss Buckyball lawsuit

The Obama administration on Tuesday asked a federal judge to dismiss a lawsuit against the Consumer Product Safety Commission after it banned a toy that it said was dangerous for children.

Two years ago, the CPSC filed a lawsuit against Maxfield and Oberton to get the company to recall Buckyball magnets because it said the product was harmful to children, who, according to some reports, would eat the magnets. Once the magnets were in their stomachs, they would rip through internal organs, causing serious injuries as they were drawn together.

ADVERTISEMENT
Rather than pay for the estimated $57 million recall, Maxfield and Oberton eventually went out of business. 

But the CPSC didn't stop there. Last May, the commission added the company's co-founder, Craig Zucker, to the lawsuit, elevating the case from a simple recall to a matter of small-business rights and entrepreneurial freedom.

That's when the accountability watchdog group Cause of Action stepped in to defend Zucker.

"This case is very much about what reins there are on the government," Cause of Action Executive Director Dan Epstein said Wednesday in an interview. "The government is essentially saying it can go after former corporate officers (who have done nothing illegal). It sets a dangerous precedent for innovators and entrepreneurs in the United States."

ADVERTISEMENT
At issue is the notion of limited liability — whether business owners and corporate officers should be personally responsible for the actions of their companies.

Cause of Action and Zucker fought back with a counter lawsuit that argues the government exceeded and "abused" its authority by going after a business owner — an individual person — who had not broken any laws. 

But the Commission on Tuesday filed a motion to dismiss the counter suit in the U.S. district court of Maryland, saying it is "premature" to sue the agency before the first court decides whether Zucker can be held personally liable for his now defunct company.

"The United States Consumer Product Safety Commission, and its Acting Chairman, Robert Adler, hereby move to dismiss the complaint for lack of subject matter jurisdiction," the CSPC wrote in the motion to dismiss.

Zucker and Cause of Action have until Jan. 31 to respond, but plan to ask for an extension.