Mattel Agrees to Toy Recall SettlementOct 15, 2009 | Parker Waichman LLP
Mattel Inc. has agreed to settle virtually all claims related to its massive 2007 toy recalls. According to the Associated Press, if the Mattel class-action settlement is approved by the court, it could end up costing the company upwards of $50 million.
As we've previously reported, Mattel and its Fisher-Price Division issued six separate recalls of lead-tainted toys in 2007. In total, around 2 million toys were recalled. The recalls included popular Sesame Street toys, Dora the Explorer and Diego toys made by Fisher-Price, as well as Mattel toys, such as Batman, Polly Pocket, Barbie accessories, and Sarge cars.
The US banned lead from paint used on toys in 1978, but as companies moved more of their toy manufacturing operations overseas to places like China, lead exposure from toys once again became a problem. Foreign factories are under a great deal of pressure to produce goods at the lowest cost possible, a situation that causes many of these manufacturers to use cheaper materials, such as lead paint.
The unprecedented number of toy recalls issued in 2007 - dozens of companies and 21 millions toys were involved - prompted the U.S. Congress to pass a new law - the CPSIA- which set strict limits for lead, lead paint and phthalates in children's products. According to the Associated Press, the law mandates third party testing for companies making products for children under 12. However, as we reported previously, the Consumer Products Safety Commission has quietly exempted Mattel from the testing requirement and is allowing the toymaker to use its own testing labs.
According to the Associated Press, the Mattel toy settlement would resolve 22 lawsuits against the company. The terms of the settlement would:
- Provide toy buyers who are part of the class-action lawsuit either 50 percent of the total amount of vouchers Mattel has sent out following the recalls or $10, whichever is greater.
- Provide consumers who didn't participate in the recalls but have a recalled toy or proof of purchase of a recalled toy with a check or a voucher in the amount of the toy.
- Provide those who declare they bought or acquired a recalled toy but destroyed it after the recall with a voucher for the amount of the toy for up to three toys, totaling up to $10 million for the class.
- Provide consumers who bought or acquired some recalled toys in which only one standalone piece of the toy was affected with refunds up to $12.
- Allow members of the settlement to recover all out-of-pocket expenses incurred for lead testing, up to $600,000 for the class.
- Require Mattel to create a quality assurance program, overseen by the court, and donate $275,000 to the National Association of Children's Hospitals and Related Institutions, a not-for-profit group of 150 children's hospitals and pediatric units.