RC2 Settles Lawsuit over Lead Tainted Thomas & Friends ToysJan 23, 2008 | Parker Waichman LLP
RC2 Corp. has agreed to pay $30 million to settle a Class Action lawsuit stemming from this summers recall of lead tainted Thomas & Friends Wooden Railway toys. The proposed Thomas & Friends lawsuit settlement received preliminary approval in the Circuit Court of Cook County, Illinois, yesterday and includes reimbursements for hundreds of thousands of consumers. and improved product safety, which RC2 says it has implemented. As part of the settlement, consumers would be either reimbursed in cash for recalled toys or offered a replacement plus a bonus toy, if they prefer. Customers without toys and proof of purchase can receive $15 coupons. As part of the settlement, RC2 promised to increase testing and auditing, improve U.S.-overseas communication, and require contract manufacturers to meet its testing and auditing standards. Final court approval of the settlement is expected in May.
The Thomas recall occurred in two parts: 1.5 million toys in June followed by 200,000 in September and was the first recall to raise global awareness about excessive lead paint levels in toys made in China. In the 12-month period ending September 30th, 19 of 61 U.S. toy recalls were a result of lead paint, according to the Consumer Product Safety Commission (CPSC). "The trend has continued in 2008," as companies increasingly test for and find more lead paint, said CPSC spokesman Scott Wolfson.
Prior to the recalls, RC2 had some quality controls in place; however, RC2 relied heavily on what its Chinese manufacturer reported to them, according to Jay Edelson, the lead plaintiff's counsel and an attorney at KamberEdelson. Edelson said RC2 neither rigorously checked whether the Chinese firm tested paint nor how well the testing was conducted; sometimes, positive test results weren't conveyed from China to RC2 representatives in the USA. RC2 dropped the Chinese manufacturer after the recall. In a statement Tuesday, CEO Curt Stoelting said the company did conduct random testing prior to the recall on a quarterly or bi-annual basis, "like much of the industry." Since the recall, RC2 increased testing of materials and toys, set tougher standards for manufacturers and paint suppliers, increased random inspections and audits, and implemented lab tests and results for every batch of wet paint.
Mattel, which faces 17 U.S. lawsuits over its recalls, and other toymakers, have also improved quality controls. The Toy Industry Association (TIA) has also asked Congress to mandate toy safety testing, which now occurs on a voluntary basis. The Consumer Federation of America claims the planned TIA proposals aren't strict enough.
Over six million toys were recalled last year due to lead—the highest number ever for product defects—and, even more lead tainted toy lawsuits are pending. Other lead toy lawsuits have been filed against Fisher-Price; Michaels Stores; Sears, Roebuck and Co.; Costco Wholesale; Eveready Battery; KMart; and Marvel Entertainment for Ernie, Elmo, Big Bird, SpongeBob, and Thomas the Train products.
Lead is known to cause cancer and reproductive harm and can cause mental and physical retardation and behavioral and other health problems in children. In adults, lead can damage the nervous system.