August 28, 2008

After Two Strangulations And Corporate Shrugging, CPSC Orders Retailers Pull Simplicity Co-Sleepers Off Market

simplicity_strangulation_cpsc.jpg

Normally when a product is found to cause injury or death, the Consumer Product Safety Commission works with the manufacturer to issue a recall and provide either a fix or a replacement product. But when two kids in the last year died from strangulation and suffocation in a Simplicity Close Sleeper co-sleeper, the CPSC took the unusual step of issuing its own safety warning and of demanding that retailers pull the dangerous product from the shelves.

So first things first: if you have a Simplicity 4-in-1 or 3-in-1 Convertible Close Sleeper bassinet with detachable Velcro fabric on the side, STOP USING IT NOW. If you know or see someone using one, TELL THEM TO STOP USING IT NOW. Basically, the rails are too far apart, and the fabric has Velcro and doesn't attached permanently, so a kid can slip between the railings and suffocate and die. It's happened at least twice already. [Read the CPSC's full warning for details.]

There's a reason, though, why the CPSC took these strong and unusual steps. Seems that SFCA, the subsidiary of DC-area vulture fund Blackstreet Capital which bought Simplicity For Children, Inc.'s assets at auction in May, isn't cooperating with the CPSC on the investigation and recall, since the problem predates their involvement.

An investigation of a Simplicity co-sleeper/bassinet death was already underway last year when the company was involved in a massive recall of a million cribs in September 2007, the company's fourth crib recall since 2005. Due to the significant, uncertain liabilities associated with the recall, Simplicity was facing a crisis; its lenders stepped in and advised the company on a sale of their debts and assets to Blackstreet, a transaction which was completed in May 2008.

The Washington Post describes the sale as an auction, but Blackstreet's own press release about the transaction doesn't mention an auction at all, but emphasizes its strategic nature and the benefits of keeping Simplicity's business operating and its management team intact. [update: this announcement issued the same day mentions that after buying the SFC's debt, SFCA bought the assets at a "Foreclosure sale."]

So basically, they laundered SFC into SFCA, washing away all the legal liabilities for their millions of dangerous products, but leaving the rest of the company and management going strong. Nice. If you look at Simplicity's own website, there's not a single hint of the change; it's still described as a "a family owned and operated business," even.

Now I know what UCC Article IX is; I know the difference between an asset sale and a stock sale or an entity sale. I'm sure that apologists would argue that if the sale/tranformation to SFCA hadn't gone through, Simplicity For Children would've gone into bankruptcy or out of business entirely, and the purchasers of the millions of dangerously, defectively designed cribs would still be on their own. What's the difference? Isn't it best to salvage what value they can as quickly as possible rather than slog through a bankruptcy?

I see two reasons why this sucks, especially in the realm of consumer products, of children's products, we're talking about freakin' bassinets here:

1) In SFCA's case, the management team who made the dangerous decisions is still in place. That was the entire strategic objective of the Blackstreet asset sale, to preserve every aspect of the original company, except the liability and legal obligations pertaining to the millions of products they designed, made, and sold, an obligation which includes cooperating with the CPSC on recalls. Literally, the same operation and people who couldn't recognize a defective design without a baby dying in it just change the logo on their golf shirts, print up some new cards, and keep right on going.

2) The Post's report quotes "an attorney for SFCA" named Rick Locker who explained how SFCA is totally not responsible for SFC's products anymore:

[Locker] added that SFCA bassinets on the market now are safe, as they are different than those involved in the two deaths. He criticized the warning, saying it didn't distinguish between safe products and the older unsafe ones.
First, that's not true. The CPSC's warning says, "This warning does not cover bassinets produced in recent months that have fabric permanently attached over the lower bar."

Second, Rick Locker may have been retained directly by SFCA, but he is also counsel for the JPMA. Access to his expert advice on product safety and regulatory matters is promoted as a perk of JPMA membership.

Of course, like the million dangerously designed cribs Simplicity sold for years before the 2007 recall, the company's defective bassinets no doubt carried the JPMA-Certified seal of approval. And when the industry association's voluntary safety standards are found to have been ignored, inadequate or both, their lawyer's official response is to ignore their own failings and culpability, to affirm their member company's shell game, and then to make false criticisms of the CPSC. You stay classy, JPMA.

While they were refusing to cooperate on recalls and investigations that related to products they'd washed Simplicity's corporate hands of, Blackstreet praised "the Simplicity brand" for "its exceptional value, innovative design and unparalleled focus on safety." Indeed, the extent of Simplicity's shitty, dangerous record on crib safety is without parallel.

update: Turns out the current CPSC warning followed an inquiry by the Chicago Tribune about the death of the second infant. The Tribune's Pulitzer Prize-winning investigation also prompted the recall of the million Simplicity cribs last year. The Trib's article is pretty heartwrenching and damning.

Bassinet Sales Halted After Deaths of Two Infants [washpost via dt reader mark]
Infants Strangled to Death in Simplicity Bassinets: CPSC Urges Consumers To Stop Using Simplicity 3-in-1 and 4-in-1 Convertible "Close-Sleeper" Models [cpsc.gov]
Previously: 1mm Simplicity cribs recalled without a repair kit available, because the CPSC only issued the recall to avert a PR disaster; which the JPMA's CYA didn't help
Popular bassinet linked to at least 2 babies' deaths [chicagotribune.com]

6 Comments

Well that's just plain evil. No diggity.

Blackstreet appears to have been a Giuliani campaign contributor. Also, it's just possible they have a TEESNY bit of political pull:

"Blackstreet's board of directors is comprised of some of the most powerful names in Washington, including former Secretary of State James A Baker IV, who is managing partner of the prestigious law firm of Baker Botts; Thomas Hale Boggs, Jr., chairman of the Patton Boggs law firm; former U.S. Ambassador to Germany Richard Burt, CEO of Diligence, LLC; Edward J. Mathias, managing director of The Carlyle Group; Robert P. Pincus, chairman, Fidelity Bank; top lobbyist Ed Rogers, a partner in the lobbying firm Barbour Griffith & Rogers; investment industry leader Arthur P. Solomon, president of DSF Advisors and Peter B. Teeley, retired senior vice president for government affairs of Amgen, Inc. "

I really want to know why the CPSC didn't issue a mandatory recall. I thought part of the recent legislation was to give them a temporary 2 member quorum so they could issue mandatory recalls with their current lineup of two board members. With this action, they've told everybody not to use the things, but people have zero recourse for getting their money back, or a replacement.

I really don't understand why we're so tied to keeping evil businesses from failing. That's the whole point of the market. You screw up and you're gone. That's supposed to be the markets prime motivation to not do things that are unethical or dangerous to your consumers.
I know there are jobs at stake, but that's part of your responsibility as a worker. To find out what your company is doing and look for a new job if what they're doing is wrong.

So far, one retailer, Wal-Mart, has said they'll give refunds/replacements, but I think it's voluntary, and that the CPSC ends up negotiating with each store separately to do it; SFCA/JPMA's lawyer also said they were cooperating, but without detailing the form or level of cooperation, The CPSC's statement says otherwise. It's odd to me, though, that basic product info like sales and mfr dates, model numbers, and the number of units affected are all missing from the CPSC's warning.

I'm sure all the major retailers will (eventually) give refunds- to do otherwise would cause too much ill will. But if this situation stands, SFCA has basically torpedoed their business, even setting aside the tremendous damage a couple of massive recalls has already caused. BRU and Walmart are not going to forget how they were left holding the bag on this. I know if I were a buyer there, Simplicity would be off the floor by Monday.

an excellent point. the corporate wallpapering may keep them out of product liability court, but their five big box retailers know the deal.

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