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May 19, 2014

Buckyballs Creator Fought the Law, and the Law Won (Sort of)

For several years, we have been following the story of Craig Zucker, cofounder of a company that produced “Buckyballs” (tiny magnet desk toys). Back in 2012, the Consumer Product Safety Commission (CPSC) ordered a recall of Zucker’s product because of an alleged danger to children.

Zucker protested, and then, months later, the CPSC added Craig Zucker personally to its complain holding him, as Reason.com’s Jim Epstein writes, “personally liable for the cost of recalling Buckyballs.”

As a Wall Street Journal editorial published this weekend explains, “If Buckyballs were found to be inherently defective, Mr. Zucker would have to pay the recall bill to the tune of $57 million—the bedrock principle of limited corporate liability notwithstanding.”

Last week, Zucker and the CPSC announced a settlement in which Zucker will pay the federal government $375,000 to go toward the cost of recalling the product. The Wall Street Journal editorial points out this settlement amounts to, “less than 1% of the commission’s initial damages claim.”

How to explain this settlement amount?

Epstein points to the statement issued by CPSC Commissioner, Ann Marie Buerkle, after the settlement was reached, “expressing concerns about how this case ‘unfolded,’ arguing that the CPSC’s rules require it to vote before broadening a complaint to add a new respondent, which it never did.”

The Journal notes the cracks in the CPSC’s case, writing, “one possibility is that CPSC officials worried that their dubious individual-liability theory would get thumped if it were tested in a higher court.”

Will this case prevent future such actions by the CPSC? Or will it, as The Journal writes, allow the CPSC to, “live another day to threaten the next Craig Zucker who dares stand up to regulators”?

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