Sep 10, 2013

The Bucky Balls Saga Continues

Earlier this week, I saw a WSJ interview with Chris Zucker, the founder and former CEO of BuckyBalls, the cool little office gift idea that took the market by storm in 2009.  In 2012, after three years of being on the market, news of small children being hospitalized after consuming the small, strong earth magnets, hit the media.  The Consumer Product Safety Commission, or CPSC, rightfully stepped in and demanded that BuckyBalls provide a plan to improve the product safety and promote public awareness of the inherent dangers in the hands of children.  BuckyBalls complied, but in July 2012, the CPSC went one step further and sued to completely ban the product.  This, I believed, was overreaching.  Now, the CPSC is going one step further ... attempting to hold Mr. Zucker personally responsible for damages.  This, as a business owner, is dangerous.

I don't want to re-opening the debate on whether the CPSC did the right thing with banning BuckyBalls from public consumption.  Instead, where this latest chapter in the saga starts, the question will be whether the courts find Mr. Zucker personally responsible for the issues that BuckBalls caused, and hence piercing the layer of corporate limited liability.

I have heard a number of different things, good and bad, about Mr. Zucker, and indeed I don't know all the facts of the case.  If Mr. Zucker did act irresponsibly and negligent (i.e. - to the extent of cigarette producers misleading the public), there is an argument for pinning the damages on him.

If, however, BuckyBalls responded to and complied fully with the CPSC requests and did everything in their power to further the safety of its product, then I can't see how the CPSC would find Mr. Zucker (and by extension, all shareholders of every corporation) personally responsible for the damages.

The ramifications are scary.  If this lawsuit succeeds, imagine the impact on every other corporation that produces products for our consumption.  If shareholders (and possibly by extension, stakeholders) are personally responsible for damages from products that are made in line with every safety guideline and legal requirement, who would risk investing in or inventing new products?

I know, I know ... children were hurt, even hospitalized, because of BuckyBalls.  Interestingly, more children are hurt and even killed by balloons annually.  Again, the responsibility comes down to the parents.  I believe that if you provide enough educational material to the public to safely consumer your product, at some point, you must hold the public responsible for improper handling.

Hair curlers momentarily left unattended.
Box of matches unintentionally left out.
(Dare I say) Gun cabinet absent-mindedly left unlocked.

You get it.

The CPSC has it's job, and for the most part, it does it very, very well.  This lawsuit is a dangerous precedent, and as entrepreneurs, we should be watching it closely.

P.S. - Possibly a more frightening thought, one which Mr. Zucker alleges, is that the CPSC is pursing the new lawsuit in retaliation to the BuckyBalls campaign against the CPSC last year (see inset picture and video below).  Granted, I also believe it was a little over the edge and mocked a little too much, especially in light of the seriousness of the injuries, but let's hope revenge is not an underlying motive for a government agency.

Thoughts?  Please share below!