The Safety-Reporting Consent Order

Question 71: The Safety-Reporting Consent Order

Your role

You are outside counsel to the board of StrataLift Mobility, a manufacturer facing an agency enforcement action over delayed safety reports. Draft a board decision one-pager of no more than 500 words. It must state the recommendation, the two cash numbers the board needs, the decision deadline, and the actions that follow approval.

Governing law

Assume the following product-safety reporting rules apply:

1. A manufacturer must report a field event within five business days after its central safety office receives information reasonably indicating that a product may have caused a serious injury.

2. A local complaint does not start the clock until it reaches the central safety office unless company policy deliberately prevents escalation or central personnel actually receive the substance another way.

3. Each untimely report is a separate violation. The agency may consider duration, number of events, injury severity, prior history, cooperation, and remediation when setting a civil penalty.

4. A knowing failure to report permits a higher penalty, but disagreement over whether incomplete information met the reporting threshold is not automatically knowing misconduct.

5. A consent order may include a civil penalty, reporting remediation, independent monitoring, and factual recitals. A no-admission clause prevents the order itself from being an admission, but underlying documents remain discoverable in private litigation.

6. The board may authorize management to settle within a stated ceiling and on specified nonmonetary conditions.

7. Continuing to litigate does not suspend remediation duties or protect future late reports.

8. A board communication should identify the actual decision, quantified cash consequences, principal legal risk, and immediate execution steps, not reproduce the full investigation.

Facts

The agency alleges 14 late reports involving StrataLift mobility scooters. Internal review supports the following:

• Ten reports reached the central safety office and were filed 9 to 34 business days later.
• Four complaints remained at local service centers and were never sent to central safety personnel until the agency inquiry. Existing policy required escalation, and no central employee is shown to have received them earlier.
• Two of the ten central reports involved fractures. The remaining events involved temporary injury.
• An internal email concerning three events states, “Wait until engineering confirms a defect before reporting.” The supplied rule requires reasonable indication, not confirmed defect.
• StrataLift has no prior reporting violation and has already installed a central intake queue, automatic deadline alerts, and weekly legal review.

The agency offers a consent order with:

• A $950,000 civil penalty.
• An 18-month independent monitor expected to cost $250,000 under a fixed proposal.
• No admission of liability.
• Factual recitals limited to the reporting dates.
• No product recall or sales restriction.

The offer expires at 5:00 p.m. on September 4. Agency staff indicated that only the penalty amount remains negotiable. Counsel believes management should have authority to accept a penalty up to $1,050,000 if necessary to preserve the no-admission clause, limited recitals, and absence of a recall. The monitor cost will remain $250,000.

If StrataLift litigates, projected defense cost is $850,000. Liability for the ten central-office late reports is not contestable on the supplied record; a hearing would decide the penalty amount and whether the four local complaints also count. The adjudicated penalty range is $1,400,000 to $1,800,000. No expected-value calculation is required.

Assignment

Draft the final one-pager, no more than 500 words. It must:

• Recommend settlement or litigation and state why.
• State the current all-in consent cash cost.
• State the maximum all-in cash authority requested from the board.
• Identify the September 4 deadline.
• Distinguish the ten supported late reports from the four local complaints.
• Address the damaging “confirmed defect” email without overclaiming.
• Preserve the no-admission, limited-recital, and no-recall terms as conditions.
• State the resolutions and next operational steps the board should approve.

Q71 key (Board Safety-Reporting One-Pager)

1. The one-pager should recommend accepting the consent order, subject to preserving no admission, date-limited factual recitals, and no recall or sales restriction. Liability for ten central-office reports is not contestable on the supplied record, the email uses the wrong confirmed-defect standard, and litigation necessarily adds $850,000 in defense cost to an adjudicated penalty of at least $1,400,000. The current consent terms cap all-in cash at $1,200,000. Missed: the board gets history rather than the value-preserving decision.
2. Current all-in consent cash cost is $950,000 penalty plus $250,000 monitor, or $1,200,000. Maximum requested authority is $1,050,000 penalty plus $250,000 monitor, or $1,300,000 all-in. These are the two decision numbers. Missed: the board authorizes a penalty without knowing total cash or a negotiation ceiling.
3. The one-pager must distinguish ten supported late reports from four local complaints whose clocks are not shown to have reached central personnel; it should not concede all 14. Missed: StrataLift enlarges the violation count in its own board record.
4. It must state that “wait for confirmed defect” conflicts with the reasonable-indication trigger and is damaging evidence for three events, but does not prove knowing failure for every report. Missed: the email is either hidden or overgeneralized.
5. The deadline is 5:00 p.m. September 4. Requested resolutions should authorize settlement up to $1.3 million all-in on the stated conditions, designate signatories, continue the intake queue and alerts, fund the monitor, preserve documents, and require quarterly board reporting. Missed: authority arrives without execution steps or after expiration.
6. Any one-page document under 500 words that reaches those destinations, uses only supplied facts, and does not turn private-litigation risk into an admission satisfies the task. Missed: presentation polish replaces the board's two cash numbers and vote.