Denver-based Zen Magnets, founded in 2009 by University of Colorado grad Shihan Qu, has been waging an unusual battle against the federal government — and the Consumer Product Safety Commission (CPSC), in particular — over the past four years. The subject of our October 9, 2014, cover story, "Magnetic Attraction," the company started out selling tiny, high-powered spherical rare earth magnets (SREMs) that can be used to build everything from complex geometric shapes to replicas of cartoon characters. And Zen Magnets itself has been building quite a legal file, to which two major decisions were added last week.
One was "as great a win as I could have possibly hoped for," says Qu.
But first came a March 22 decision from U.S. District Court Judge Christine Arguello, making permanent a preliminary injunction that she'd already handed down, banning the sale of almost a million magnets that Zen Magnets had purchased from Star Networks right before that company agreed to a recall of the magnets as part of a 2014 deal with the CPSC. Last week Arguello ruled that Zen Magnets had violated the Consumer Product Safety Act when it subsequently resold the magnets as Neoballs, and ordered Zen Magnets to provide refunds to consumers who'd already purchased the magnets and to destroy any remaining inventory.
Zen Magnets' disputed SREMs in action.
But then on March 25 Administrative Law Judge Dean Metry handed down a decision in a federal administrative adjudication concerning whether the CPSC could require Zen Magnets to take certain remedial actions for selling the magnets. "After considering the entire record, consisting of both documentary and testimonial evidence," the judge ruled, "the ALJ finds the Agency DID NOT Prove all SREMs, as sold by the Respondent, are substantial product hazards."
In act, the judge found that "proper use of Zen Magnets and Neoballs creates no exposure to danger whatsoever," although he did note that they should be sold with warnings.
And that is "huge," Qu says. "We just basically won our case that says all warnings with Neoballs were okay."
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"Together, the last week represents 90 percent victory and 10 percent recall," he continues. "For the CPSC, this is a huge loss: It's the first time a CPSC administrative action has been challenged in court since 2001...
"From the beginning — even from those who supported us — we were told that the CPSC was an insuperable, governmental Goliath. Today, we feel vindicated — and victorious," Qu says. "This outcome affirms our decision to fight for ourselves and the countless people who have supported us in writing, through petitions, and with purchases. It has been expensive to disagree with the Federal Government, but this ruling is a huge victory for consumer rights and liberties."
But the fight is not over, he adds, because Zen Magnets are not yet available. And then there's that decision from Arguello....