Mattel 2007 Annual Report Download - page 111

Central District of California (In re Mattel Inc. Toy Lead Paint Products Liability Litigation). On
December 18, 2007, the JPML issued a transfer order, transferring six actions pending outside the Central
District of California (Sarjent,Shoukry,Goldman,Monroe,Chow and Hughey) to the Central District of
California for coordinated or consolidated pretrial proceedings with five actions pending in the Central District
(Mayhew,White,Luttenberger,Puerzer and Shah). The remaining cases (Healy,Powell,Rusterholtz,Jiminez,
Probst,Harrington,DiGiacinto,Allen, Sanders, Entsminger, and White II), so-called “potential tag-along
actions,” are either already pending in the Central District of California or have been transferred there pursuant to
January 3 and January 17, 2008 conditional transfer orders issued by the JPML.
The MDL proceeding is at a preliminary stage.
California Proposition 65 Claims
On September 24 and September 26, 2007, respectively, the Environmental Law Foundation and the Center
for Environmental Health (together, the “Noticing Parties”), each of which is a non-profit environmental group,
issued pre-litigation notices of intent to sue (the “Notices”) against Mattel for allegedly failing to issue clear and
reasonable warnings in accordance with California Health and Safety Code Section 25249.6 (“Proposition 65”)
with regard to potential exposures to lead and lead compounds from certain toys distributed for sale in California.
Pursuant to Proposition 65, the pre-litigation Notices had to be served on the California Attorney General, the
district attorneys in California, and certain city attorneys, at least sixty days before the Noticing Parties could
proceed with a formal lawsuit. On November 19, 2007, the California Attorney General, joined by the Los
Angeles City Attorney, brought suit against Mattel and Fisher-Price, along with a number of other entities
alleged to have manufactured and/or sold children’s products that exposed children to lead, in Alameda County
Superior Court in California. The complaint asserts claims for violation of Proposition 65 and the California
Unlawful Business Practices Act and seeks civil penalties up to $2,500 per day for each violation of each statute
and injunctive relief. The filing of this action by the Attorney General precludes the Noticing Parties from
proceeding with a lawsuit of their own. The Attorney General’s lawsuit was served on Mattel and Fisher-Price on
January 23, 2008, and remains at a preliminary stage.
Product Liability Litigation in Canada
Since September 26, 2007, eight proposed class actions have been filed in the provincial superior courts of
the following Canadian provinces: British Columbia (Trainor v. Fisher-Price, filed September 26, 2007); Alberta
(Cairns v. Fisher-Price, filed September 26, 2007); Saskatchewan (Sharp v. Mattel Canada, filed
September 26, 2007); Quebec (El-Mousfi v. Mattel Canada, filed September 27, 2007, and Fortier v. Mattel
Canada, filed October 10, 2007); Ontario (Wiggins v. Mattel Canada, filed September 28, 2007); New
Brusnwick (Travis v. Fisher-Price, filed September 28, 2007); and Manitoba (Close v. Fisher-Price, filed
October 3, 2007). Mattel, Fisher-Price and Mattel Canada are defendants in all of the actions, and Fisher-Price
Canada is a defendant in two of the actions (El-Mousfi and Wiggins). All but one of the cases seek certification of
both a class of residents of that province and a class of all other residents of Canada outside the province where
the action was filed. The classes are generally defined similarly in all of the actions to include both purchasers of
the toys recalled by Mattel and Fisher-Price in August and September 2007 and children, either directly or
through their parents as “next friends,” who have had contact with those toys (either directly or through their
parents as “next friends”).
The actions in Canada generally allege that defendants were negligent in allowing their products to be
manufactured and sold with lead paint on the toys and negligent in the design of the toys with the small magnets,
which led to the sale of defective products. The cases typically state claims in four categories: (i) production of a
defective product; (ii) misrepresentations; (iii) negligence; and (iv) violations of consumer protection statutes.
Plaintiffs generally seek general and special damages, damages in the amount of monies paid for testing of
children based on alleged exposure to lead, restitution of any amount of monies paid for replacing recalled toys,
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