Mattel 2007 Annual Report Download - page 112

disgorgement of benefits resulting from recalled toys, aggravated and punitive damages, pre-judgment and
post-judgment interest, and an award of litigation costs and attorneys’ fees. Plaintiffs in all of the actions except
one do not specify the amount of damages sought. In the Ontario action (Wiggins), plaintiff demands general
damages of CDN$75 million and special damages of CDN$150 million, in addition to the other remedies. In
November 2007, the class action suit commenced by Mr. Fortier was voluntarily dismissed.
After the dismissal of his class action suit, Mr. Fortier filed an individual action in Quebec (Fortier v. Mattel
Canada, Inc., filed on November 22, 2007). In his individual action, Mr. Fortier alleges that he purchased
recalled toys and, as a result, suffered damages, including consequential and incidental damages such as worry,
concern, and costs of the products and replacement products, medicines, diagnosis, and treatment. Mr. Fortier
alleges damages of CDN$5 million.
All of the actions in Canada are at a preliminary stage.
Product Liability and Related Claims in Brazil
Three consumer protection associations and agencies have filed claims against Mattel’s subsidiary Mattel do
Brasil Ltda. in the following courts in Brazil: (a) the Public Treasury Court in the State of Santa Catarina
(Associacao Catarinense de Defesa dos Cidadaos, dos Consumidores e dos Contribuintes—ACC/SC v. Mattel do
Brasil Ltda., filed February 2, 2007); (b) the Second Circuit Commercial Court in the State of Rio de Janeiro
(Consumer Protection Committee from the State Legislative Body from Rio de Janeiro—CPLeg/RJ v. Mattel do
Brasil Ltda., filed August 17, 2007); and (c) the Sixth Circuit Civil Court in the Federal District (Brazilian
Institute for the Study and Defense of Consumer Relationships—IBEDEC v. Mattel do Brasil Ltda., filed
September 13, 2007). The ACC/SC case relates to the recall of magnetic products in November 2006; the CPLeg/
RJ case relates to the August 2007 recall of magnetic products; and the IBEDEC case relates to the August and
September 2007 recalls of magnetic products and products with non-approved paint containing lead in excess of
applicable regulatory and Mattel standards. The cases generally 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; restitution of monies paid by consumers to replace recalled
toys; disgorgement of benefits resulting from recalled toys; aggravated and punitive damages; pre-judgment and
post-judgment interest; injunctive relief; and litigation costs and attorneys’ fees. The amount of damages sought
by plaintiffs is not generally specified, except that in the Public Treasury Court in the State of Santa Catarina
action (ACC/SC), plaintiff demands general damages of approximately $1 million, in addition to other remedies,
and in the Sixth Circuit Civil Court in the Federal District action (IBEDEC), plaintiff estimated the amount of
approximately $28 million, as a basis for calculating court fees, in addition to requesting other remedies.
Since August 20, 2007, the Department of Consumer Protection and Defense (“DPDC”), the Executive
Group for Consumer Protection (“PROCON”) from São Paulo, Mato Grosso and Rio de Janeiro, and public
prosecutors from the States of Pernambuco, Rio Grande do Norte, and Rio de Janeiro have initiated eight
administrative proceedings against Mattel do Brasil for offering products that Mattel allegedly should have
known to present a risk for the consumers’ health and safety. The proceedings have been filed in the following
administrative tribunals: (a) DPDC (DPDC v. Mattel do Brasil Ltda., filed August 20, 2007, and DPDC v. Mattel
do Brasil Ltda., filed September 14, 2007); (b) PROCON (PROCON/MT v. Mattel do Brasil, filed August 29,
2007, PROCON/SP v. Mattel do Brasil, filed September 4, 2007, and PROCON/RJ v. Mattel do Brasil, filed
August 27, 2007); and (c) the Public Prosecutor’s Office (MP/RJ v. Mattel do Brasil, filed September 27, 2007,
MP/PE v. Mattel do Brasil, filed September 28, 2007, and MP/RN v. Mattel do Brasil, filed October 10, 2007).
The administrative proceedings generally state claims based on the alleged negligence of Mattel do Brasil
regarding recalled products. In the PROCON/SP proceeding plaintiff estimated a fine equivalent to
approximately $400,000. None of the other administrative proceedings listed above specify the amount of the
penalties that could be applied if the claims against Mattel do Brasil are successful. On December 21, 2007, the
PROCON/SP rendered a decision and decided to impose on Mattel do Brasil a fine of approximately $225,000.
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