Mattel 2008 Annual Report Download - page 101

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against Mattel do Brasil, alleging that the company offered products whose risks to consumers’ health and safety
should have been known by Mattel. The proceedings have been filed with the following administrative courts:
(a) DPDC (DPDC v. Mattel do Brasil Ltda., filed on August 20, 2007, and DPDC v. Mattel do Brasil Ltda., filed
on September 14, 2007); (b) PROCON (PROCON/MT v. Mattel do Brasil, filed on August 29, 2007, PROCON/
SP v. Mattel do Brasil, filed on September 4, 2007, and PROCON/RJ v. Mattel do Brasil, filed on August 27,
2007); and (c) the Public Prosecutor’s Office (MP/RJ v. Mattel do Brasil, filed on September 27, 2007, MP/PE v.
Mattel do Brasil, filed on September 28, 2007, and MP/RN v. Mattel do Brasil, filed on 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, PROCON/SP
rendered a decision and decided to impose a fine on Mattel do Brasil in the approximate amount of $200,000. On
January 9, 2008, Mattel do Brasil filed an administrative appeal regarding the decision of December 21, 2007. On
January 29, 2009, the administrative appeal was not granted and Mattel do Brasil is evaluating available
alternatives.
In addition to the matters discussed above, a few individual consumers in Brazil have brought individual
lawsuits against Mattel do Brasil. These lawsuits have been brought in special courts that provide expedited
judgments on cases involving amounts below $7,000 and in consumer defense agencies (PROCONs). Generally,
these claims focus on alleged failures by Mattel to make refunds in cash or replace recalled products with new
toys in the proper time and manner. At present there are 19 individual lawsuits; none of these lawsuits states a
claim for damages exceeding $7,000. The special courts that provide expedited judgments have issued decisions
in eleven lawsuits brought by individual consumers; in three of these cases, the court decisions order Mattel do
Brasil to refund only the amounts paid by the consumers for the recalled toys; in six cases, Mattel do Brasil was
also ordered to pay general damages (“danos morais”) to the consumers, which range from approximately $250
to $450. Two of the lawsuits were dismissed in their entirety.
All of the actions in Brazil are at a preliminary stage, except for the PROCON/SP administrative procedure,
the eleven individual consumer lawsuits mentioned in the preceding paragraph, in which the courts have rendered
decisions, and the cases involving IBEDEC and CPLeg/RJ.
Product Liability Litigation in Colombia
On August 22, 2007, plaintiff, a resident of Colombia, filed an action (Matiz v. Ministry of Health, et al. )in
the Administrative Court for the Bogota Circuit in the Republic of Colombia against Mattel and the Colombian
Ministry of Health. Plaintiff alleges the following claims: (a) violation of the collective right to free economic
competition, (b) violation of the collective right to public health, (c) violation of the prohibition against the
introduction of toxic waste into the national territory, and (d) violation of the collective right of consumers to be
free from unsafe products. Plaintiff seeks the following relief: an affirmative injunction for additional recalls; a
declaration of liability for violation of consumers’ “collective rights” to public health, free economic
competition, and the prohibition against the introduction of toxic waste into the national territory; economic
incentives of between 10 and 150 times the minimum monthly legal wage (up to $35,000); and an award of
litigation costs and attorneys’ fees. The Court has denied the interim measures requested by the plaintiff. On
July 8, 2008, Mattel filed its brief furnishing information requested by the Court. Also, the Superintendent of
Industry and Commerce and the Ministry of Health separately submitted their required documents. The parties
were required to submit their respective closing arguments by July 31, 2008, which Mattel and the plaintiff did
on that date. The Minister of Health, however, filed its brief untimely.
On October 17, 2008, the Administrative Court issued a Judgment in Mattel’s favor. The Court decided in
Mattel’s favor and denied the claims that the plaintiff had made in the lawsuit. The Court accepted Matttel’s
arguments and declared as proved the exception proposed by Mattel regarding the absence of support for the
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