Mattel 2008 Annual Report Download - page 99

In addition, Mattel has responded to formal and informal inquiries from, and produced certain information
and documents to, a number of state attorneys general. In December 2008 and January 2009, Mattel and Fisher-
Price entered into consent judgments with Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut,
Delaware, Florida, Hawaii, Idaho, Illinois, Iowa, Kansas, Kentucky, Maryland, Massachusetts, Michigan,
Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Jersey, New Mexico, New York, North
Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas,
Vermont, Washington, West Virginia, Wisconsin and Wyoming. Under the terms of the consent judgments,
Mattel and Fisher-Price agreed to pay a total of $12 million to be divided among the various states and to comply
as of the effective date of the settlements with certain federal lead standards scheduled to become effective at
various times in the future. The consent judgments have been filed in all of the states and are in the process of
approval by the respective courts in those states.
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
Brunswick (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.
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 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,
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 discontinued. In October 2008,
counsel in the Quebec class action (El-Mousfi) sought permission from the Court to discontinue that action, and
that request remains pending.
After the discontinuance 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. Mattel moved to stay Mr. Fortier’s individual action pending
resolution of the request to proceed as a class action filed in the El-Mousfi action also pending in Quebec, and
that motion to stay was denied.
All of the actions in Canada are at a preliminary stage.
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