Consumer Product Safety Commission, Appellant, v. the Anaconda Company, a Wholly Owned Subsidiary of Atlanticrichfield Company et al.consumer Product Safety Commission v. the Anaconda Company et al., Appellants, 593 F.2d 1314 (D.C. Cir. 1979)

Since the mid-1960's many of the central wiring systems that have been installed in residential structures have incorporated aluminum wiring as the primary electrical conductor.¹  Until the early 1970's, these "aluminum branch circuit wiring systems" borrowed the technology developed for use in similar copper wiring systems with respect to the design and installation of the electrical outlets, switches, and other devices that comprise the finished product. Accumulating evidence that these wiring systems might present a fire hazard prompted the industry to develop new performance standards for aluminum wiring and for the devices used with aluminum conductors.²  Prior to this development, "old technology" aluminum branch circuit wiring systems were installed in at least 1.5 million residences throughout the United States.³ 

The Consumer Product Safety Commission ("CPSC" or the "Commission"), an agency established pursuant to the Consumer Product Safety Act of 1972 ("CPSA" or the "Act"),⁴  has exercised certain of its investigative, rulemaking, and adjudicatory powers in an effort to isolate the causes of, and to alleviate the hazard associated with, old technology aluminum wiring systems. These interlocutory appeals arise from an action filed by CPSC in the United States District Court for the District of Columbia pursuant to CPSA § 12. That section authorizes the Commission, upon discovery that a consumer product "presents imminent and unreasonable risk of death, serious personal illness, or severe personal injury," to seek a declaratory judgment that the product is "an imminently hazardous consumer product," and to obtain such affirmative relief "as may be necessary to protect the public."⁵  The complaint named as defendants 26 corporations that between 1965 and 1973 manufactured and sold various components of the old technology aluminum wiring systems.⁶  It sought temporary relief in the form of an order requiring widespread public notice of the hazard, the danger signals to look for, and precautionary measures to take, and sought as well an order requiring the permanent repair of residences wired with old technology aluminum wiring systems.⁷  Defendants' motion to dismiss for lack of jurisdiction was denied, except in the case of Kaiser Aluminum & Chemical Corporation, which presented a special claim of collateral estoppel. Most of the defendants appear before us as appellants (No. 78-1070).⁸  Kaiser is before us as appellee (No. 78-1054). For convenience, we shall refer collectively to the "defendants."

Section 12 is applicable only when the allegedly hazardous item is a "consumer product" as that term is defined by the Act.⁹  In certain respects CPSC enjoys a broad jurisdiction over products that may cause injury to consumers. However, that jurisdiction is circumscribed by the Act's complex definition of "consumer product." Defendants contend that an aluminum branch circuit wiring system is not a "consumer product."

These wiring systems are manufactured from a number of products, some or all of which may qualify as "consumer products" within the applicable definition. But the alleged fire hazard is not caused by a defect in a component part; rather it arises from the improper design or installation of the wiring system as a whole. The Commission's view concerning the nature of the hazard is stated in the Notice of Proceeding for Development of Consumer Product Safety Standard, 40 Fed.Reg. 51218, 51219 (1975):

In many cases, connections within "aluminum wire systems" become defective over a period of time, resulting in overheating or arcing at the point where the wire is connected to other elements of the system. These defects are caused by the presence in the joint of aluminum oxide and by the effects of vibration, creep, expansion and contraction, and transient electrical surges.

The Commission notes further that poor workmanship in assembling aluminum wire connections appears to increase the likelihood of defective connections and component failure.

In 1973, shortly after its establishment, the Commission began to investigate various reports that fires resulting in injury and loss of life had been caused by failures in residential aluminum branch circuit wiring systems. In March and April of 1974 CPSC held public hearings on the subject. See 40 Fed.Reg. 51218 (1975). In November, 1975, the Commission instituted a rulemaking proceeding for the development of one or more consumer product safety standards designed to reduce or eliminate the risks associated with aluminum branch circuit wiring systems. Id. Shortly thereafter, it directed the Commission staff to commence proceedings to seek relief for residences that already had the possibly hazardous aluminum wiring systems.

Pursuant to its responsibilities under CPSA § 5,¹⁰  the Commission disseminated information alerting the public to the potential hazard posed by aluminum wiring systems and suggesting ways to alleviate the danger. In January of 1976, Kaiser Aluminum & Chemical Corporation brought suit in the United States District Court for the District of Delaware to enjoin the Commission from continuing to release allegedly inaccurate information concerning aluminum wiring. In March, District Judge Walter K. Stapleton held that CPSC was without jurisdiction to investigate aluminum wiring and to disseminate information with respect to the product because aluminum wiring was not a "consumer product" within the meaning of the Act. Kaiser Aluminum & Chemical Corp. v. CPSC, 428 F. Supp. 177 (D. Del. 1976). This ruling was reversed by the Court of Appeals for the Third Circuit in March, 1978. Kaiser Aluminum & Chemical Corp. v. CPSC, 574 F.2d 178 (3d Cir.), Cert. denied, --- U.S. ----, 99 S. Ct. 218, 58 L. Ed. 2d 193 (1978).

In September, 1976, as a part of its ongoing investigation, CPSC issued subpoenas to various manufacturers of aluminum wiring and electrical devices that were used in old technology aluminum branch circuit wiring systems. In due course, it brought an action in the District Court for the District of Columbia to enforce the subpoenas against those companies that had refused to comply. In June, 1977, District Judge Thomas A. Flannery ruled that aluminum wiring systems were "consumer products" within the Act and generally granted enforcement of the subpoenas. However, the court gave collateral estoppel effect to the then extant ruling of the Delaware district court and denied the petition with respect to Kaiser. United States v. Anaconda Co., 445 F. Supp. 486 (D.D.C. 1977).¹¹ 

In October, 1977, the Commission commenced the present action to obtain a declaration that old technology aluminum branch circuit wiring systems are "imminently hazardous consumer products," and to obtain such affirmative injunctive relief as might be required. In December, 1977, in response to defendants' motion to dismiss on jurisdictional grounds, District Judge Flannery issued an order reaffirming his June ruling that aluminum wiring systems were "consumer products." The memorandum opinion incorporated by reference the prior jurisdictional analysis. Again, the court granted Kaiser's motion to dismiss. Judge Flannery then certified the jurisdictional and collateral estoppel questions to this court pursuant to 28 U.S.C. § 1292(b) (1976). CPSC v. Anaconda Co., 445 F. Supp. 498, 503 (D.D.C. 1977). This court accepted the appeal.

A. The Definition of "Consumer Product"

Various products have been involved in the Commission's investigation and rulemaking activity with respect to aluminum wiring systems: the wiring system as a whole, the aluminum wiring, as well as the various connecting devices. In this case we need consider only the aluminum branch circuit wiring system as a whole. Two factors converge to narrow our focus: First, the alleged fire hazard arises from a deficiency in the design or installation of the wiring system as a whole rather than from a defect in one or more of the component parts. Second, the jurisdiction of the Commission to bring a section 12 action is narrowly limited by the Act; jurisdiction exists only if the product that presents an "imminent and unreasonable risk" qualifies as a "consumer product."

The Commission's authority to initiate an adjudicatory action under section 12 is more limited than its jurisdiction to engage in investigation or rulemaking. Under section 5(a) (1) of the Act, the Commission may investigate the causes of injuries that are "associated with" consumer products.¹²  Similarly, section 7(a) (1) of the Act authorizes rulemaking "to prevent or reduce an unreasonable risk of injury associated with" a consumer product.¹³  Thus if one or more of the components of an aluminum branch circuit wiring system qualifies as a consumer product, then the Commission would have jurisdiction to engage in investigation or rulemaking with respect to that product without regard to whether an aluminum branch circuit wiring system, as a distinct product, qualifies as a consumer product. See Kaiser Aluminum & Chemical Corp. v. CPSC, supra. In sum, if a component is a consumer product, the Commission has jurisdiction to investigate the entire system, since the hazard is "associated with" the component, but the Commission does not have jurisdiction to seek an adjudicatory order as to the system as a whole unless that system itself qualifies as a consumer product.

We now turn to this all-important definition. The complete text of CPSA § 3(a) (1) appears in the margin.¹⁴  Its core provision states:

The term "consumer product" means any article, or component part thereof, produced or distributed (i) for sale to a consumer for use in or around a permanent or temporary household or residence, a school, in recreation, or otherwise, or (ii) for the personal use, consumption or enjoyment of a consumer in or around a permanent or temporary household or residence, a school, in recreation, or otherwise;

1. The term "article." A consumer product may be "any article, or component part thereof." From the context of the term "article," and particularly its juxtaposition with the phrase, "component part thereof," we discern that Congress contemplated an object produced or distributed as a distinct article of commerce, rather than any physical entity that might exist only at an intermediate stage of production.¹⁵  The Senate Committee explained the reason for its insertion of the phrase "or component part thereof:" "The definition of 'consumer product' has been broadened to include 'a component' of the product, so that the Agency could regulate just a part of a product, if only such regulation is warranted."¹⁶  Thus, a product may be a "consumer product" if it either is produced or distributed as a distinct article of commerce (and fulfills the other definitional requirements), or is produced or distributed as a component part of such a distinct article.

2. Alternative modes of distribution. A consumer product must be produced or distributed either "(i) for sale to a consumer . . .," or "(ii) for the personal use, consumption or enjoyment of a consumer . . . ." What clause (i) contemplates is a direct sale of the product to the consumer. The legislative history reveals that clause (ii) was intended to complement clause (i) by reaching situations in which a consumer acquires the use of a product other than through a direct sale transaction, E. g., through lease, promotional gift, or purchase by an institution for consumer use.¹⁷  Together, clauses (i) and (ii) were designed to ensure that the definition of consumer product would encompass the various modes of distribution through which consumers acquire products and are exposed to the risks of injury associated with those products.¹⁸ 

3. Housing is not a "consumer product." Generally, an aluminum branch circuit wiring system is produced and distributed for sale to a consumer or for the use of a consumer as a component part of a residential structure. The language of the statute as well as the legislative history make clear that housing as such is not a "consumer product."¹⁹  However, the Commission has taken the position that its jurisdiction extends to every component part of a dwelling including the central wiring and plumbing systems as well as the wall and flooring systems and their various building components. Such an extension of the statutory language would seem to ignore a contrary congressional intention and potentially raises significant problems of federalism in areas of building construction currently regulated extensively by local jurisdictions. Despite the best efforts of able counsel, the Commission had obvious difficulty at oral argument defending its interpretation in the face of the conceded congressional unwillingness to grant jurisdiction over housing, and the pervasive tone of a statutory scheme that carefully limits the scope of the agency's authority.²⁰ 

4. Requirement that product be "customarily" sold to consumers as a distinct article. Since housing as such is not a consumer product, a component part of a residence its aluminum branch circuit wiring system cannot qualify as a consumer product unless it is produced or distributed as a distinct article of commerce. The legislative history makes clear that when a consumer buys all of the component parts of an aluminum branch circuit wiring system, and then puts together the system himself, for his own use, the resulting product is not within the definition of "consumer product."²¹  Nor does the Act cover aluminum branch circuit wiring systems merely because they are purchased as a component part of a house, for a house is not a consumer product. But the definition may apply if the wirings systems are bought separately by consumers one may hypothesize consumers who act as their own general contractors in residential construction, and contract with electricians to install the wiring systems.²²  Nevertheless, if such situations are rare and out of the ordinary they would not suffice to ground the Commission's jurisdiction.

Subsection 3(a) (1) (A) provides that the term "consumer product" does not include: "any article which is not customarily produced or distributed for sale to, or use or consumption by, or enjoyment of, a consumer."²³  Apparently one motivation for this provision was to exclude "industrial products" from the Commission's jurisdiction,²⁴  but the provision is not so defined. The limitation on jurisdiction applies whenever the production for sale or use by a consumer is only occasional and is not customary. Conversely, if a product is customarily sold or otherwise distributed to consumers, then it remains a "consumer product" notwithstanding that a large portion of the product's distribution is for industrial purposes.²⁵  Jurisdiction does not require a showing that a majority of product sales are to consumers, but there must be a significant marketing of the product as a distinct article of commerce for sale to consumers or for the use of consumers before the product may be considered as "customarily" produced or distributed in that manner.²⁶ 

We are dealing here not with an exemption, which often triggers the conception that the burden is on the one claiming the exemption, but with a provision defining jurisdiction it includes A, but not B. The Commission's jurisdiction is ultimately dependent on a determination that aluminum branch circuit wiring systems are customarily sold or otherwise distributed to consumers as distinct articles of commerce. While this appears unlikely, it is inappropriate to take judicial notice of the nonexistence of such a jurisdictional fact. This determination should be made in the first instance by the agency. We remand to the district court for further consideration. It should first inquire whether the Commission has made the jurisdictional findings necessary to bring an action maintainable only as to a consumer product. If the agency has undertaken the requisite analysis, the court should conduct appropriate review. If the agency has not made the analysis necessary for jurisdiction, the district court will enter an appropriate order.²⁷ 

B. Collateral Estoppel Effect of Decision of Delaware District Court

The district court dismissed the Commission's complaint as to Kaiser Aluminum & Chemical Corp. because it felt constrained to give collateral estoppel effect to Judge Stapleton's jurisdictional ruling in Kaiser Aluminum & Chemical Corp. v. CPSC, 428 F. Supp. 177 (D. Del. 1977).

A ruling for which collateral estoppel effect is sought must have been essential to the judgment in a prior proceeding. 1B J. Moore, Federal Practice P 0.441(2), at 3777 (1974); See Restatement of Judgments § 70, Comment b (1942). The jurisdictional question in this case is whether aluminum branch circuit wiring systems are "consumer products." This was not the issue before the Delaware district court. A fair reading of Judge Stapleton's decision makes clear that the only issue actually litigated in Delaware related to aluminum wiring, a distinct product from the one involved in this case. The dicta relating to aluminum branch circuit wiring systems were unnecessary to the judgment in the Delaware case. For the same reason, the Third Circuit's ruling on appeal, Kaiser Aluminum & Chemical Corp. v. CPSC, 574 F.2d 178 (3d Cir.), Cert. denied, --- U.S. ----, 99 S. Ct. 218, 58 L. Ed. 2d 193 (1978), is not entitled to effect on the basis of collateral estoppel in this case. We find the doctrine of collateral estoppel inapplicable, and vacate this portion of the ruling so that the district court may proceed as to Kaiser in the same manner it finds appropriate as to the other defendants.

Remanded for further proceedings.