From the Factory to the Playroom: Mattel, Inc.—Shenzhen Union King Sales Contract Exercise

• DOI: http://doi.org/10.1111/j.1744-1722.2011.01094.x
• Date: 01 July 2011
• Author: Marisa Anne Pagnattaro
• Published date: 01 July 2011

From the Factory to the Playroom:

Mattel, Inc.FShenzhen Union King

Sales Contract Exercise

Marisa Anne Pagnattaro

n

Nothing is more important than the safety of our children.

1

INTRODUCTION

The discovery of lead paint on nearly one million toys prompted the

world’s largest toy company, Mattel, Inc. (‘‘Mattel’’) to initiate a massive

recall in August 2007.

2

The initial recall included eighty-three products,

which were all manufactured in China for sale in the United States.

3

Just

two weeks later, Mattel’s CEO issued an apology in connection with an

additional recall affecting 9.5 million toys in the United States and 11 mil-

lion in foreign countriesFagain, all of the toys were manufactured in

China.

4

In a full-page ad placed in the New York Times, the Wall Street

Journal, and USA Today, Mattel Chairman and CEO Robert A. Eckert

r2011 The Author

Journal of Legal Studies Education r2011 Academy of Legal Studies in Business

357

Journal of Legal Studies Education

Volume 28, Issue 2, 357–383, Summer/Fall 2011

n

Associate Professor of Legal Studies, Terry College of Business, University of Georgia, and

winner of the 2010 Charles M. Hewett Master Teacher Competition. Special thanks to Ilse

Hawkins for providing valuable feedback after using the exercise.

1

Mattel Chairman and CEO Robert ‘‘Bob’’ Eckert, full-page ad placed in the New York Times,

the Wall Street Journal, and USA Today (Aug. 14, 2007), available at http://www.nytimes.com/

2007/08/14/business/15toys-web.html.

2

Louise Story, Lead Paint PromptsMattel to Recall 967,000 Toys, N.Y.TIMES, Aug. 2, 2007, avail-

able at http://www.nytimes.com/2007/08/02/business/02toy.html.

3

Id.

4

Mattel CEO: ‘‘Rigorous Standards’’ After Massive Toy Recall, CNN U.S., Aug. 14, 2007, available at

http://articles.cnn.com/2007-08-14/us/recall_1_polly-pocket-mattel-ceo-toys?_s=PM:US.

appealed to parents, stating that ‘‘[a]s a father of four, I share your focus on

providing what’s best for them.’’

5

The recalled toys fell into two categories:

those with impermissible levels of lead paint and those with risks associated

with small high-powered magnets.

6

Mattel’s immediate remedial action

underscores its stated commitment to safety, which is prominent on its

corporate Web site:

At Mattel, the safety of our toys is our number one priority. We create and

produce some of the world’s most beloved toys and brands for children, and

we know that with this comes the responsibility to ensure quality and safety. We

strive to sustain the trust of consumers by employing strict standards that ex-

tend from product design to manufacturing and through distribution.

7

In addition to the full-page ads, Mattel also distributed a video apol-

ogy, pledging to increase the frequency of itspaint inspections.

8

Ultimately,

Mattel agreed to pay a $2.3 million civil f‌ine for violating a federal

lead paint ban

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and agreed to a class action settlement, including nearly

$13 million in plaintiffs’ attorney fees.

10

Mattel’s manufacturing problems in China inspired this f‌ictional contract

negotiation exercise, which is designed to facilitate students’ understanding of

the complexities of contracts for the sale of goods in the international context.

11

5

Eckert, supra note 1. The effects of lead paint on children are ‘‘permanent and irreversible.’’

Joseph D. Pargola, Childhood Lead Poisoning: Combating a Timeless Silent Killer,37RUTGERS L.

REC. 300, 301 (2010).

6

Id. See generally David Barboza & Louise Story, Mattel Issues New Recall of Toys Made in China,

N.Y. TIMES, Aug. 14, 2007, available at http://www.nytimes.com/2007/08/14/business/15toys-

web.html (discussing the extent of the recall); Mattel, Consumer Relations Support Center,

Recall Information, 2010, available at http://service.mattel.com/us/recall/39054_IVR.asp (recall-

ing toys sold in retail stores in the United States since May 1, 2007).

7

Mattel, Inc. Corporate Responsibility, available at http://corporate.mattel.com/about-us/

corporate-responsibility.aspx (last visited Jan. 25, 2011).

8

Nicholas Casey & Nicholas Zamiska, Mattel Does Damage Control After New Recall,WALL ST.J.

Aug. 15, 2007, available at http://online.wsj.com/article/SB118709567221897168.html.

9

Parija B. Kavilanz, Mattel Fined $2.3 Million Over Lead in Toys, CNNMONEY, June 5, 2009,

available at http://money.cnn.com/2009/06/05/news/companies/cpsc/.

10

Amanda Bronstad, Play Time ...Is OVER! Objectors Fail to Block Mattel Lead Paint Settlement,

NAT’LL. J., Mar. 22, 2010, available at http://www.law.com/jsp/cc/PubArticleFriendlyCC.

jsp?id=1202446523146.

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For examples of negotiation exercises in the domestic context for the classroom, see Corey

A. Ciocchetti, Employment Law, Negotiation and the Business Environment: A Cooperative Collective

358 Vol. 28 / The Journal of Legal Studies Education