[Federal Register Volume 79, Number 111 (Tuesday, June 10, 2014)]
[Notices]
[Pages 33177-33179]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-13483]
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CONSUMER PRODUCT SAFETY COMMISSION
[CPSC Docket No. 14-C0002]
Cinmar, LLC, Inc., Provisional Acceptance of a Settlement
Agreement and Order
AGENCY: Consumer Product Safety Commission.
ACTION: Notice.
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SUMMARY: It is the policy of the Commission to publish settlements
which it provisionally accepts under the Consumer Product Safety Act in
the Federal Register in accordance with the terms of 16 CFR 1118.20(e).
Published below is a provisionally-accepted Settlement Agreement with
Cinmar, LLC, containing a civil penalty of $3,100,000.00, within twenty
(20) days of service of the Commission's final Order accepting the
Settlement Agreement.
DATES: Any interested person may ask the Commission not to accept this
agreement or otherwise comment on its contents by filing a written
request with the Office of the Secretary by June 25, 2014.
ADDRESSES: Persons wishing to comment on this Settlement Agreement
should send written comments to the Comment 14-C0002 Office of the
Secretary, Consumer Product Safety Commission, 4330 East West Highway,
Room 820, Bethesda, Maryland 20814-4408.
FOR FURTHER INFORMATION CONTACT: Kelly M. Moore, Trial Attorney,
Division of Compliance, Office of the General Counsel, Consumer Product
Safety Commission, 4330 East West Highway, Bethesda, Maryland 20814-
4408; telephone (301) 504-7447.
SUPPLEMENTARY INFORMATION: The text of the Agreement and Order appears
below.
Dated: June 5, 2014.
Todd A. Stevenson,
Secretary.
Settlement Agreement
1. In accordance with the Consumer Product Safety Act (CPSA), 15
U.S.C. 2051-2089 and 16 CFR 1118.20, Cinmar, LLC (Cinmar), and the U.S.
Consumer Product Safety Commission (Commission), through its staff
(staff), hereby enter into this Settlement Agreement (Agreement). The
Agreement and the incorporated attached Order (Order) resolve staff's
charges set forth below.
The Parties
2. The Commission is an independent federal regulatory agency,
established pursuant to, and responsible for, the enforcement of the
CPSA. By executing the Agreement, staff is acting on behalf of the
Commission, pursuant to 16 CFR 1118.20(b). The Commission issues the
Order under the provisions of the CPSA.
3. Cinmar (d/b/a Frontgate) is a limited liability company,
organized and existing under the laws of the state of Delaware, with
its principal corporate office located at 5566 West Chester Road, West
Chester, OH 45069. Cinmar is a retailer of home furnishings and
decorative household items.
Staff Charges
4. Between November 2005 and July 2010, Cinmar sold approximately
38,000 Frontgate foldaway closet two- and three-step ladders made of
mahogany wood and designed for use in walk-in closets (Subject
Products, or Ladders). Cinmar sold the Ladders to consumers nationwide
for between $89.95 and $149.50.
5. The Ladders are ``consumer products,'' and at all relevant
times, Cinmar was a ``retailer'' of these consumer products, which were
``distributed in commerce,'' as those terms are defined or used in
sections 3(a)(5), (7) and (13), of the CPSA, 15 U.S.C. 2052(a)(5), (7)
and (13).
6. The Ladders are defective because the steps can break
unexpectedly, posing a fall hazard to consumers.
7. CPSC staff charges that Cinmar received notice of the defect
shortly after Ladder sales began in November 2005. Between 2005 and
2010, Cinmar received hundreds of reports of step breakage during first
and early use, including reports of injuries to consumers. During that
same time, Cinmar implemented design changes to eliminate the hazard
posed by the Subject Products. Throughout this period, Cinmar also paid
out claims filed by consumers who reported that they had been injured
when the Ladders broke during use.
8. CPSC staff charges that (i) by September 28, 2007, Cinmar had
sufficient information that reasonably supported the conclusion that
the Ladders contained a defect that could create a substantial product
hazard or created an unreasonable risk of serious injury or death and
(ii) that Cinmar was required to inform the Commission immediately of
such defect or risk, as required by sections 15(b)(3) and (4) of the
CPSA, 15 U.S.C. 2064(b)(3) and (4). By that date, Cinmar had received
more than 600 Ladder returns due to breakage and had been notified of
at least one personal injury lawsuit filed by a consumer alleging
injury from a broken Ladder.
9. CPSC staff charges that, when consumers contacted Cinmar
regarding their broken Ladders, Cinmar routinely provided the consumers
with replacement Ladders which Cinmar knew were just as likely to
break.
10. Despite having information regarding the Ladders' defect or
risk, Cinmar failed to inform the Commission immediately, as required
by sections 15(b)(3) and (4) of the CPSA, 15 U.S.C. 2064(b)(3) and (4).
11. Cinmar did not file its Full Report with the Commission until
July 29, 2010. By that time, more than 1,200 consumers had returned
their Ladders to Cinmar, most citing breakage, and others citing
cosmetic problems. Also by that time, Cinmar had received notice of at
least two dozen injuries, one of which required surgery and another
necessitated hospitalization.
[[Page 33178]]
12. In failing to inform the Commission about the Subject Products
immediately, Cinmar knowingly violated section 19(a)(4) of the CPSA, 15
U.S.C. 2068(a)(4), as the term ``knowingly'' is defined in section
20(d) of the CPSA, 15 U.S.C. 2069(d).
13. Pursuant to section 20 of the CPSA, 15 U.S.C. 2069, Cinmar is
subject to civil penalties for its knowing failure to report, as
required by section 15(b) of the CPSA, 15 U.S.C. 2064(b).
Cinmar's Response
14. Cinmar neither admits nor denies the charges set forth in
paragraphs 4 through 13, including, but not limited to, the charge that
the Ladders contained a defect which could create a substantial product
hazard or created an unreasonable risk of serious injury or death, and
the contention that Cinmar failed to notify the Commission in a timely
manner, in accordance with section 15(b) of the CPSA, 15 U.S.C.
2064(b).
Agreement of the Parties
15. Under the CPSA, the Commission has jurisdiction over the matter
involving the Ladders described herein and over Cinmar.
16. In settlement of staff's charges, and to avoid the cost,
distraction, delay, uncertainty, and inconvenience of protracted
litigation or other proceedings, Cinmar shall pay a civil penalty in
the amount of three million one hundred thousand dollars
($3,100,000.00), which shall be due and payable within twenty (20)
calendar days after receiving service of the Commission's final Order
accepting the Agreement. All payments to be made under the Agreement
shall constitute debts owing to the United States and shall be made by
electronic wire transfer to the United States via: http://www.pay.gov.
17. The parties agree that this settlement figure is predicated,
among other things, upon the accuracy of oral and written
representations of, and statements by, Cinmar and Cinmar's
representatives (including representations and warranties set forth in
the Agreement).
18. The parties enter into the Agreement for settlement purposes
only. The Agreement does not constitute an admission by Cinmar or a
determination by the Commission that Cinmar violated the CPSA.
19. Following staff's receipt of the Agreement executed on behalf
of Cinmar, staff shall promptly submit the Agreement to the Commission
for provisional acceptance. Promptly following provisional acceptance
of the Agreement by the Commission, the Agreement shall be placed on
the public record and published in the Federal Register, in accordance
with the procedures set forth in 16 CFR 1118.20(e). If, within fifteen
(15) calendar days, the Commission does not receive any written request
not to accept the Agreement, the Agreement shall be deemed finally
accepted on the sixteenth (16th) calendar day after the date the
Agreement is published in the Federal Register, in accordance with 16
CFR 1118.20(f).
20. The Agreement is conditioned upon, and subject to, the
Commission's final acceptance, as set forth above, and is subject to
the provisions of 16 CFR 1118.20(h). Upon the later of: (i) The
Commission's final acceptance of the Agreement and service of the
accepted Agreement upon Cinmar, and (ii) the date of issuance of the
final Order, the Agreement shall be in full force and effect and shall
be binding upon the parties.
21. Effective upon the later of: (i) The Commission's final
acceptance of the Agreement and service of the accepted Agreement upon
Cinmar, and (ii) the date of issuance of the final Order, for good and
valuable consideration, Cinmar hereby expressly and irrevocably waives
and agrees not to assert any past, present, or future rights to the
following, in connection with the matter described in the Agreement:
(a) An administrative or judicial hearing; (b) judicial review or other
challenge or contest of the validity of the Order or of the
Commission's actions; (c) a determination by the Commission of whether
Cinmar failed to comply with the CPSA and the underlying regulations;
(d) a statement of findings of fact and conclusions of law; and (e) any
claims under the Equal Access to Justice Act.
22. Cinmar shall implement and maintain a formal compliance program
designed to ensure compliance with the statutes and regulations
enforced by the Commission that, at a minimum, contains the following
elements: (i) Written standards and policies; (ii) procedures for
reviewing claims and reports for safety concerns and for implementing
corrective and preventive actions when compliance deficiencies or
violations are identified (including procedures to prevent defective
products from being introduced into commerce); (iii) a mechanism for
confidential employee reporting of compliance-related questions or
concerns to either a compliance officer or to another senior manager
with authority to act as necessary; (iv) effective communication of
company compliance-related policies and procedures to all employees,
through training programs, or otherwise; (v) senior manager
responsibility for compliance and accountability for violations of the
statutes and regulations enforced by the Commission; (vi) oversight of
compliance by Cinmar's governing body; and (vii) retention of all
compliance-related records for at least five (5) years, and
availability of such records to staff upon request.
23. Cinmar shall maintain and enforce a system of internal controls
and procedures designed to ensure that: (i) Information required to be
disclosed by Cinmar to the Commission is recorded, processed, and
reported in accordance with applicable law; (ii) all reporting made to
the Commission is timely, truthful, complete, and accurate; and (iii)
prompt disclosure is made to Cinmar management of any significant
deficiencies or material weaknesses in the design or operation of such
internal controls that are reasonably likely to adversely affect in any
material respect Cinmar's ability to record, process, and report to the
Commission in accordance with applicable law.
24. Upon request of staff, Cinmar shall provide written
documentation of such improvements, processes, and controls, including,
but not limited to, the effective dates of such improvements,
processes, and controls. Cinmar shall cooperate fully and truthfully
with staff and shall make available all information, materials, and
personnel deemed necessary by staff to evaluate Cinmar's compliance
with the terms of the Agreement.
25. The parties acknowledge and agree that the Commission may make
public disclosure of the terms of the Agreement and the Order.
26. Cinmar represents that the Agreement: (i) Is entered into
freely and voluntarily, without any degree of duress or compulsion
whatsoever; (ii) has been duly authorized; and (iii) constitutes the
valid and binding obligation of Cinmar, and each of its successors and/
or assigns, enforceable against Cinmar in accordance with the
Agreement's terms. The individuals signing the Agreement on behalf of
Cinmar represent and warrant that they are duly authorized by Cinmar to
execute the Agreement.
27. The Commission signatories represent that they are signing the
Agreement in their official capacities and that they are authorized to
execute the Agreement.
28. The Agreement is governed by the laws of the United States.
29. The Agreement and the Order shall apply to, and be binding
upon,
[[Page 33179]]
Cinmar and each of its subsidiaries, successors, transferees, and
assigns, and a violation of the Agreement or Order may subject Cinmar
and each of its successors, transferees, and assigns to appropriate
legal action.
30. The Agreement and the Order constitute the complete agreement
between the parties on the subject matter contained herein and therein.
31. The Agreement may be used in interpreting the Order.
Understandings, agreements, representations, or interpretations apart
from those contained in the Agreement and the Order may not be used to
vary or contradict their terms. For purposes of construction, the
Agreement shall be deemed to have been drafted by both of the parties,
and therefore, shall not be construed against any party for that reason
in any subsequent dispute.
32. The Agreement shall not be waived, amended, modified, or
otherwise altered, except as in accordance with the provisions of 16
CFR 1118.20(h). The Agreement may be executed in counterparts.
33. If any provision of the Agreement or the Order is held to be
illegal, invalid, or unenforceable under present or future laws
effective during the terms of the Agreement and the Order, such
provision shall be fully severable. The balance of the Agreement and
the Order shall remain in full force and effect, unless the Commission
and Cinmar agree that severing the provision materially affects the
purpose of the Agreement and Order.
CINMAR, LLC
Dated: 5/27/2014
By:--------------------------------------------------------------------
H.R. Harvey,
President, Cinmar, LLC, 5566 West Chester Road, West Chester, OH 45069.
Dated: 5/28/2014
By:--------------------------------------------------------------------
Ivan J. Wasserman
Manatt, Phelps & Phillips, LLP, 700 12th Street NW., Suite 1100,
Washington, DC 20005, Counsel for Cinmar, LLC.
U.S. CONSUMER PRODUCT SAFETY COMMISSION STAFF
Stephanie Tsacoumis
General Counsel.
Mary B. Murphy
Assistant General Counsel.
Dated: 5/28/2014
By:--------------------------------------------------------------------
Kelly Moore,
Trial Attorney, Division of Compliance, Attorney.
Order
Upon consideration of the Settlement Agreement entered into between
Cinmar, LLC (Cinmar), and the U.S. Consumer Product Safety Commission
(Commission), and the Commission having jurisdiction over the subject
matter and over Cinmar, and it appearing that the Settlement Agreement
and the Order are in the public interest, it is
ORDERED that the Settlement Agreement be, and is, hereby, accepted;
and it is
FURTHER ORDERED, that Cinmar shall comply with the terms of the
Settlement Agreement and shall pay a civil penalty of $3,100,000.00,
within twenty (20) calendar days after receiving service of the
Commission's final Order accepting the Settlement Agreement. Upon
failure of Cinmar to make the foregoing payment when due, interest on
the unpaid amount shall accrue and be paid by Cinmar at the federal
legal rate of interst set forth at 28 U.S.C. 1961(a) and (b). If Cinmar
fails to make such a payment or to comply in full with any other
provision as set forth in the Settlement Agreement, such conduct will
be considered a violation of the Settlement Agreement and Order.
Provisionally accepted and provisional Order issued on the 5th
day of June, 2014.
By Order of the Commission.
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Todd A. Stevenson,
Secretary, U.S. Consumer Product Safety Commission.
[FR Doc. 2014-13483 Filed 6-9-14; 8:45 am]
BILLING CODE 6355-01-P