Acuity Brands, Inc., Provisional Acceptance of a Settlement Agreement and Order, 13105-13108 [06-2419]

Agencies

• Consumer Product Safety Commission

[Federal Register Volume 71, Number 49 (Tuesday, March 14, 2006)]
[Notices]
[Pages 13105-13108]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-2419]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 06-C0002]


Acuity Brands, 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 
Acuity Brands, Inc., containing a civil penalty of $700,000.00.

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 March 29, 2006.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 06-C0002, Office of the 
Secretary, Consumer Product Safety Commission, Washington, DC 20207.

FOR FURTHER INFORMATION CONTACT: Seth B. Popkin, Trial Attorney, Office 
of Compliance, Consumer Product Safety Commission, Washington, DC 
20207; telephone (301) 504-7612.

SUPPLEMENTARY INFORMATION: The text of the Agreement and Order appears 
below.

    Dated: March 8, 2006.
Todd A. Stevenson,
Secretary.

In the Matter of Acuity Brands, Inc.

Settlement Agreement and Order

    1. In accordance with 16 CFR 1118.20, Acuity Brands, Inc. and the 
staff (``Staff'') of the United States Consumer Product Safety 
Commission (``Commission'') enter into this Settlement Agreement 
(``Agreement''). The Agreement and the incorporated attached Order 
(``Order'') settle the Staff's allegations set forth below.

Parties

    2. The Commission is an independent federal regulatory agency 
established pursuant to, and responsible for the enforcement of, the 
Consumer Product Safety Act, 15 U.S.C. 2051-2084 (``CPSA'').
    3. Acuity Brands, Inc. is a corporation organized and existing 
under the laws of the state of Delaware, and its principal offices are 
located in Atlanta, Georgia. Acuity Brands, Inc.'s businesses, among 
other things, design and manufacture lighting equipment. Lithonia 
Lighting conducted the product recalls referenced in the Agreement and 
identified itself as the manufacturer of those recalled products. 
Lithonia Lighting is a division of, and is wholly owned by, Acuity 
Lighting Group, Inc., which is wholly owned by Acuity Brands, Inc. 
Lithonia Lighting is also a brand of lighting products sold by Acuity 
Lighting Group, Inc. Acuity Brands Inc., Acuity Lighting Group, Inc., 
and Lithonia Lighting are collecting referred to herein as ``Acuity.''
    4. Paragraphs 5 through 38 constitute the Staff's allegations based 
on the Staff's investigations. Paragraphs 39 through 48 constitute 
Acuity's responsive allegations disputing the Staff's allegations.

Staff Allegations

ELM/ELM II Emergency Lights

    5. From August 1992 to May 1997, Acuity manufactured, and 
wholesalers and distributors sold, approximately 1.2 million ELM/ELM2 
emergency lights later recalled on April 13, 2001 (``ELM Lights''). The 
ELM Lights were installed near exit doors in buildings such as schools, 
offices, and shopping centers, to aid in evacuation in the event of an 
emergency.
    6. Each ELM Light is a ``consumer product'' that Acuity 
``distributed in commerce,'' and Acuity is a ``manufacturer'' of that 
consumer product, as those terms are defined in CPSA sections 3(a)(1), 
(4), (11), and (12), 15 U.S.C. 2052(a)(1), (4), (11), and (12).
    7. The ELM Lights had an electrical component that could overheat 
when connected to 277-volt electrical systems, and that could melt and 
burn the light enclosures and other objects, posing a fire hazard.
    8. From January 1996 through September 2000, Acuity received 
reports of ELM Light capacitor failures and incidents from 33 sites, 
involving 109 failed capacitors, many of which included incidents of 
smoking, melting, rupturing, burning, and fire. Results included melted 
or damaged light enclosures, damaged walls and carpet, and one injury, 
i.e., a burned finger. From 1996 to 1999, Acuity replaced 345 ELM 
Lights due to the hazard.
    9. Beginning in 1996, Acuity conducted testing and analysis, and it 
made an engineering change relating to the hazard by switching to a 
different and safer type of capacitor. By July

[[Page 13106]]

1997, Acuity was replacing ELM Lights having defective capacitors with 
new units having the new capacitors.
    10. From 1998 to 1999, Underwriters Laboratories wrote 4 letters to 
Acuity advising it of the CPSA's reporting requirements and/or of the 
ELM Lights' risk of fire, serious injury, or death. In 2000, Acuity 
received a letter from the Commission staff advising of the CPSA 
reporting requirements.
    11. By July 1997, Acuity had obtained information that reasonably 
supported the conclusion that the ELM Lights contained a defect that 
could create a substantial product hazard or that they created an 
unreasonable risk of serious injury or death. As of that date, Acuity 
had received reports from 12 sites, and the reports involved 60 failed 
(overheated) capacitors, at least 8 fire incidents, and 1 light that 
exploded, suffered smoke and heat damage, and had a capacitor failure 
not contained within the light enclosure. As of that date, Acuity had 
replaced some of the original capacitors with safer ones. CPSA sections 
15(b)(2) and (3), 15 U.S.C. 2064(b)(2) and (3), required by Acuity to 
immediately inform the Commission of the defect or risk.
    12. Acuity did not report to the Commission regarding the ELM 
Lights until October 19, 2000, thereby failing to immediately inform 
the Commission as required by CPSA sections 15(b)(2) and (3), 15 U.S.C. 
2064(b)(2) and (3). This failure violated CPSA section 19(a)(4), 15 
U.S.C. 2068(a)(4).
    13. Acuity knowingly failed to immediately inform the Commission of 
the ELM Lights' defect or risk, as the term ``knowingly'' is defined in 
CPSA section 20(d), 15 U.S.C. 2069(d). Pursuant to CPSA section 20, 15 
U.S.C. 2069, this failure subjected Acuity to civil penalties.

HID Lights

    14. From November 2002 through October 2003, Acuity manufactured, 
and from November 2002 through February 2004, lighting and electrical 
supply distributors sold, approximately 52,600 indoor high intensity 
discharge lights later recalled on March 29, 2004 (``HID Lights''). The 
HID Lights have acrylic lenses and/or reflectors, and they are 
generally used in industrial locations and commercial locations such as 
retail spaces, warehouses, and gymnasiums.
    15. Each HID Light is a ``consumer product'' that Acuity 
``distributed in commerce,'' and Acuity is a ``manufacturer'' of that 
consumer product, as those terms are defined in CPSA sections 3(a)(1), 
(4), (11), and (12), 15 U.S.C. 2052(a)(1), (4), (11), and (12).
    16. The HID Lights has an electrical component that could leak 
fluid that might degrade the acrylic lenses and reflectors, causing 
them to crack and fall from significant heights in pieces or in their 
entirety. Falling acrylic could injure people below.
    17. From May 2003 through January 2004, Acuity received reports of 
HID Light failures from 18 sites, with 197 incidents in which acrylic 
lenses or reflectors cracked. These incidents included 56 occasions in 
which acrylic lenses, reflectors, or pieces fell from the lights. One 
injury occurred involving a forehead laceration and eye damage. During 
this time, Acuity replaced 770 HID Lights due to the hazard.
    18. By the summer of 2003, Acuity knew that bad and leaking 
capacitors caused cracking acrylic, and Acuity learned of concerns 
about the defect, the potential for personal injury, and people fearing 
that falling reflectors could hit them.
    19. Beginning in the summer of 2003, Acuity received defect 
analyses through which it learned more about the defect and hazard, and 
Acuity took further corrective action of its own, instructing its 
manufacturing facilities to stop using these capacitors because they 
were failing due to a manufacturing defect. In November 2003, due to 
ongoing and numerous failures from the defect, Acuity directed a change 
in the component vendor.
    20. By August 2003, Acuity had obtained information that reasonably 
supported the conclusion that the HID Lights contained a defect that 
could create a substantial product hazard or that they created an 
unreasonable risk of serious injury or death. As of that date, Acuity 
knew that at 4 different sites, a total of 88 incidents occurred in 
which acrylic lenses or reflectors cracked, including 17 incidents in 
which acrylic lenses, reflectors, or pieces fell. CPSA sections 
15(b)(2) and (3), 15 U.S.C. 2064(b)(2) and (3), required Acuity to 
immediately inform the Commission of the defect or risk.
    21. Acuity did not report to the Commission regarding the HID 
Lights until February 6, 2004, thereby failing to immediately inform 
the Commission as required by CPSA sections 15(b)(2) and (3), 15 U.S.C. 
2064(b)(2) and (3). This failure violated CPSA section 19(a)(4), 15 
U.S.C. 2068(a)(4).
    22. Acuity knowingly failed to immediately inform the Commission of 
the HID Lights' defect or risk, as the term ``knowingly'' is defined in 
CPSA section 20(d), 15 U.S.C. 2069(d). Pursuant to CPSA section 20, 15 
U.S.C. 2069, this failure subjected Acuity to civil penalties.

HID Expansion Lights

    23. From April through October 2002, Acuity manufactured, and from 
April 2002 through February 2004, distributors sold, approximately 
40,600 indoor high intensity discharge lights later recalled on March 
8, 2005 (``HID Expansion Lights''). The HID Expansion Lights have the 
same features, uses, defects, and hazard as the HID Lights described 
above. The HID Expansion Lights differ from the HID Lights in that 
Acuity manufactured the former from April through October 2002, a 
manufacture period preceding the manufacture period for the HID Lights. 
These additional products resulted in an expansion, one year later, of 
the original recall, to include this additional manufacture period 
(``Expansion Period'').
    24. Each HID Expansion Light is a ``consumer product'' that Acuity 
``distributed in commerce,'' and Acuity is a ``manufacturer'' of that 
consumer product, as those terms are defined in CPSA sections 3(a)(1), 
(4), (11), and (12), 15 U.S.C. 2052(a)(1), (4), (11), and (12).
    25. From September 2003 through June 2004, Acuity received reports 
from 10 sites of Expansion Period products (i.e., the recalled HID 
Expansion Lights, as well as other lights that did not have acrylic and 
were not included in the recall but did have the same defective 
capacitors) leaking, cracking, and/or failing. From these 10 sites, 
Acuity learned of the following incident facts: At least 162 Expansion 
Period products with leaking capacitors only (no cracking/falling 
acrylic); 60 HID Expansion Lights with cracked lenses and/or reflectors 
that did not fall; and 31 HID Expansion Lights with lenses and/or 
reflectors that fell. At these sites, Acuity did 644 Expansion Period 
product replacements.
    26. In September 2003, Acuity received the first site report about 
Expansion Period leaking capacitors. From April 5 to June 13, 2004, 
Acuity received reports from 6 sites having HID Expansion Lights with 
cracked lenses and/or reflectors.
    27. Acuity acknowledged that its analysis for the HID Lights 
related as well to the HID Expansion Lights. Acuity also acknowledged 
that the HID Expansion Lights involved the same potential risk 
previously tested and that led to the HID Lights recall. Acuity 
conceded that as of February 2004, it knew the defect and took 
corrective action by stopping sale and doing replacements.
    28. By April 2004, Acuity had obtained information that reasonably 
supported the conclusion that the HID

[[Page 13107]]

Expansion Lights contained a defect that could create a substantial 
product hazard or that they created an unreasonable risk of serious 
injury or death. CPSA sections 15(b)(2) and (3), 15 U.S.C. 2064(b)(2) 
and (3), required Acuity to immediately inform the Commission of the 
defect or risk.
    29. Acuity did not report to the Commission regarding the HID 
Expansion Lights until October 8, 2004, thereby failing to immediately 
inform the Commission as required by CPSA sections 15(b)(2) and (3), 15 
U.S.C. 2064(b)(2) and (3). This failure violated CPSA section 19(a)(4), 
15 U.S.C. 2068(a)(4).
    30. Acuity knowingly failed to immediately inform the Commission of 
the HID Expansion Lights' defect or risk, as the term ``knowingly'' is 
defined in CPSA section 20(d), 15 U.S.C. 2069(d). Pursuant to CPSA 
section 20, 15 U.S.C. 2069, this failure subjected Acuity to civil 
penalties.

HID Cord Lights

    31. From June 1999 through May 2002, Acuity manufactured, and 
lighting and electrical supply distributors sold, approximately 120,000 
indoor high intensity discharge lights later recalled on March 11, 2005 
(``HID Cord Lights''). The HID Cord Lights are generally used in 
locations such as retail spaces, light manufacturing areas, warehouse 
spaces, and gymnasiums.
    32. Each HID Cord Light is a ``consumer product'' that Acuity 
``distributed in commerce,'' and Acuity is a ``manufacturer'' of that 
consumer product, as those terms are defined in CPSA sections 3(a)(1), 
(4), (11), and (12), 15 U.S.C. 2052(a)(1), (4), (11), and (12).
    33. The cord of the HID Cord Lights could drip plasticizer fluid 
that might degrade the acrylic lenses and reflectors, causing them to 
crack and fall from significant heights in pieces or in their entirety. 
Falling acrylic could injure people below.
    34. From June 2002 through September 2004, Acuity learned of 15 
sites at which these were at least 510 failing HID Cord Lights (i.e., 
lights with cracking or failing lenses or reflectors, and/or dripping 
cords). These incidents included 6 falling lenses, more than 286 
cracking reflectors, 19 falling reflectors, and at least 202 dripping 
cords that had not yet resulted in cracking or falling reflectors. 
During this time, Acuity replaced or made arrangements to replace over 
2,000 HID Cord Lights.
    35. From June 2002 to September 2004, Acuity learned of defect 
information, the potential for personal injury, and people concerned 
that falling lenses and reflectors could hit them. During this time, 
Acuity received increasing information about the cord fluid being 
incompatible with acrylic and about acrylic cracking due to fluid 
leaking from cords. In August 2003, Acuity learned of the cord 
manufacturer's intent to do a corrective action by revising the cord's 
design, and in October 2003, Acuity acknowledged the defect issues and 
defective cords.
    36. By July 2003, Acuity had obtained information that reasonably 
supported the conclusion that the HID Cord Lights contained a defect 
that could create a substantial product hazard or that they created an 
unreasonable risk of serious injury or death. As of that date, Acuity 
had learned of 7 sites with 224 failing HID Cord Lights, including 5 
falling lenses, 123 cracking reflectors, 4 falling reflectors, and at 
least 92 dripping cords not yet resulting in acrylic cracking or 
falling. Acuity replaced 431 HID Cord Lights at these sites. Also by 
July 2003, Acuity had learned of the cord fluid as the incidents' 
cause, and Acuity recognized the safety issue. CPSA sections 15(b)(2) 
and (3), 15 U.S.C. 2064(b)(2) and (3), required Acuity to immediately 
inform the Commission of the defect or risk.
    37. Acuity did not report to the Commission regarding the HID Cord 
Lights until September 27, 2004, thereby failing to immediately inform 
the Commission as required by CPSA sections 15(b)(2) and (3), 15 U.S.C. 
2064(b)(2) and (3). This failure violated CPSA section 19(a)(4), 15 
U.S.C. 2068(a)(4).
    38. Acuity knowingly failed to immediately inform the Commission of 
the HID Cord Lights' defect or risk, as the term ``knowingly'' is 
defined in CPSA section 20(d), 15 U.S.C. 2069(d). Pursuant to CPSA 
section 20, 15 U.S.C. 2069, this failure subjected Acuity to civil 
penalties.

Acuity's Responsive Allegations

    39. Acuity contests and denies the Staff's allegations and enters 
into the Agreement to resolve the Staff's allegations without the 
expense and distraction of litigation. By agreeing to this settlement, 
Acuity does not admit any of the allegations set forth above in the 
Agreement or any fault, liability, or statutory or regulatory 
violation.
    40. Acuity voluntarily, and without the Commission having first 
requested information from Acuity, notified the Commission in each of 
the matters described above.
    41. Acuity closely monitored its reporting obligations under the 
CPSA. Acuity never knowingly failed to file a required report with the 
Commission or knowingly committed any other violation of the CPSA. 
Acuity has continued to improve its efforts to meet its reporting 
obligations under the CPSA.
    42. Acuity's actions were to a significant degree influenced by its 
belief, based upon its initial review of the facts, that the Commission 
did not have jurisdiction over the products in question.
    43. Acuity voluntarily conducted corrective actions with respect to 
the products identified in the Staff's allegations. It did so pursuant 
to the Commission's ``Fast Track'' program, and neither the Commission 
nor the Staff has ever made any determination that the products at 
issue contained a defect that could create either a substantial product 
hazard or an unreasonable risk of serious injury or death.
    44. For several reasons, the actual risk associated with the 
products at issue was much lower in fact than implied by the Staff's 
description of incidents involving the products. These reasons include 
the fact that not all products subject to the corrective actions 
contained the problem that contributed to the performance failures 
described in the corrective actions. Moreover, even many of the product 
units that would have been so affected would not have caused harm due 
to varying circumstances. The fact that only two minor injuries 
occurred with respect to the products described in the Staff's 
allegations demonstrates that the actual, manifested risk from the 
products at issue was virtually nonexistent.
    45. With respect to three of the four reports that the Staff has 
alleged were untimely, the component at issue was made by a third-party 
supplier and not by Acuity.
    46. The Staff's recitation of incidents involving failure modes of 
varying levels of severity as evidence that the products were unsafe or 
should have been subject to the Commission's reporting requirements is 
over inclusive. Acuity evaluated its reporting obligations to the 
Commission based upon its assessment of risk, and it distinguished 
between risk issues and product performance issues in its evaluation of 
incidents. Acuity considered many of the incidents set forth in the 
Staff's allegations to be performance issues, based upon information 
available at the time. Product performance issues that do not 
demonstrate a substantial product hazard or an unreasonable risk of 
serious injury or death are not reportable to the Commission, 
regardless of whether Acuity responded

[[Page 13108]]

to customer requirements by providing replacement products.
    47. The limitations period for bringing any claim regarding the ELM 
Lights has expired.
    48. The HID Expansion Lights matter discussed in the Staff's 
allegations does not constitute a reporting violation separate from the 
alleged HID Lights reporting violation.

Agreement of the Parties

    49. Under the CPSA, the Commission has jurisdiction over this 
matter and over Acuity.
    50. The parties enter into the Agreement for settlement purposes 
only. The Agreement does not constitute an admission by Acuity, or a 
determination by the Commission, that Acuity has knowingly violated the 
CPSA. The Agreement does not constitute a Commission finding of fact or 
law with respect to any of the Agreement's allegations.
    51. In settlement of the Staff's allegations, Acuity shall pay a 
civil penalty in the amount of seven hundred thousand dollars 
($700,000.00) within twenty (20) calendar days of service of the 
Commission's final Order accepting the Agreement. The payment shall be 
by check payable to the order of the United States Treasury.
    52. Upon the Commission's provisional acceptance of the Agreement, 
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 the Commission does not receive any written request not 
to accept the Agreement within fifteen (15) days, the Agreement shall 
be deemed finally accepted on the sixteenth (16th) day after the date 
it is published in the Federal Register.
    53. Upon the Commission's final acceptance of the Agreement and 
issuance of the final Order, Acuity knowingly, voluntarily, and 
completely waives any rights it may have in this matter to the 
following: (1) An administrative or judicial hearing; (2) judicial 
review or other challenge or contest of the validity of the 
Commission's Order or actions; (3) a determination by the Commission of 
whether Acuity failed to comply with the CPSA and its underlying 
regulations; (4) a statement of findings of fact and conclusions of 
law; and (5) any claims under the Equal Access to Justice Act with 
respect to the Staff's allegations in the Agreement.
    54. The Commission may publicize the terms of the Agreement and 
Order. In publicizing the Agreement and Order, the Commission will 
comply with the requirements of law, including CPSA section 6(b), 15 
U.S.C. 2055(b), to the extent applicable.
    55. Acuity's full and timely payment to the United States Treasury 
of a civil penalty in the amount of seven hundred thousand dollars 
($700,000.00) as required herein resolves the Staff's allegations in 
the Agreement with respect to the following: (a) Acuity; (b) any Acuity 
parent, subsidiary, affiliate, division, or related entity; (c) any 
shareholder, director, officer, employee, agent, or attorney of any 
entity referenced in (a) or (b) above; and (d) any successor, heir, or 
assignee of any entity referenced in (a), (b), or (c) above.
    56. The Agreement and Order shall apply to, and be binding upon, 
Acuity and each of its successors and assigns.
    57. The Commission issues the Order under the provisions of the 
CPsa, and violation of the Order may subject Acuity to appropriate 
legal action.
    58. The Agreement may be used in interpreting the Order. 
Understandings, agreements, representations, or interpretations apart 
from those contained in the Agreement and Order may not be used to vary 
or contradict their terms. The Agreement shall not be waived, amended, 
modified, or otherwise altered, except in a writing that is executed by 
the party against whom such waiver, amendment, modification, or 
alteration is sought to be enforced, and that is approved by the 
Commission.
    59. If after the effective date hereof, any provision of the 
Agreement and Order is held to be illegal, invalid, or unenforceable 
under present or future laws effective during the terms of the 
Agreement and Order, such provisions shall be fully severable. The 
balance of the Agreement and Order shall remain in full force and 
effect, unless the Commission and Acuity determine that severing the 
provision materially affects the purpose of the Agreement and Order.

Acuity Brands, Inc.
Dated: January 3, 2006.

By:

Vernon J. Nagel,
President, Acuity Brands, Inc., 1170 Peachtree Street, NE., Suite 
2400, Atlanta, GA 30309.

Jeffrey S. Bromme,
Esq., Arnold & Porter LLP, 555 Twelfth Street, NW., Washington, DC 
20004-1206, Counsel for Acuity Brands, Inc.

U.S. Consumer Product Safety Commission Staff.
J. Gibson Mullan,
Assistant Executive Director, Office of Compliance.

Ronald G. Yelenik,
Acting Director, Legal Division, Office of Compliance.

Dated: January 13, 2006.

By:

Seth B. Popkin,
Trial Attorney, Legal Division, Office of Compliance.

Order

    Upon consideration of the Settlement Agreement entered into between 
Acuity Brands, Inc. (``Acuity'') and the U.S. Consumer Product Safety 
Commission (``Commission'') staff, and the Commission having 
jurisdiction over the subject matter and over Acuity, and it appearing 
that the Settlement Agreement and Order is in the public interest, it 
is
    Ordered, that the Settlement Agreement be, and hereby is, accepted; 
and it is
    Further ordered, that Acuity shall pay a civil penalty in the 
amount of seven hundred thousand dollars ($700,000.00) within twenty 
(20) calendar days of service of the final Order upon Acuity. The 
payment shall be made by check payable to the order of the United 
States Treasury. Upon the failure of Acuity to make the foregoing 
payment when due, interest on the unpaid amount shall accrue and be 
paid by Acuity at the federal legal rate of interest set forth at 28 
U.S.C. 1961(a) and (b).

    Provisionally accepted and Provisional Order issued on the 8th 
day of March, 2006.

    By order of the Commission.
Todd A. Stevenson,
Secretary, Consumer Product Safety Commission.
[FR Doc. 06-2419 Filed 3-13-06; 8:45 am]
BILLING CODE 6355-01-M