Hoover Company, Inc., a Corporation, Provisional Acceptance of a Settlement Agreement and Order, 3113-3114 [07-292]

Agencies

• Consumer Product Safety Commission

[Federal Register Volume 72, Number 15 (Wednesday, January 24, 2007)]
[Notices]
[Pages 3113-3114]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 07-292]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 07-C0003]


Hoover Company, Inc., a Corporation, 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 
Hoover Company, Inc., a corporation, containing a civil penalty of 
$750,000.

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 February 8, 2007.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 07-C0003, Office of the 
Secretary, Consumer Product Safety Commission, 4330 East West Highway, 
Bethesda, Maryland 20814-4408.

FOR FURTHER INFORMATION CONTACT: Michelle F. Gillice, Trial Attorney, 
Office of Compliance and Field Operations, Consumer Product Safety 
Commission, 4330 East West Highway, Bethesda, Maryland 20814-4408; 
telephone (301) 504-7667.

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

    Dated: January 18, 2007.
Todd A. Stevenson,
Secretary.

United States of America Consumer Product Safety Commission

[CPSC Docket No. 07-C0003]

In the Matter of Hoover Company, Inc. a Corporation; Settlement 
Agreement and Order

    1. This Settlement Agreement is made by and between the staff (the 
``staff'') of the U.S. Consumer Product Safety Commission (the 
``Commission'') and Hoover Company, Inc. (``Hoover''), a corporation, 
in accordance with 16 CFR 1118.20 of the Commission's Procedures for 
Investigations, Inspections and Inquiries under the Consumer Product 
Safety Act (``CPSA''). This Settlement Agreement and the incorporated 
attached Order resolve the staff's allegations set forth below.

The Parties

    2. The Commission is an independent federal regulatory agency 
responsible for the enforcement of the CPSA, 15 U.S.C. 2051-2084.
    3. Hoover is a corporation organized and existing under the laws of 
the State of Delaware, with its principal corporate office located in 
North Canton, Ohio. At all times relevant herein, Hoover designed and 
manufactured vacuum cleaners subject to the Settlement Agreement and 
Order.

Staff Allegations

    4. Between may 1998 and November 1999, Hoover manufactured 
approximately 636,000 Self-Propelled Wind Tunnel Upright vacuum 
cleaners under the following model numbers: U6423-900; U6445-900; 
U6425-900; U6445-960; U6451-900; U6425-950; U6449-900; and U6455-900, 
(hereinafter ``vacuum cleaners'').
    5. The vacuum cleaners are ``consumer product(s)'' and, at the 
times relevant herein, Hoover was a ``manufacturer'' of ``consumer 
product(s)'' which were ``distributed in commerce'' as those terms are 
defined in 3(a)(1), (4), (11), and (12) of the CPSA, 15 U.S.C. 
2052(a)(1), (4), (11) and (12).
    6. The vacuum cleaners are defective because of a poor crimp 
connection at the wire termination which could cause overheating, 
melting and ultimately, fire in the switch/handle area. The vacuum 
cleaners could catch fire while in use and switched to the ``ON'' 
position and while switched to ``Off'' if plugged in to an outlet.
    7. On or about April 14, 1999, Hoover first learned of a vacuum 
cleaner switch overheating and melting.
    8. Between October and November 1999, after receiving notice of at 
least four incidents, Hoover made several design changes to eliminate 
overheating in the switch area. Hoover also directed that all vacuum 
cleaners in inventory and any brought in by customers for repair for 
any reason be reworked in order to eliminate the switch overheating 
problem.
    9. On February 26, 2001, Hoover's Safety Committee met and reviewed 
the vacuum cleaner incidents. At this time, Hoover had received notice 
of at least 46 incidents with the vacuum cleaners, 23 of which were 
allegations that the switch/handle area caught on fire. At least two 
reports indicated that the vacuum cleaner ignited while switched to the 
``OFF'' position and consumers believed the vacuum cleaners to be off. 
The Safety Committee, however, decided that no report should be made to 
the Commission.
    10. On June 11, 2002, the Safety Committee met again to review 80 
new incidents involving the switch defect. By this time, Hoover had 
received notice of at least 127 incidents. In 73 of these incidents, 
consumers reported that the vacuum cleaners caught on fire.
    11. On or about September 24, 2002, Hoover hired an outside 
consulting firm to examine and test the vacuum cleaners to determine 
the cause of the switch failures.
    12. On March 12, 2003, the consulting firm issued a report 
confirming that a poor crimp connection caused the switch to melt and 
malfunction. By this time, Hoover had received notice of 171 incidents 
pertaining to switch overheating and/or melting. In 96 of these 
incidents, consumers reported that their vacuum cleaners caught on 
fire.
    13. On June 7, 2004, after receiving notice of several vacuum 
cleaner incidents, Commission staff sent Hoover a letter requesting 
submission of a full report pursuant to section 15(b) of the CPSA.
    14. On July 9, 2004, Hoover submitted a report in response to the 
staff's request. At this time of its report, Hoover had received notice 
of at least 260 consumer incidents, of which 141 involved reports of 
fire. Other than one report of minor burns to hands, there were no 
report consumer injuries.
    15. Although Hoover had obtained sufficient information which could 
reasonably support the conclusion that the vacuum cleaners contained a 
defect which could create a substantial product hazard, or created an 
unreasonable risk of serious injury or

[[Page 3114]]

death, it failed to immediately inform the Commission of such defect or 
risk as required by sections 15(b)(2) and (3) of the CPSA, 15 U.S.C. 
2064(b)(2) and (3). In failing to do so, Hoover ``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).
    16. Pursuant to section 20 of the CPSA, 15 U.S.C. 2069, Hoover is 
subject to civil penalties for its failure to make a timely report 
under section 15(b) of the CPSA, 15 U.S.C. 2064(b).

Response of Hoover

    17. Hoover denies that the vacuum cleaners contain a defect which 
could create a substantial product hazard, or create a substantial risk 
of serious injury or death, and denies that it violated the reporting 
requirements of section 15(b) of the CPSA, 15 U.S.C. 2064(b).

Agreement of the Parties

    18. The Commission has jurisdiction over this matter and over 
Hoover under the CPSA, 15 U.S.C. 2051-2084.
    19. In settlement of the staff's allegations, Hoover agrees to pay 
a civil penalty of seven hundred fifty thousand dollars ($750,000.00) 
within twenty (20) calendar days of service of the Final Order of the 
Commission accepting this Settlement Agreement. This payment shall be 
made by check payable to the order of the United States Treasury.
    20. The parties enter this Settlement Agreement for settlement 
purposes only. The Settlement Agreement does not constitute an 
admission by Hoover or a determination by the Commission that Hoover 
violated the CPSA's reporting requirements.
    21. Upon provisional acceptance of this Settlement Agreement and 
Order by the Commission, the Commission shall place this Agreement and 
Order on the public record and shall publish it in the Federal Register 
in accordance with the procedure set forth in 16 CFR 1118.20(e). If the 
Commission does not receive any written requests not to accept the 
Settlement Agreement and Order within 15 calendar days, the Settlement 
Agreement and Order shall be deemed finally accepted on the 16th 
calendar day after the date it is published in the Federal Register, in 
accordance with 16 CFR 1118.20(f).
    22. Upon final acceptance of the Settlement Agreement by the 
Commission and issuance of the Final Order, Hoover knowingly, 
voluntarily and completely waives any rights it may have in this matter 
to the following :(i) An administrative or judicial hearing; (ii) 
judicial review or other challenge or contest of the Commission's 
actions; (iii) a determination by the Commission as to whether Hoover 
failed to comply with the CPSA and the underlying regulations; (iv) a 
statement of findings of fact and conclusions of law; and (v) any 
claims under the Equal Access to Justice Act.
    23. The Commission may publicize the terms of the Settlement 
Agreement and Order.
    24. The Settlement Agreement shall apply to, and be binding upon 
Hoover and each of its successors and assigns, its parent entity, its 
parent's subsidiaries, and each of their respective successors and 
assigns.
    25. The Commission's Order in this matter is issued under the 
provisions of the CPSA, 15 U.S.C. 2051-2084, and a violation of the 
Order may subject those referenced in paragraph 24 above to appropriate 
legal action.
    26. This Settlement Agreement may be used in interpreting the 
Order. Agreements, understandings, representations, or interpretations 
made outside of this Settlement Agreement and Order may not be used to 
vary or to contradict its terms.
    27. This Settlement Agreement and Order shall not be waived, 
changed, amended, modified, or otherwise altered, without written 
agreement thereto executed by the party against whom such amendment, 
modification, alteration, or waiver is sought to be enforced, and 
approval by the Commission.
    28. If, after the effective date hereof, any provision of this 
Settlement Agreement and Order is held to be illegal, invalid, or 
unenforceable under present or future laws effective during the terms 
of the Settlement Agreement and Order, such provision shall be fully 
severable. The rest of the Settlement Agreement and Order shall remain 
in full effect, unless the Commission and Hoover determine that 
severing the provision materially changes the purpose of the Settlement 
Agreement and Order.

    Dated: January 2, 2007.

Hoover Corporation.

Karl R. Milam,
Chief Executive Officer.

    Dated: January 4, 2007.

U.S. Consumer Product Safety Commission.

John Gibson Mullan,
Director, Office of Compliance and Field Operations.

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

Michelle Faust Gillice,
Trial Attorney, Compliance Legal Division.

United States of America Consumer Product Safety Commission

[CPSC Docket No. 07-C0003]

In the Matter of Hoover Company, Inc., A Corporation

Order

    Upon consideration of the Settlement Agreement entered into between 
Hoover Company, Inc. (``Hoover'') and the staff of the U.S. Consumer 
Product Safety Commission (the ``Commission''), and the Commission 
having jurisdiction over the subject matter and over Hoover, and it 
appearing the Settlement Agreement is in the public interest, it is
    Ordered, that the Settlement Agreement be, and hereby is, accepted; 
and it is
    Further ordered, that Hoover shall pay a civil penalty in the 
amount of seven hundred fifty thousand dollars ($750,000.00). This 
payment shall be made payable to the United States Treasury within 
twenty (20) calendar days of service of the Final Order of the 
Commission upon Hoover. Upon the failure of Hoover to make full payment 
in the prescribed time, interest on the outstanding balance shall 
accrue and be paid at the federal rate of interest under the provisions 
of 28 U.S.C. 1961(a) and (b).

    Provisionally accepted and Provisional Order issued on the 18th 
day of January, 2007.

    By Order of the Commission.

Todd A. Stevenson, Secretary, Consumer Product Safety Commission.
[FR Doc. 07-292 Filed 1-23-07; 8:45 am]
BILLING CODE 6355-01-M