Aqua-Leisure Industries, Inc., Provisional Acceptance of a Settlement Agreement and Order, 63801-63803 [2012-25507]
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Federal Register / Vol. 77, No. 201 / Wednesday, October 17, 2012 / Notices
Agreement and the attached Order resolve
Staff’s allegations set forth below.
CONSUMER PRODUCT SAFETY
COMMISSION
THE PARTIES
2. Staff is the staff of the Commission, an
independent federal regulatory agency
established pursuant to, and responsible for,
enforcement of the CPSA.
3. Aqua Leisure is a privately-held
company, organized and existing under the
laws of the state of Massachusetts, with its
principal office located at 525 Bodwell
Street, Avon, Massachusetts 02322–1098.
[CPSC Docket No. 13–C0001]
Aqua-Leisure Industries, Inc.,
Provisional Acceptance of a
Settlement Agreement and Order
Consumer Product Safety
Commission.
ACTION: Notice.
AGENCY:
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 AquaLeisure Industries, Inc., containing a
civil penalty of $650,000.00, 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 November
1, 2012.
ADDRESSES: Persons wishing to
comment on this Settlement Agreement
should send written comments to the
Comment 13–C0001, Office of the
Secretary, Consumer Product Safety
Commission, 4330 East West Highway,
Room 820, Bethesda, Maryland 20814–
4408.
FOR FURTHER INFORMATION CONTACT:
Jennifer W. Feinberg, Trial Attorney,
Division of Compliance, Office of the
General Counsel, Consumer Product
Safety Commission, 4330 East West
Highway, Bethesda, Maryland 20814–
4408; telephone (301) 504–7843.
SUPPLEMENTARY INFORMATION: The text of
the Agreement and Order appears
below.
SUMMARY:
Dated: October 12, 2012.
Todd A. Stevenson,
Secretary.
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UNITED STATES OF AMERICA
CONSUMER PRODUCT SAFETY
COMMISSION
In the Matter of: Aqua-Leisure Industries, Inc.
CPSC Docket No.: 13–C0001
SETTLEMENT AGREEMENT AND ORDER
1. In accordance with 16 C.F.R. § 1118.20,
Aqua-Leisure Industries, Inc. (‘‘Aqua
Leisure’’) and staff (‘‘Staff’’) of the United
States Consumer Product Safety Commission
(‘‘Commission’’ or ‘‘CPSC’’) hereby enter into
this Settlement Agreement (‘‘Agreement’’)
under the Consumer Product Safety Act
(‘‘CPSA’’), 15 U.S.C. §§ 2051–2089. The
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STAFF ALLEGATIONS
4. The Subject Products are ‘‘consumer
products’’ and, at all relevant times, Aqua
Leisure was a ‘‘manufacturer’’ of ‘‘consumer
products,’’ which were ‘‘distribute[d] in
commerce,’’ as those terms are defined or
used in sections 3(a)(5), (8), and (11) of the
CPSA, 15 U.S.C. § 2052(3)(a)(5), (8), and (11).
5. The Subject Products are defective
because the leg straps in the seat of the
inflatable baby boat can tear with normal use,
causing children to unexpectedly fall into or
under the water, posing a risk of drowning.
6. Aqua Leisure received its first complaint
of sudden tearing of the seat crotch of certain
models of its inflatable baby boats in 2001,
and announced a recall of 90,000 of those
boats on November 28, 2001 (the ‘‘2001
Recall’’). The 2001 Recall disclosed that
Aqua Leisure and CPSC had received 12
reports of sudden tearing of the seat,
including four reports that children were
submerged completely under water before a
caregiver was able to rescue the child.
7. For two years following the July 2001
recall, Staff monitored Aqua Leisure’s
execution of its Corrective Action Plan. On
July 14, 2003, Staff notified Aqua Leisure of
its decision to close the case, but reserved the
right to reopen the matter if Staff determined
that the public had not been adequately
protected from the risk of injury presented by
the product. Staff further advised that Aqua
Leisure had a ‘‘continuing obligation to
inform the Commission of defects associated
with this product * * *.’’
8. After the 2001 Recall, the Firm
continued to produce different versions of
the inflatable baby boats, which also became
the subject of consumer complaints. Between
December 2002 and June 2009, Aqua Leisure
distributed approximately 4 million of these
inflatable baby boats (‘‘Subject Products’’) in
U.S. commerce. The Subject Products came
in 18 different models, and sold for
approximately $8 to $15 each through
nationwide retailers.
9. Between July 14, 2003, and July 31,
2006, Aqua Leisure became aware of 17
incidents in which these post-2001 Recall
inflatable baby boat seats ‘‘fell out’’;
‘‘ripped’’; ‘‘failed’’; ‘‘tore’’; ‘‘split’’; and/or
‘‘separated,’’ including four incidents in
which a baby boat seat ripped, causing
children to fall into the water unexpectedly.
10. By July 2006, Aqua Leisure had
information that the leg straps of the Subject
Products were not being produced in
accordance with the width and thickness
specifications of the replacement product
that had been evaluated by Staff as a part of
the 2001 Recall and Corrective Action Plan.
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11. In August 2008, Aqua Leisure senior
executives raised concerns internally about a
‘‘potential problem’’ with the Subject
Products, and began investigating the Subject
Products and contemplating its obligation to
report and the possibility of enforcement
action by the CPSC. Aqua Leisure did not
report to the CPSC at that time, however.
12. On October 31, 2008, CPSC Staff
notified Aqua Leisure of an incident
involving a 6-month-old girl who was
completely submerged in a pool when the
bottom of her inflatable baby boat seat ‘‘broke
completely.’’ However, Aqua Leisure had
previously received notice of this incident on
July 25, 2008 yet the firm took no steps to
report to the CPSC.
13. In addition, by October 31, 2008, Aqua
Leisure was aware of at least 24 consumer
complaints regarding the seats of the Subject
Products since the 2001 Recall, including
nine reports in which children fell through
the Subject Products suddenly and were
completely submerged underwater.
14. Aqua Leisure waited until March 12,
2009 to report to the CPSC, just hours before
the publication of a news story by a Boston
news team about problems with the Subject
Products and Aqua Leisure’s handling of
complaints and potential failure to report to
the Commission.
15. Aqua Leisure’s initial report to the
Commission on March 12, 2009, and its
subsequent Full Report on April 17, 2009,
incorrectly reported the scope and severity of
the hazard: both reports identified only four
incidents and only one model of boat affected
by the potential problem, instead of the
actual 28 complaints received for 18 different
models.
16. On May 21, 2009, Aqua Leisure filed
a Supplemental Full Report in which it
reported that the Firm had received at least
28 consumer complaints regarding 18
different models of baby boats.
17. On July 2, 2009, Aqua Leisure
announced a recall for the Subject Products.
The recall disclosed 31 reports of inflatable
baby boat seats tearing, causing children to
fall into or under the water.
18. Although well before May 21, 2009,
Aqua Leisure had obtained sufficient
information to reasonably support the
conclusion that the Subject Products
contained a defect that could create a
substantial product hazard, or created an
unreasonable risk of serious injury or death,
Aqua Leisure failed 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).
In failing to inform the Commission
immediately of the defect or advising that the
defect involved the Subject Products, Aqua
Leisure 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).
19. Pursuant to section 20 of the CPSA, 15
U.S.C. § 2069, Aqua Leisure is subject to civil
penalties for its knowing failure to report, as
required under section 15(b) of the CPSA, 15
U.S.C. § 2064(b).
RESPONSE OF AQUA LEISURE
20. The Firm denies staff’s allegations that
it knew that the Subject Products contained
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defects which could create a substantial
product hazard pursuant to section 15(a) of
the CPSA, 15 U.S.C. 2064(a), and further
denies that it knowingly violated the
reporting requirements of section 15(b) of the
CPSA, 15 U.S.C. 2064(b).
21. Like all inflatable pool toys, the Subject
Products degrade over time. Section 1115.6
of Title 16 of the Code of Federal Regulations
directs the Commission to consider, among
other things, ‘‘the level of exposure of
consumers to the risk’’ before determining
that a reportable product defect exists. The
reported failure rate for Subject Product leg
straps was 0.0000063%. Of millions of units
sold, Aqua Leisure received only 6 consumer
reports (including suspect reports) in 2004,
only 2 reports in 2005, only 7 reports in
2006, 3 in 2007, and 5 in 2008. The number
of substantiated injuries is zero.
22. In addition, Section 1115.4 of title 15
of the Code of Federal Regulations requires
the Commission to ‘‘consider, as appropriate:
* * * the adequacy of warnings and
instructions to mitigate such risk’’ before it
determines that a product is defective. Each
baby boat is accompanied by a warning that
instructs parents to supervise their children,
as follows: ‘‘This is not a life saving device.
Do not leave child unattended while in use.
Only to be used in water in which the child
is within its depth and under adult
supervision. NEVER leave a child
unattended. DO NOT overinflate or use high
pressure air to inflate. Under NO
circumstances should a child be left in or
around water unless a competent adult
swimmer is present supervising the child.
DO NOT use with a baby who cannot sit
confidently. The possibility DOES exist that
a baby could tip the unit over. To reduce the
risk of this happening, the water must be
deep enough so that the baby cannot touch
the bottom. Always exercise caution when
babies are teething as they could puncture
the baby boat. Do not give any playing
accessories that have the potential to damage
this product. Not suitable for children under
6 months.’’ For these reasons, Aqua Leisure
did not believe the leg straps tears were
reportable events under Section 15(b).
AGREEMENT OF THE PARTIES
23. For purposes of this Agreement, as a
manufacturer of consumer products
distributed in U.S. commerce, Aqua Leisure
is subject to the Commission’s jurisdiction.
24. In settlement of Staff’s allegations,
Aqua Leisure consents to the entry of the
attached Order (‘‘Order’’) as set forth below,
and will pay a civil penalty in the amount
of six hundred fifty thousand dollars
($650,000.00) (the ‘‘Settlement Amount’’),
two hundred fifty thousand ($250,000.00) of
which will be paid within twenty (20) days
of the date this Order becomes final, and the
remaining four hundred thousand
($400,000.00) of which will be paid within
one hundred twenty (120) days of the date
this Order becomes final. The payment shall
be made to the CPSC via www.pay.gov.
25. Aqua Leisure warrants that it has
reviewed its financial situation and that it
currently is solvent within the meaning of 11
U.S.C. §§ 547(b)(3) and 548(a)(1)(B)(ii)(I), and
shall remain solvent following payment to
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the United States of the Settlement Amount.
Further, the parties warrant that, in
evaluating whether to execute this
Agreement, they (a) have intended that the
mutual promises, covenants, and obligations
set forth constitute a contemporaneous
exchange for new value given to Aqua
Leisure, within the meaning of 11 U.S.C.
§ 547(c)(1), and (b) conclude that these
mutual promises, covenants and obligations
do, in fact, constitute such contemporaneous
exchange. Further, the parties warrant that
the mutual promises, covenants, and
obligations set forth herein are intended to,
and do, in fact, represent a reasonably
equivalent exchange of value that is not
intended to hinder, delay, or defraud any
entity to which Aqua Leisure was or became
indebted to on or after the date of transfer,
within the meaning of 11 U.S.C. § 548(a)(1).
26. If within 91 days of the effective date
of this Agreement or of any payment made
under this Agreement, Aqua Leisure
commences, or a third party commences, any
case, proceeding, or other action under any
law relating to bankruptcy, insolvency,
reorganization, or relief of debtors (a) seeking
to have any order for relief of Aqua Leisure’s
debt’s, or seeking to adjudicate Aqua Leisure
as bankrupt or insolvent; or (b) seeking
appointment of a receiver, trustee, custodian,
or other similar official for Aqua Leisure or
for all or any substantial part of Aqua
Leisure’s assets, Aqua Leisure agrees as
follows:
a. Aqua Leisure’s obligations under this
Agreement may not be avoided pursuant to
11 U.S.C. § 547, and Aqua Leisure shall not
argue or otherwise take the position in any
such case, proceeding, or action that: (i) Aqua
Leisure’s obligations under this Agreement
may be avoided under 11 U.S.C. § 547; (ii)
Aqua Leisure was insolvent at the time this
Agreement was entered into, or became
insolvent as a result of the payment made to
the United States; or (iii) mutual promises,
covenants, and obligations set forth in this
Agreement do not constitute a
contemporaneous exchange for new value
given to Aqua Leisure.
b. If Aqua Leisure’s obligations under this
Agreement are avoided for any reason,
including, but not limited to, through the
exercise of a trustee’s avoidance powers
under the Bankruptcy Code, the United
States, at its sole option, may rescind the
releases in this Agreement and bring any
civil and/or administrative claim, action or
proceeding against Aqua Leisure. Aqua
Leisure agrees that (i) any such action or
proceeding brought by the United States
seeking payment according to the Order set
forth herein are enforcement actions that are
not subject to an ‘‘automatic stay’’ pursuant
to 11 U.S.C. § 362(a) as a result of the action,
case or proceedings described in the first
clause of this Paragraph and Aqua Leisure
shall not argue or otherwise contend that the
United States’ action or proceeding is subject
to an automatic stay and therefore barred; (ii)
Aqua Leisure shall not plead, argue or
otherwise raise any defenses under the
theories of statute of limitations, laches,
estoppels, or similar theories, to any such
civil or administrative claims, actions or
proceedings that are brought by the United
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States within 10 calendar days of written
notification to Aqua Leisure that the releases
have been rescinded pursuant to this
Paragraph; and (iii) the United States has a
valid claim against Aqua Leisure in the
amount of $1.875 million and the United
States may pursue its claim in the case,
action or proceeding referenced in the first
clause of this Paragraph, as well as in any
other case, action or proceeding.
c. The agreements in Paragraphs 26(a) and
26(b) shall apply only when the
circumstances described in Paragraph 26
exist. Aqua Leisure acknowledges that the
agreements, restrictions and claim
enhancements in this Paragraph are provided
in exchange for valuable consideration
provided in this Agreement.
27. The parties further agree that if Aqua
Leisure fails to make timely payments as
agreed to in paragraph 24, such conduct will
be considered a violation of this Agreement
and Order.
28. Subject to Paragraphs 12 and 13, above,
the Agreement is a full and complete
resolution between Staff and Aqua Leisure,
and its parents, shareholders, divisions,
subdivisions, subsidiaries, partners, sister
companies and their successors and assigns
of all claims for civil penalties that have been
or could have been asserted based on the
facts contained in Staff’s allegations above.
29. The parties enter into this Agreement
for settlement purposes only. The Agreement
does not constitute an admission by Aqua
Leisure, or a determination by the
Commission, that Aqua Leisure violated the
CPSA’s reporting requirements.
30. Upon 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 C.F.R. § 1118.20(e). If the Commission
does not receive any written request not to
accept the Agreement within fifteen (15)
calendar days, the Agreement shall be
deemed finally accepted on the 16th calendar
day after the date it is published in the
Federal Register, in accordance with 16
C.F.R. § 1118.20(f).
31. Upon the Commission’s final
acceptance of the Agreement and issuance of
the Order, Aqua Leisure knowingly,
voluntarily, and completely waives any
rights it may have in this matter to the
following: (a) an administrative or judicial
hearing; (b) judicial review or other challenge
or contest of the Commission’s actions; (c) a
determination by the Commission of whether
Aqua Leisure 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.
32. The Commission may publicize the
terms of the Agreement and the final Order.
33. The Agreement and the final Order
shall apply to, and be binding upon, Aqua
Leisure, and each of its successors and/or
assigns, until the obligation described in
paragraph 24 has been fulfilled.
34. The Commission issues the final Order
under the provisions of the CPSA, and a
violation of the final Order may subject Aqua
Leisure, and each of its successors and/or
assigns, to appropriate legal action.
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Federal Register / Vol. 77, No. 201 / Wednesday, October 17, 2012 / Notices
service of the Commission’s Order upon
counsel for Aqua Leisure, and the remaining
four hundred thousand ($400,000.00) paid
within one hundred twenty (120) days of
service. The payments shall be made
electronically to the CPSC via www.pay.gov.
Upon the failure of Aqua Leisure to make the
foregoing payments when due, interest on the
unpaid amount shall accrue and be paid by
Aqua Leisure at the federal legal rate of
interest set forth at 28 U.S.C. § 1961(a) and
(b). If Aqua Leisure fails to make such
payments as set forth in the Agreement, such
conduct will be considered a violation of this
Agreement and Order.
Provisionally accepted and provisional
Order issued on the 11th day of October,
2012.
BY ORDER OF THE COMMISSION:
lllllllllllllllllllll
Todd A. Stevenson, Secretary
U.S. Consumer Product Safety Commission
U.S. CONSUMER PRODUCT SAFETY
COMMISSION STAFF
Cheryl A. Falvey
General Counsel
Mary B. Murphy
Assistant General Counsel
Division of Compliance
Dated: 9/19/12
By: lllllllllllllllllll
Jennifer W. Feinberg
Trial Attorney
Division of Compliance
Office of the General Counsel
Federal Acquisition Regulation;
Information Collection; Pollution
Prevention and Right-to-Know
Information (FAR 52.223–5)
UNITED STATES OF AMERICA
CONSUMER PRODUCT SAFETY
COMMISSION
In the Matter of: Aqua-Leisure Industries, Inc.
CPSC Docket No.: 13–C0001
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35. The Agreement may be used in
interpreting the final Order. Understandings,
agreements, representations, or
interpretations apart from those contained in
the Agreement and the Order may not be
used to vary or contradict the terms or the
Agreement and the final Order. The
Agreement shall not be waived, amended,
modified, or otherwise altered without
written agreement thereto, executed by the
party against whom such waiver,
amendment, modification, or alteration is
sought to be enforced.
36. If any provision of the Agreement or
the final Order is held to be illegal, invalid,
or unenforceable under present or future
laws effective during the terms of the
Agreement and the final Order, such
provision shall be fully severable. The
balance of the Agreement and the final Order
shall remain in full force and effect, unless
the Commission and Aqua Leisure agree that
severing the provision materially affects the
purpose of the Agreement and final Order.
37. This Agreement may be signed in
counterparts.
AQUA-LEISURE INDUSTRIES, INC.
Dated: 8/21/12
By: lllllllllllllllllll
Steven Berenson, CEO
Aqua-Leisure Industries, Inc.
Dated: 8/21/12
By: lllllllllllllllllll
George Gigounas, Esq.
Counsel to Aqua-Leisure Industries, Inc.
DLA Piper
San Francisco, CA
SUMMARY:
ORDER
Upon consideration of the Agreement
entered into between Aqua-Leisure
Industries, Inc. (‘‘Aqua Leisure’’), and U.S.
Consumer Product Safety Commission
(‘‘Commission’’) staff, and the Commission
having jurisdiction over the subject matter
and over Aqua Leisure, and it appearing that
the Agreement and the Order are in the
public interest, it is
ORDERED that the Agreement be, and is,
hereby, accepted; and it is
FURTHER ORDERED, that Aqua Leisure shall
pay a civil penalty in the total amount of six
hundred fifty thousand dollars ($650,000.00),
with two hundred fifty thousand dollars
($250,000.00) paid within twenty (20) days of
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[FR Doc. 2012–25507 Filed 10–16–12; 8:45 am]
BILLING CODE 6355–01–P
DEPARTMENT OF DEFENSE
GENERAL SERVICES
ADMINISTRATION
NATIONAL AERONAUTICS AND
SPACE ADMINISTRATION
[Docket 2012–0076; Sequence 36; OMB
Control No. 9000–0147]
Department of Defense (DOD),
General Services Administration (GSA),
and National Aeronautics and Space
Administration (NASA).
ACTION: Notice of request for public
comments regarding an extension to an
existing OMB clearance.
AGENCY:
Under the provisions of the
Paperwork Reduction Act, the
Regulatory Secretariat will be
submitting to the Office of Management
and Budget (OMB) a request to review
and approve an extension of a
previously approved information
collection requirement concerning
pollution prevention and right-to-know
information.
Public comments are particularly
invited on: Whether this collection of
information is necessary for the proper
performance of functions of the Federal
Acquisition Regulations (FAR), and
whether it will have practical utility;
whether our estimate of the public
burden of this collection of information
is accurate, and based on valid
assumptions and methodology; ways to
enhance the quality, utility, and clarity
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63803
of the information to be collected; and
ways in which we can minimize the
burden of the collection of information
on those who are to respond, through
the use of appropriate technological
collection techniques or other forms of
information technology.
DATES: Submit comments on or before
December 17, 2012.
ADDRESSES: Submit comments
identified by Information Collection
9000–0147, Pollution Prevention and
Right-to-Know Information by any of the
following methods:
• Regulations.gov: https://
www.regulations.gov.
Submit comments via the Federal
eRulemaking portal by searching the
OMB control number. Select the link
‘‘Submit a Comment’’ that corresponds
with ‘‘Information Collection 9000–
0147, Pollution Prevention and Right-toKnow Information’’. Follow the
instructions provided at the ‘‘Submit a
Comment’’ screen. Please include your
name, company name (if any), and
‘‘Information Collection 9000–0147,
Pollution Prevention and Right-to-Know
Information’’ on your attached
document.
• Fax: 202–501–4067.
• Mail: General Services
Administration, Regulatory Secretariat
(MVCB), 1275 First Street NE.,
Washington, DC 20417. ATTN: Hada
Flowers/IC 9000–0147, Pollution
Prevention and Right-to-Know
Information.
Instructions: Please submit comments
only and cite Information Collection
9000–0147, Pollution Prevention and
Right-to-Know Information, in all
correspondence related to this
collection. All comments received will
be posted without change to https://
www.regulations.gov, including any
personal and/or business confidential
information provided.
FOR FURTHER INFORMATION CONTACT:
Marissa Petrusek, Procurement Analyst,
Office of Acquisition Policy, GSA, (202)
501–0136 or email
marissa.petrusek@gsa.gov.
SUPPLEMENTARY INFORMATION:
A. Purpose
As implemented in Federal
Acquisition Regulation (FAR) Subpart
23.10, Executive Order 13514, Federal
Leadership in Environmental, Energy,
and Economic Performance, signed on
October 5, 2009 (74 FR 52117, October
8, 2009) and Executive Order 13423,
Strengthening Federal Environmental,
Energy, and Transportation
Management, signed on January 24,
2007 (72 FR 3919, January 26, 2007),
mandates compliance with right-to-
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]]>Agencies
[Federal Register Volume 77, Number 201 (Wednesday, October 17, 2012)]
[Notices]
[Pages 63801-63803]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-25507]
[[Page 63801]]
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CONSUMER PRODUCT SAFETY COMMISSION
[CPSC Docket No. 13-C0001]
Aqua-Leisure Industries, Inc., Provisional Acceptance of a
Settlement Agreement and Order
AGENCY: Consumer Product Safety Commission.
ACTION: Notice.
-----------------------------------------------------------------------
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
Aqua-Leisure Industries, Inc., containing a civil penalty of
$650,000.00, 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 November 1, 2012.
ADDRESSES: Persons wishing to comment on this Settlement Agreement
should send written comments to the Comment 13-C0001, Office of the
Secretary, Consumer Product Safety Commission, 4330 East West Highway,
Room 820, Bethesda, Maryland 20814-4408.
FOR FURTHER INFORMATION CONTACT: Jennifer W. Feinberg, Trial Attorney,
Division of Compliance, Office of the General Counsel, Consumer Product
Safety Commission, 4330 East West Highway, Bethesda, Maryland 20814-
4408; telephone (301) 504-7843.
SUPPLEMENTARY INFORMATION: The text of the Agreement and Order appears
below.
Dated: October 12, 2012.
Todd A. Stevenson,
Secretary.
UNITED STATES OF AMERICA CONSUMER PRODUCT SAFETY COMMISSION
In the Matter of: Aqua-Leisure Industries, Inc.
CPSC Docket No.: 13-C0001
SETTLEMENT AGREEMENT AND ORDER
1. In accordance with 16 C.F.R. Sec. 1118.20, Aqua-Leisure
Industries, Inc. (``Aqua Leisure'') and staff (``Staff'') of the
United States Consumer Product Safety Commission (``Commission'' or
``CPSC'') hereby enter into this Settlement Agreement
(``Agreement'') under the Consumer Product Safety Act (``CPSA''), 15
U.S.C. Sec. Sec. 2051-2089. The Agreement and the attached Order
resolve Staff's allegations set forth below.
THE PARTIES
2. Staff is the staff of the Commission, an independent federal
regulatory agency established pursuant to, and responsible for,
enforcement of the CPSA.
3. Aqua Leisure is a privately-held company, organized and
existing under the laws of the state of Massachusetts, with its
principal office located at 525 Bodwell Street, Avon, Massachusetts
02322-1098.
STAFF ALLEGATIONS
4. The Subject Products are ``consumer products'' and, at all
relevant times, Aqua Leisure was a ``manufacturer'' of ``consumer
products,'' which were ``distribute[d] in commerce,'' as those terms
are defined or used in sections 3(a)(5), (8), and (11) of the CPSA,
15 U.S.C. Sec. 2052(3)(a)(5), (8), and (11).
5. The Subject Products are defective because the leg straps in
the seat of the inflatable baby boat can tear with normal use,
causing children to unexpectedly fall into or under the water,
posing a risk of drowning.
6. Aqua Leisure received its first complaint of sudden tearing
of the seat crotch of certain models of its inflatable baby boats in
2001, and announced a recall of 90,000 of those boats on November
28, 2001 (the ``2001 Recall''). The 2001 Recall disclosed that Aqua
Leisure and CPSC had received 12 reports of sudden tearing of the
seat, including four reports that children were submerged completely
under water before a caregiver was able to rescue the child.
7. For two years following the July 2001 recall, Staff monitored
Aqua Leisure's execution of its Corrective Action Plan. On July 14,
2003, Staff notified Aqua Leisure of its decision to close the case,
but reserved the right to reopen the matter if Staff determined that
the public had not been adequately protected from the risk of injury
presented by the product. Staff further advised that Aqua Leisure
had a ``continuing obligation to inform the Commission of defects
associated with this product * * *.''
8. After the 2001 Recall, the Firm continued to produce
different versions of the inflatable baby boats, which also became
the subject of consumer complaints. Between December 2002 and June
2009, Aqua Leisure distributed approximately 4 million of these
inflatable baby boats (``Subject Products'') in U.S. commerce. The
Subject Products came in 18 different models, and sold for
approximately $8 to $15 each through nationwide retailers.
9. Between July 14, 2003, and July 31, 2006, Aqua Leisure became
aware of 17 incidents in which these post-2001 Recall inflatable
baby boat seats ``fell out''; ``ripped''; ``failed''; ``tore'';
``split''; and/or ``separated,'' including four incidents in which a
baby boat seat ripped, causing children to fall into the water
unexpectedly.
10. By July 2006, Aqua Leisure had information that the leg
straps of the Subject Products were not being produced in accordance
with the width and thickness specifications of the replacement
product that had been evaluated by Staff as a part of the 2001
Recall and Corrective Action Plan.
11. In August 2008, Aqua Leisure senior executives raised
concerns internally about a ``potential problem'' with the Subject
Products, and began investigating the Subject Products and
contemplating its obligation to report and the possibility of
enforcement action by the CPSC. Aqua Leisure did not report to the
CPSC at that time, however.
12. On October 31, 2008, CPSC Staff notified Aqua Leisure of an
incident involving a 6-month-old girl who was completely submerged
in a pool when the bottom of her inflatable baby boat seat ``broke
completely.'' However, Aqua Leisure had previously received notice
of this incident on July 25, 2008 yet the firm took no steps to
report to the CPSC.
13. In addition, by October 31, 2008, Aqua Leisure was aware of
at least 24 consumer complaints regarding the seats of the Subject
Products since the 2001 Recall, including nine reports in which
children fell through the Subject Products suddenly and were
completely submerged underwater.
14. Aqua Leisure waited until March 12, 2009 to report to the
CPSC, just hours before the publication of a news story by a Boston
news team about problems with the Subject Products and Aqua
Leisure's handling of complaints and potential failure to report to
the Commission.
15. Aqua Leisure's initial report to the Commission on March 12,
2009, and its subsequent Full Report on April 17, 2009, incorrectly
reported the scope and severity of the hazard: both reports
identified only four incidents and only one model of boat affected
by the potential problem, instead of the actual 28 complaints
received for 18 different models.
16. On May 21, 2009, Aqua Leisure filed a Supplemental Full
Report in which it reported that the Firm had received at least 28
consumer complaints regarding 18 different models of baby boats.
17. On July 2, 2009, Aqua Leisure announced a recall for the
Subject Products. The recall disclosed 31 reports of inflatable baby
boat seats tearing, causing children to fall into or under the
water.
18. Although well before May 21, 2009, Aqua Leisure had obtained
sufficient information to reasonably support the conclusion that the
Subject Products contained a defect that could create a substantial
product hazard, or created an unreasonable risk of serious injury or
death, Aqua Leisure failed 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. Sec. 2064(b)(3) and (4). In failing to inform the
Commission immediately of the defect or advising that the defect
involved the Subject Products, Aqua Leisure knowingly violated
section 19(a)(4) of the CPSA, 15 U.S.C. Sec. 2068(a)(4), as the
term ``knowingly'' is defined in section 20(d) of the CPSA, 15
U.S.C. Sec. 2069(d).
19. Pursuant to section 20 of the CPSA, 15 U.S.C. Sec. 2069,
Aqua Leisure is subject to civil penalties for its knowing failure
to report, as required under section 15(b) of the CPSA, 15 U.S.C.
Sec. 2064(b).
RESPONSE OF AQUA LEISURE
20. The Firm denies staff's allegations that it knew that the
Subject Products contained
[[Page 63802]]
defects which could create a substantial product hazard pursuant to
section 15(a) of the CPSA, 15 U.S.C. 2064(a), and further denies
that it knowingly violated the reporting requirements of section
15(b) of the CPSA, 15 U.S.C. 2064(b).
21. Like all inflatable pool toys, the Subject Products degrade
over time. Section 1115.6 of Title 16 of the Code of Federal
Regulations directs the Commission to consider, among other things,
``the level of exposure of consumers to the risk'' before
determining that a reportable product defect exists. The reported
failure rate for Subject Product leg straps was 0.0000063%. Of
millions of units sold, Aqua Leisure received only 6 consumer
reports (including suspect reports) in 2004, only 2 reports in 2005,
only 7 reports in 2006, 3 in 2007, and 5 in 2008. The number of
substantiated injuries is zero.
22. In addition, Section 1115.4 of title 15 of the Code of
Federal Regulations requires the Commission to ``consider, as
appropriate: * * * the adequacy of warnings and instructions to
mitigate such risk'' before it determines that a product is
defective. Each baby boat is accompanied by a warning that instructs
parents to supervise their children, as follows: ``This is not a
life saving device. Do not leave child unattended while in use. Only
to be used in water in which the child is within its depth and under
adult supervision. NEVER leave a child unattended. DO NOT
overinflate or use high pressure air to inflate. Under NO
circumstances should a child be left in or around water unless a
competent adult swimmer is present supervising the child. DO NOT use
with a baby who cannot sit confidently. The possibility DOES exist
that a baby could tip the unit over. To reduce the risk of this
happening, the water must be deep enough so that the baby cannot
touch the bottom. Always exercise caution when babies are teething
as they could puncture the baby boat. Do not give any playing
accessories that have the potential to damage this product. Not
suitable for children under 6 months.'' For these reasons, Aqua
Leisure did not believe the leg straps tears were reportable events
under Section 15(b).
AGREEMENT OF THE PARTIES
23. For purposes of this Agreement, as a manufacturer of
consumer products distributed in U.S. commerce, Aqua Leisure is
subject to the Commission's jurisdiction.
24. In settlement of Staff's allegations, Aqua Leisure consents
to the entry of the attached Order (``Order'') as set forth below,
and will pay a civil penalty in the amount of six hundred fifty
thousand dollars ($650,000.00) (the ``Settlement Amount''), two
hundred fifty thousand ($250,000.00) of which will be paid within
twenty (20) days of the date this Order becomes final, and the
remaining four hundred thousand ($400,000.00) of which will be paid
within one hundred twenty (120) days of the date this Order becomes
final. The payment shall be made to the CPSC via www.pay.gov.
25. Aqua Leisure warrants that it has reviewed its financial
situation and that it currently is solvent within the meaning of 11
U.S.C. Sec. Sec. 547(b)(3) and 548(a)(1)(B)(ii)(I), and shall
remain solvent following payment to the United States of the
Settlement Amount. Further, the parties warrant that, in evaluating
whether to execute this Agreement, they (a) have intended that the
mutual promises, covenants, and obligations set forth constitute a
contemporaneous exchange for new value given to Aqua Leisure, within
the meaning of 11 U.S.C. Sec. 547(c)(1), and (b) conclude that
these mutual promises, covenants and obligations do, in fact,
constitute such contemporaneous exchange. Further, the parties
warrant that the mutual promises, covenants, and obligations set
forth herein are intended to, and do, in fact, represent a
reasonably equivalent exchange of value that is not intended to
hinder, delay, or defraud any entity to which Aqua Leisure was or
became indebted to on or after the date of transfer, within the
meaning of 11 U.S.C. Sec. 548(a)(1).
26. If within 91 days of the effective date of this Agreement or
of any payment made under this Agreement, Aqua Leisure commences, or
a third party commences, any case, proceeding, or other action under
any law relating to bankruptcy, insolvency, reorganization, or
relief of debtors (a) seeking to have any order for relief of Aqua
Leisure's debt's, or seeking to adjudicate Aqua Leisure as bankrupt
or insolvent; or (b) seeking appointment of a receiver, trustee,
custodian, or other similar official for Aqua Leisure or for all or
any substantial part of Aqua Leisure's assets, Aqua Leisure agrees
as follows:
a. Aqua Leisure's obligations under this Agreement may not be
avoided pursuant to 11 U.S.C. Sec. 547, and Aqua Leisure shall not
argue or otherwise take the position in any such case, proceeding,
or action that: (i) Aqua Leisure's obligations under this Agreement
may be avoided under 11 U.S.C. Sec. 547; (ii) Aqua Leisure was
insolvent at the time this Agreement was entered into, or became
insolvent as a result of the payment made to the United States; or
(iii) mutual promises, covenants, and obligations set forth in this
Agreement do not constitute a contemporaneous exchange for new value
given to Aqua Leisure.
b. If Aqua Leisure's obligations under this Agreement are
avoided for any reason, including, but not limited to, through the
exercise of a trustee's avoidance powers under the Bankruptcy Code,
the United States, at its sole option, may rescind the releases in
this Agreement and bring any civil and/or administrative claim,
action or proceeding against Aqua Leisure. Aqua Leisure agrees that
(i) any such action or proceeding brought by the United States
seeking payment according to the Order set forth herein are
enforcement actions that are not subject to an ``automatic stay''
pursuant to 11 U.S.C. Sec. 362(a) as a result of the action, case
or proceedings described in the first clause of this Paragraph and
Aqua Leisure shall not argue or otherwise contend that the United
States' action or proceeding is subject to an automatic stay and
therefore barred; (ii) Aqua Leisure shall not plead, argue or
otherwise raise any defenses under the theories of statute of
limitations, laches, estoppels, or similar theories, to any such
civil or administrative claims, actions or proceedings that are
brought by the United States within 10 calendar days of written
notification to Aqua Leisure that the releases have been rescinded
pursuant to this Paragraph; and (iii) the United States has a valid
claim against Aqua Leisure in the amount of $1.875 million and the
United States may pursue its claim in the case, action or proceeding
referenced in the first clause of this Paragraph, as well as in any
other case, action or proceeding.
c. The agreements in Paragraphs 26(a) and 26(b) shall apply only
when the circumstances described in Paragraph 26 exist. Aqua Leisure
acknowledges that the agreements, restrictions and claim
enhancements in this Paragraph are provided in exchange for valuable
consideration provided in this Agreement.
27. The parties further agree that if Aqua Leisure fails to make
timely payments as agreed to in paragraph 24, such conduct will be
considered a violation of this Agreement and Order.
28. Subject to Paragraphs 12 and 13, above, the Agreement is a
full and complete resolution between Staff and Aqua Leisure, and its
parents, shareholders, divisions, subdivisions, subsidiaries,
partners, sister companies and their successors and assigns of all
claims for civil penalties that have been or could have been
asserted based on the facts contained in Staff's allegations above.
29. The parties enter into this Agreement for settlement
purposes only. The Agreement does not constitute an admission by
Aqua Leisure, or a determination by the Commission, that Aqua
Leisure violated the CPSA's reporting requirements.
30. Upon 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 C.F.R. Sec. 1118.20(e). If the Commission does not
receive any written request not to accept the Agreement within
fifteen (15) calendar days, the Agreement shall be deemed finally
accepted on the 16th calendar day after the date it is published in
the Federal Register, in accordance with 16 C.F.R. Sec. 1118.20(f).
31. Upon the Commission's final acceptance of the Agreement and
issuance of the Order, Aqua Leisure knowingly, voluntarily, and
completely waives any rights it may have in this matter to the
following: (a) an administrative or judicial hearing; (b) judicial
review or other challenge or contest of the Commission's actions;
(c) a determination by the Commission of whether Aqua Leisure 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.
32. The Commission may publicize the terms of the Agreement and
the final Order.
33. The Agreement and the final Order shall apply to, and be
binding upon, Aqua Leisure, and each of its successors and/or
assigns, until the obligation described in paragraph 24 has been
fulfilled.
34. The Commission issues the final Order under the provisions
of the CPSA, and a violation of the final Order may subject Aqua
Leisure, and each of its successors and/or assigns, to appropriate
legal action.
[[Page 63803]]
35. The Agreement may be used in interpreting the final Order.
Understandings, agreements, representations, or interpretations
apart from those contained in the Agreement and the Order may not be
used to vary or contradict the terms or the Agreement and the final
Order. The Agreement shall not be waived, amended, modified, or
otherwise altered without written agreement thereto, executed by the
party against whom such waiver, amendment, modification, or
alteration is sought to be enforced.
36. If any provision of the Agreement or the final Order is held
to be illegal, invalid, or unenforceable under present or future
laws effective during the terms of the Agreement and the final
Order, such provision shall be fully severable. The balance of the
Agreement and the final Order shall remain in full force and effect,
unless the Commission and Aqua Leisure agree that severing the
provision materially affects the purpose of the Agreement and final
Order.
37. This Agreement may be signed in counterparts.
AQUA-LEISURE INDUSTRIES, INC.
Dated: 8/21/12
By:--------------------------------------------------------------------
Steven Berenson, CEO
Aqua-Leisure Industries, Inc.
Dated: 8/21/12
By:--------------------------------------------------------------------
George Gigounas, Esq.
Counsel to Aqua-Leisure Industries, Inc.
DLA Piper
San Francisco, CA
U.S. CONSUMER PRODUCT SAFETY COMMISSION STAFF
Cheryl A. Falvey
General Counsel
Mary B. Murphy
Assistant General Counsel
Division of Compliance
Dated: 9/19/12
By:--------------------------------------------------------------------
Jennifer W. Feinberg
Trial Attorney
Division of Compliance
Office of the General Counsel
UNITED STATES OF AMERICA CONSUMER PRODUCT SAFETY COMMISSION
In the Matter of: Aqua-Leisure Industries, Inc.
CPSC Docket No.: 13-C0001
ORDER
Upon consideration of the Agreement entered into between Aqua-
Leisure Industries, Inc. (``Aqua Leisure''), and U.S. Consumer
Product Safety Commission (``Commission'') staff, and the Commission
having jurisdiction over the subject matter and over Aqua Leisure,
and it appearing that the Agreement and the Order are in the public
interest, it is
ORDERED that the Agreement be, and is, hereby, accepted; and it
is
FURTHER ORDERED, that Aqua Leisure shall pay a civil penalty in
the total amount of six hundred fifty thousand dollars
($650,000.00), with two hundred fifty thousand dollars ($250,000.00)
paid within twenty (20) days of service of the Commission's Order
upon counsel for Aqua Leisure, and the remaining four hundred
thousand ($400,000.00) paid within one hundred twenty (120) days of
service. The payments shall be made electronically to the CPSC via
www.pay.gov. Upon the failure of Aqua Leisure to make the foregoing
payments when due, interest on the unpaid amount shall accrue and be
paid by Aqua Leisure at the federal legal rate of interest set forth
at 28 U.S.C. Sec. 1961(a) and (b). If Aqua Leisure fails to make
such payments as set forth in the Agreement, such conduct will be
considered a violation of this Agreement and Order.
Provisionally accepted and provisional Order issued on the 11th
day of October, 2012.
BY ORDER OF THE COMMISSION:
-----------------------------------------------------------------------
Todd A. Stevenson, Secretary
U.S. Consumer Product Safety Commission
[FR Doc. 2012-25507 Filed 10-16-12; 8:45 am]
BILLING CODE 6355-01-P
