Forman Mills, Inc., Provisional Acceptance of a Settlement Agreement and Order, 18015-18018 [2014-07099]

Agencies

• Consumer Product Safety Commission

[Federal Register Volume 79, Number 61 (Monday, March 31, 2014)]
[Notices]
[Pages 18015-18018]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-07099]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 14-C0001]


Forman Mills, 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 
Forman Mills, Inc., containing a civil penalty of $600,000.00, 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

[[Page 18016]]

the Office of the Secretary by April 15, 2014.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 14-C0001 Office of the 
Secretary, Consumer Product Safety Commission, 4330 East West Highway, 
Room 820, Bethesda, Maryland 20814-4408.

FOR FURTHER INFORMATION CONTACT: Sean R. Ward, Trial Attorney, Division 
of Compliance, Office of the General Counsel, Consumer Product Safety 
Commission, 4330 East West Highway, Bethesda, Maryland 20814-4408; 
telephone (301) 504-7602.

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

    Dated: March 26, 2014.
Todd A. Stevenson,
Secretary.

UNITED STATES OF AMERICA CONSUMER PRODUCT SAFETY COMMISSION

    In the Matter of: Forman Mills, Inc., CPSC Docket No.: 14-C0001

SETTLEMENT AGREEMENT

    1. In accordance with the Consumer Product Safety Act (CPSA), 15 
U.S.C. 2051-2089 and 16 CFR 1118.20, Forman Mills, Inc. (Forman Mills), 
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 this 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. Forman Mills is a corporation, organized and existing under the 
laws of the state of Pennsylvania, with its principal corporate office 
located in Pennsauken, NJ. Forman Mills is a retailer, selling a wide 
selection of low-priced designer clothing.

STAFF CHARGES

    4. Between June 2007 and February 2010, Forman Mills sold and/or 
held for sale four series of Garments, consisting of approximately 
2,105 children's upper outerwear garments with drawstrings (Garments) 
to consumers. Forman Mills sold the Garments to consumers and/or held 
the Garments for sale with the intent to ultimately sell to consumers. 
The Garments were sold at retail stores in the United States for 
between $5 and $100.
    5. The Garments are ``consumer products'' and, at all relevant 
times, Forman Mills was a ``retailer'' of these consumer products, 
which were ``distributed in commerce,'' as those terms are defined or 
used in sections 3(a)(5), (8), and (13) of the CPSA, 15 U.S.C. 
2052(a)(5), (8), and (13).
    6. In February 1996, staff issued the Guidelines for Drawstrings on 
Children's Upper Outerwear (Guidelines) to help prevent children from 
strangling or entangling on neck and waist drawstrings. The Guidelines 
state that drawstrings can cause, and have caused, injuries and deaths 
when they catch on items, such as playground equipment, bus doors, or 
cribs. In the Guidelines, staff recommends that no children's upper 
outerwear in sizes 2T to 12 be manufactured or sold to consumers with 
hood and neck drawstrings.
    7. In June 1997, ASTM adopted a voluntary standard, ASTM F1816-97, 
incorporating the Guidelines. The Guidelines state that firms should be 
aware of the hazards associated with drawstrings and should ensure that 
garments they sell conform to the voluntary standard.
    8. On May 19, 2006, the Commission posted on its Web site a letter 
from the Commission's Director of the Office of Compliance directed to 
manufacturers, importers, and retailers of children's upper outerwear. 
The letter urges them to make certain that all children's upper 
outerwear sold in the United States complies with ASTM F1816-97. The 
letter also states that staff considers children's upper outerwear with 
drawstrings at the hood or neck area to be defective and to present a 
substantial risk of injury to young children under Federal Hazardous 
Substances Act (FHSA) section 15(c), 15 U.S.C. 1274(c). The letter 
references the CPSA's section 15(b), 15 U.S.C. 2064(b), reporting 
requirements.
    9. In April 2009, the Commission issued an Order wherein Forman 
Mills agreed to pay a civil penalty of $35,000 to settle staff's 
charges that the Firm failed to report children's upper outerwear 
products with drawstrings that it distributed in commerce. Throughout 
the course of that civil penalty matter, Forman Mills received repeated 
reminders about the drawstring hazards and applicable law.
    10. Forman Mills' distribution in commerce of the Garments did not 
comply with the 1996 staff Guidelines, ASTM F1816-97, or staff's May 
2006 defect notice, and posed a strangulation hazard to children.
    11. Forman Mills' distribution of three of the series of garments 
with drawstrings (Weeplay Kids, Lollytogs and 5 Star Apparel) occurred 
in part, during the same period of time as the investigation and 
negotiation of Forman Mills' 2009 civil penalty matter, which also 
involved garments with drawstrings.
    12. On January 6, 2009 (the unit count was revised February 14, 
2011), February 18, 2010, April 8, 2010, and May 27, 2010, the 
Commission and four U.S. importers announced four separate recalls of 
the Garments that were distributed in commerce by Forman Mills. Forman 
Mills was identified as a retailer of the Garments in one of the four 
press releases announcing the recalls.
    13. Based in part on information available through the sources set 
forth in paragraphs six through eight herein, Forman Mills had presumed 
and actual knowledge that the Garments distributed in commerce posed a 
strangulation hazard and presented a substantial risk of injury to 
children under FHSA section 15(c)(1), 15 U.S.C. 1274(c)(1). Forman 
Mills obtained information that reasonably supported the conclusion 
that the Garments contained defects that could create substantial 
product hazards or that the Garments created unreasonable risks of 
serious injury or death. Pursuant to CPSA sections 15(b)(3) and (4), 15 
U.S.C. 2064(b)(3) and (4), Forman Mills was required to inform the 
Commission immediately of these defects and risks.
    14. Despite having actual and presumed knowledge of the hazards and 
risks, Forman Mills did not file any report with the Commission 
regarding the Garments, as required by section 15(b) of the CPSA, 15 
U.S.C. Sec.  2064(b).
    15. Forman Mills knowingly and repeatedly failed to immediately 
inform the Commission about the Garments, as required by CPSA sections 
15(b)(3) and (4), 15 U.S.C. 2064(b)(3) and (4), and as the term 
``knowingly'' is defined in CPSA section 20(d), 15 U.S.C. 2069(d). 
These knowing failures violated CPSA section 19(a)(4), 15 U.S.C. 
2068(a)(4). Pursuant to CPSA section 20, 15 U.S.C. 2069, these knowing 
failures subjected Forman Mills to civil penalties.

FORMAN MILL'S RESPONSE

    16. This Agreement is in settlement of the staff's charges and does 
not constitute an admission by Forman Mills to the charges set forth in 
paragraphs 4 through 15, including, but not limited to, the charge that 
the

[[Page 18017]]

Garments contained a defect which could create a substantial product 
hazard or create an unreasonable risk of serious injury or death, and 
the contention that Forman Mills failed to notify the Commission in a 
timely manner, in accordance with section 15(b) of the CPSA, 15 U.S.C. 
2064(b).
    17. Forman Mills is not a manufacturer, but is a retailer of a wide 
range of products in many sizes, types, and styles including some 
children's garments. During the time period covered by the staff 
allegations, it purchased from thousands of vendors well over 100,000 
SKUs and more than 25 million garments annually. Like most retailers, 
Forman Mills required its suppliers to provide garments that complied 
fully with all relevant laws, regulations and standards, and relied on 
its suppliers to abide by these requirements.
    18. By December 2008, Forman Mills, rather than relying solely on 
suppliers to fulfill their contractual obligations, had instituted new 
buying, receiving and inventory control procedures to reduce the 
possibility that children's garments with drawstrings might end up on 
its shelves.
    19. All of the Garments cited by the staff in their allegations in 
paragraphs 4-15 above were purchased before those new procedures went 
into effect. In fact, CPSC knew about the firm's 2007 purchase of 
approximately 840 of those Garments by December 2008 when staff was 
negotiating a civil penalty settlement with Forman Mills. Staff decided 
not to pursue civil penalties regarding the subsequent violation at 
that time but reserved the right to reopen this matter and seek civil 
penalties should there be future violations. Forman Mills' denies that 
its buyers or other responsible personnel had either actual or 
constructive knowledge that it had purchased and sold the Garments 
until it was informed of that by the publically announced recalls on 
January 6, 2009, February 18, 2010, April 8, 2010, and May 27, 2010.
    20. By the time Forman Mills settled the previous civil penalty 
matter, most of the Garments were already sold. Forman Mills disputes 
any staff charge that it had knowledge or even a reasonable way to 
become aware of the remaining Garments, or of previous sales of the 
Garments. Because it could not reasonably have known about the 
existence of drawstrings in the Garments, Forman Mills denies the staff 
allegations that it in fact had an obligation to report and or 
``knowingly'' failed to report. Forman Mills has advised the Commission 
that it is unaware of any reports of incidents or injuries associated 
with the Garments
    21. Forman Mills enters into this agreement to settle this matter 
without the expense and likely disruptions of its business that might 
result from litigation. In settling this matter, Forman Mills does not 
admit any of the staff factual or legal allegations nor concede that a 
penalty in the amount agreed to is appropriate.

AGREEMENT OF THE PARTIES

    22. Under the CPSA, the Commission has jurisdiction over the matter 
involving the Garments described herein and over Forman Mills.
    23. In settlement of staff's charges, and to avoid the cost, 
distraction, delay, uncertainty, and inconvenience of protracted 
litigation or other proceedings, Forman Mills shall pay a civil penalty 
in the amount of six hundred thousand dollars ($600,000.00) within 
twenty (20) calendar days after receiving service of the Commission's 
final Order accepting the Agreement. The payment shall be made 
electronically to the Commission via: www.pay.gov.
    24. The parties enter into this Agreement for settlement purposes 
only. The Agreement does not constitute an admission by Forman Mills or 
a determination by the Commission that Forman Mills violated the CPSA.
    25. Following staff's receipt of this Agreement executed on behalf 
of Forman Mills, 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).
    26. This 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 this Agreement and service of the 
accepted Agreement upon Forman Mills; and (ii) the date of issuance of 
the final Order, this Agreement shall be in full force and effect and 
shall be binding upon the parties.
    27. Effective upon the later of: (i) The Commission's final 
acceptance of the Agreement and service of the accepted Agreement upon 
Forman Mills; and (ii) the date of issuance of the final Order, for 
good and valuable consideration, Forman Mills 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 Forman Mills 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.
     28. Forman Mills has already taken steps to reduce the possibility 
of the purchase and sale of children's garments with drawstrings and 
shall fully implement and maintain a compliance program designed to 
ensure compliance with the statutes and regulations enforced by the 
Commission. That program will include at a minimum, the following 
elements: (i) Written standards and policies; (ii) procedures for 
implementing corrective and preventive actions when compliance 
deficiencies or violations are identified; (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 applicable 
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) board 
oversight of compliance (if applicable); and (vii) retention of all 
compliance-related records for at least five (5) years after the 
Commission has issued the Final Order and availability of such records 
to staff upon request.
    29. Forman Mills shall maintain and enforce a system of internal 
controls and procedures designed to ensure that: (i) Information 
required to be disclosed by Forman Mills 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 Forman Mills' 
management of any significant deficiencies or material weaknesses in 
the design or operation of

[[Page 18018]]

such internal controls that are reasonably likely to adversely affect 
in any material respect Forman Mills' ability to record, process and 
report to the Commission in accordance with applicable law.
    30. Upon reasonable request of staff, Forman Mills shall provide 
written documentation of such improvements, processes, and controls, 
including, but not limited to, the effective dates of such 
improvements, processes, and controls. Forman Mills shall cooperate 
fully and truthfully with staff and shall make available all 
information, materials, and personnel deemed necessary by staff to 
evaluate Forman Mills' compliance with the terms of the Agreement.
    31. The parties acknowledge and agree that the Commission may make 
public disclosure of the terms of the Agreement and the Order.
    32. Forman Mills represents that the Agreement: (i) Is freely and 
voluntarily entered into, without any degree of duress or compulsion 
whatsoever; (ii) has been duly authorized; and (iii) constitutes the 
valid and binding obligation of Forman Mills, and each of its 
successors and/or assigns, enforceable against Forman Mills in 
accordance with its terms. The individuals signing the Agreement on 
behalf of Forman Mills represent and warrant that they are duly 
authorized by Forman Mills to execute the Agreement.
    33. The Commission signatories represent that they are signing the 
Agreement in their official capacities and that they are authorized to 
execute this Agreement.
    34. The Agreement is governed by the laws of the United States.
    35. The Agreement and the Order shall apply to, and be binding 
upon, Forman Mills and each of its successors, transferees, and 
assigns, and a violation of the Agreement or Order may subject Forman 
Mills and each of its successors, transferees, and assigns, to 
appropriate legal action.
    36. The Agreement and the Order constitute the complete agreement 
between the parties on the subject matter contained therein.
    37. 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 shall not, therefore, be construed against any party for that 
reason in any subsequent dispute.
    38. 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.
    39. 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 Forman Mills agree that severing the provision materially affects 
the purpose of the Agreement and Order.

Forman Mills, Inc.

Dated: March 11, 2014.
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Richard P. Forman,
CEO and President,
Forman Mills, Inc.,
1070 Thomas Busch Memorial Highway,
Pennsauken, NJ 08110.

Dated: March 12, 2014.
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Eric L. Stone,
Law Office of Eric Stone, LLC,
14524 Kings Grant St.,
North Potomac, MD 20878,
Counsel for Forman Mills, Inc.

U.S. Consumer Product Safety Commission Staff.

Stephanie Tsacoumis,
General Counsel,
Mary B. Murphy,
Assistant General Counsel.

Dated: March 12, 2014.
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Sean R. Ward,
Trial Attorney,
Division of Compliance,
Office of the General Counsel.

UNITED STATES OF AMERICA CONSUMER PRODUCT SAFETY COMMISSION

    In the Matter of: Forman Mills, Inc., CPSC Docket No.: 14-C0001

ORDER

    Upon consideration of the Settlement Agreement entered into between 
Forman Mills, Inc. (Forman Mills), and the U.S. Consumer Product Safety 
Commission (Commission), and the Commission having jurisdiction over 
the subject matter and over Forman Mills, 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 Forman Mills shall comply with the terms of 
the Settlement Agreement and shall pay a civil penalty of six hundred 
thousand dollars ($600,000.00) within twenty (20) calendar days after 
receiving service of the Commission's final Order accepting the 
Settlement Agreement. The payment shall be made electronically to the 
CPSC via: www.pay.gov. Upon the failure of Forman Mills to make the 
foregoing payment when due, interest on the unpaid amount shall accrue 
and be paid by Forman Mills at the federal legal rate of interest set 
forth at 28 U.S.C. 1961(a) and (b). If Forman Mills fails to make such 
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 26th day 
of March, 2014.

    By Order of the Commission:
Todd A. Stevenson,

Secretary, U.S. Consumer Product Safety Commission.

[FR Doc. 2014-07099 Filed 3-28-14; 8:45 am]
BILLING CODE 6355-01-P