Cinmar, LLC, Inc., Provisional Acceptance of a Settlement Agreement and Order, 33177-33179 [2014-13483]

Agencies

• Consumer Product Safety Commission

[Federal Register Volume 79, Number 111 (Tuesday, June 10, 2014)]
[Notices]
[Pages 33177-33179]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-13483]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 14-C0002]


Cinmar, LLC, Inc., Provisional Acceptance of a Settlement 
Agreement and Order

AGENCY: Consumer Product Safety Commission.

ACTION: Notice.

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SUMMARY: It is the policy of the Commission to publish settlements 
which it provisionally accepts under the Consumer Product Safety Act in 
the Federal Register in accordance with the terms of 16 CFR 1118.20(e). 
Published below is a provisionally-accepted Settlement Agreement with 
Cinmar, LLC, containing a civil penalty of $3,100,000.00, within twenty 
(20) days of service of the Commission's final Order accepting the 
Settlement Agreement.

DATES: Any interested person may ask the Commission not to accept this 
agreement or otherwise comment on its contents by filing a written 
request with the Office of the Secretary by June 25, 2014.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 14-C0002 Office of the 
Secretary, Consumer Product Safety Commission, 4330 East West Highway, 
Room 820, Bethesda, Maryland 20814-4408.

FOR FURTHER INFORMATION CONTACT: Kelly M. Moore, Trial Attorney, 
Division of Compliance, Office of the General Counsel, Consumer Product 
Safety Commission, 4330 East West Highway, Bethesda, Maryland 20814-
4408; telephone (301) 504-7447.

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

    Dated: June 5, 2014.
Todd A. Stevenson,
Secretary.

Settlement Agreement

    1. In accordance with the Consumer Product Safety Act (CPSA), 15 
U.S.C. 2051-2089 and 16 CFR 1118.20, Cinmar, LLC (Cinmar), and the U.S. 
Consumer Product Safety Commission (Commission), through its staff 
(staff), hereby enter into this Settlement Agreement (Agreement). The 
Agreement and the incorporated attached Order (Order) resolve staff's 
charges set forth below.

The Parties

    2. The Commission is an independent federal regulatory agency, 
established pursuant to, and responsible for, the enforcement of the 
CPSA. By executing the Agreement, staff is acting on behalf of the 
Commission, pursuant to 16 CFR 1118.20(b). The Commission issues the 
Order under the provisions of the CPSA.
    3. Cinmar (d/b/a Frontgate) is a limited liability company, 
organized and existing under the laws of the state of Delaware, with 
its principal corporate office located at 5566 West Chester Road, West 
Chester, OH 45069. Cinmar is a retailer of home furnishings and 
decorative household items.

Staff Charges

    4. Between November 2005 and July 2010, Cinmar sold approximately 
38,000 Frontgate foldaway closet two- and three-step ladders made of 
mahogany wood and designed for use in walk-in closets (Subject 
Products, or Ladders). Cinmar sold the Ladders to consumers nationwide 
for between $89.95 and $149.50.
    5. The Ladders are ``consumer products,'' and at all relevant 
times, Cinmar was a ``retailer'' of these consumer products, which were 
``distributed in commerce,'' as those terms are defined or used in 
sections 3(a)(5), (7) and (13), of the CPSA, 15 U.S.C. 2052(a)(5), (7) 
and (13).
    6. The Ladders are defective because the steps can break 
unexpectedly, posing a fall hazard to consumers.
    7. CPSC staff charges that Cinmar received notice of the defect 
shortly after Ladder sales began in November 2005. Between 2005 and 
2010, Cinmar received hundreds of reports of step breakage during first 
and early use, including reports of injuries to consumers. During that 
same time, Cinmar implemented design changes to eliminate the hazard 
posed by the Subject Products. Throughout this period, Cinmar also paid 
out claims filed by consumers who reported that they had been injured 
when the Ladders broke during use.
    8. CPSC staff charges that (i) by September 28, 2007, Cinmar had 
sufficient information that reasonably supported the conclusion that 
the Ladders contained a defect that could create a substantial product 
hazard or created an unreasonable risk of serious injury or death and 
(ii) that Cinmar was required to inform the Commission immediately of 
such defect or risk, as required by sections 15(b)(3) and (4) of the 
CPSA, 15 U.S.C. 2064(b)(3) and (4). By that date, Cinmar had received 
more than 600 Ladder returns due to breakage and had been notified of 
at least one personal injury lawsuit filed by a consumer alleging 
injury from a broken Ladder.
    9. CPSC staff charges that, when consumers contacted Cinmar 
regarding their broken Ladders, Cinmar routinely provided the consumers 
with replacement Ladders which Cinmar knew were just as likely to 
break.
    10. Despite having information regarding the Ladders' defect or 
risk, Cinmar failed to inform the Commission immediately, as required 
by sections 15(b)(3) and (4) of the CPSA, 15 U.S.C. 2064(b)(3) and (4).
    11. Cinmar did not file its Full Report with the Commission until 
July 29, 2010. By that time, more than 1,200 consumers had returned 
their Ladders to Cinmar, most citing breakage, and others citing 
cosmetic problems. Also by that time, Cinmar had received notice of at 
least two dozen injuries, one of which required surgery and another 
necessitated hospitalization.

[[Page 33178]]

    12. In failing to inform the Commission about the Subject Products 
immediately, Cinmar knowingly violated section 19(a)(4) of the CPSA, 15 
U.S.C. 2068(a)(4), as the term ``knowingly'' is defined in section 
20(d) of the CPSA, 15 U.S.C. 2069(d).
    13. Pursuant to section 20 of the CPSA, 15 U.S.C. 2069, Cinmar is 
subject to civil penalties for its knowing failure to report, as 
required by section 15(b) of the CPSA, 15 U.S.C. 2064(b).

Cinmar's Response

    14. Cinmar neither admits nor denies the charges set forth in 
paragraphs 4 through 13, including, but not limited to, the charge that 
the Ladders contained a defect which could create a substantial product 
hazard or created an unreasonable risk of serious injury or death, and 
the contention that Cinmar failed to notify the Commission in a timely 
manner, in accordance with section 15(b) of the CPSA, 15 U.S.C. 
2064(b).

Agreement of the Parties

    15. Under the CPSA, the Commission has jurisdiction over the matter 
involving the Ladders described herein and over Cinmar.
    16. In settlement of staff's charges, and to avoid the cost, 
distraction, delay, uncertainty, and inconvenience of protracted 
litigation or other proceedings, Cinmar shall pay a civil penalty in 
the amount of three million one hundred thousand dollars 
($3,100,000.00), which shall be due and payable within twenty (20) 
calendar days after receiving service of the Commission's final Order 
accepting the Agreement. All payments to be made under the Agreement 
shall constitute debts owing to the United States and shall be made by 
electronic wire transfer to the United States via: https://www.pay.gov.
    17. The parties agree that this settlement figure is predicated, 
among other things, upon the accuracy of oral and written 
representations of, and statements by, Cinmar and Cinmar's 
representatives (including representations and warranties set forth in 
the Agreement).
    18. The parties enter into the Agreement for settlement purposes 
only. The Agreement does not constitute an admission by Cinmar or a 
determination by the Commission that Cinmar violated the CPSA.
    19. Following staff's receipt of the Agreement executed on behalf 
of Cinmar, staff shall promptly submit the Agreement to the Commission 
for provisional acceptance. Promptly following provisional acceptance 
of the Agreement by the Commission, the Agreement shall be placed on 
the public record and published in the Federal Register, in accordance 
with the procedures set forth in 16 CFR 1118.20(e). If, within fifteen 
(15) calendar days, the Commission does not receive any written request 
not to accept the Agreement, the Agreement shall be deemed finally 
accepted on the sixteenth (16th) calendar day after the date the 
Agreement is published in the Federal Register, in accordance with 16 
CFR 1118.20(f).
    20. The Agreement is conditioned upon, and subject to, the 
Commission's final acceptance, as set forth above, and is subject to 
the provisions of 16 CFR 1118.20(h). Upon the later of: (i) The 
Commission's final acceptance of the Agreement and service of the 
accepted Agreement upon Cinmar, and (ii) the date of issuance of the 
final Order, the Agreement shall be in full force and effect and shall 
be binding upon the parties.
    21. Effective upon the later of: (i) The Commission's final 
acceptance of the Agreement and service of the accepted Agreement upon 
Cinmar, and (ii) the date of issuance of the final Order, for good and 
valuable consideration, Cinmar hereby expressly and irrevocably waives 
and agrees not to assert any past, present, or future rights to the 
following, in connection with the matter described in the Agreement: 
(a) An administrative or judicial hearing; (b) judicial review or other 
challenge or contest of the validity of the Order or of the 
Commission's actions; (c) a determination by the Commission of whether 
Cinmar failed to comply with the CPSA and the underlying regulations; 
(d) a statement of findings of fact and conclusions of law; and (e) any 
claims under the Equal Access to Justice Act.
    22. Cinmar shall implement and maintain a formal compliance program 
designed to ensure compliance with the statutes and regulations 
enforced by the Commission that, at a minimum, contains the following 
elements: (i) Written standards and policies; (ii) procedures for 
reviewing claims and reports for safety concerns and for implementing 
corrective and preventive actions when compliance deficiencies or 
violations are identified (including procedures to prevent defective 
products from being introduced into commerce); (iii) a mechanism for 
confidential employee reporting of compliance-related questions or 
concerns to either a compliance officer or to another senior manager 
with authority to act as necessary; (iv) effective communication of 
company compliance-related policies and procedures to all employees, 
through training programs, or otherwise; (v) senior manager 
responsibility for compliance and accountability for violations of the 
statutes and regulations enforced by the Commission; (vi) oversight of 
compliance by Cinmar's governing body; and (vii) retention of all 
compliance-related records for at least five (5) years, and 
availability of such records to staff upon request.
    23. Cinmar shall maintain and enforce a system of internal controls 
and procedures designed to ensure that: (i) Information required to be 
disclosed by Cinmar to the Commission is recorded, processed, and 
reported in accordance with applicable law; (ii) all reporting made to 
the Commission is timely, truthful, complete, and accurate; and (iii) 
prompt disclosure is made to Cinmar management of any significant 
deficiencies or material weaknesses in the design or operation of such 
internal controls that are reasonably likely to adversely affect in any 
material respect Cinmar's ability to record, process, and report to the 
Commission in accordance with applicable law.
    24. Upon request of staff, Cinmar shall provide written 
documentation of such improvements, processes, and controls, including, 
but not limited to, the effective dates of such improvements, 
processes, and controls. Cinmar shall cooperate fully and truthfully 
with staff and shall make available all information, materials, and 
personnel deemed necessary by staff to evaluate Cinmar's compliance 
with the terms of the Agreement.
    25. The parties acknowledge and agree that the Commission may make 
public disclosure of the terms of the Agreement and the Order.
    26. Cinmar represents that the Agreement: (i) Is entered into 
freely and voluntarily, without any degree of duress or compulsion 
whatsoever; (ii) has been duly authorized; and (iii) constitutes the 
valid and binding obligation of Cinmar, and each of its successors and/
or assigns, enforceable against Cinmar in accordance with the 
Agreement's terms. The individuals signing the Agreement on behalf of 
Cinmar represent and warrant that they are duly authorized by Cinmar to 
execute the Agreement.
    27. The Commission signatories represent that they are signing the 
Agreement in their official capacities and that they are authorized to 
execute the Agreement.
    28. The Agreement is governed by the laws of the United States.
    29. The Agreement and the Order shall apply to, and be binding 
upon,

[[Page 33179]]

Cinmar and each of its subsidiaries, successors, transferees, and 
assigns, and a violation of the Agreement or Order may subject Cinmar 
and each of its successors, transferees, and assigns to appropriate 
legal action.
    30. The Agreement and the Order constitute the complete agreement 
between the parties on the subject matter contained herein and therein.
    31. The Agreement may be used in interpreting the Order. 
Understandings, agreements, representations, or interpretations apart 
from those contained in the Agreement and the Order may not be used to 
vary or contradict their terms. For purposes of construction, the 
Agreement shall be deemed to have been drafted by both of the parties, 
and therefore, shall not be construed against any party for that reason 
in any subsequent dispute.
    32. The Agreement shall not be waived, amended, modified, or 
otherwise altered, except as in accordance with the provisions of 16 
CFR 1118.20(h). The Agreement may be executed in counterparts.
    33. If any provision of the Agreement or the Order is held to be 
illegal, invalid, or unenforceable under present or future laws 
effective during the terms of the Agreement and the Order, such 
provision shall be fully severable. The balance of the Agreement and 
the Order shall remain in full force and effect, unless the Commission 
and Cinmar agree that severing the provision materially affects the 
purpose of the Agreement and Order.

CINMAR, LLC

Dated: 5/27/2014

By:--------------------------------------------------------------------
H.R. Harvey,
President, Cinmar, LLC, 5566 West Chester Road, West Chester, OH 45069.

Dated: 5/28/2014

By:--------------------------------------------------------------------

Ivan J. Wasserman
Manatt, Phelps & Phillips, LLP, 700 12th Street NW., Suite 1100, 
Washington, DC 20005, Counsel for Cinmar, LLC.

U.S. CONSUMER PRODUCT SAFETY COMMISSION STAFF

Stephanie Tsacoumis
General Counsel.

Mary B. Murphy
Assistant General Counsel.

Dated: 5/28/2014

By:--------------------------------------------------------------------

Kelly Moore,
Trial Attorney, Division of Compliance, Attorney.

Order

    Upon consideration of the Settlement Agreement entered into between 
Cinmar, LLC (Cinmar), and the U.S. Consumer Product Safety Commission 
(Commission), and the Commission having jurisdiction over the subject 
matter and over Cinmar, and it appearing that the Settlement Agreement 
and the Order are in the public interest, it is
    ORDERED that the Settlement Agreement be, and is, hereby, accepted; 
and it is
    FURTHER ORDERED, that Cinmar shall comply with the terms of the 
Settlement Agreement and shall pay a civil penalty of $3,100,000.00, 
within twenty (20) calendar days after receiving service of the 
Commission's final Order accepting the Settlement Agreement. Upon 
failure of Cinmar to make the foregoing payment when due, interest on 
the unpaid amount shall accrue and be paid by Cinmar at the federal 
legal rate of interst set forth at 28 U.S.C. 1961(a) and (b). If Cinmar 
fails to make such a payment or to comply in full with any other 
provision as set forth in the Settlement Agreement, such conduct will 
be considered a violation of the Settlement Agreement and Order.
    Provisionally accepted and provisional Order issued on the 5th 
day of June, 2014.

By Order of the Commission.

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Todd A. Stevenson,
Secretary, U.S. Consumer Product Safety Commission.

[FR Doc. 2014-13483 Filed 6-9-14; 8:45 am]
BILLING CODE 6355-01-P