HMI Industries, Inc., Provisional Acceptance of a Settlement Agreement and Order, 38519-38522 [2014-15905]
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Federal Register / Vol. 79, No. 130 / Tuesday, July 8, 2014 / Notices
Foundation and the Observatory. We
have also prepared an EA titled,
‘‘Issuance of an Incidental Harassment
Authorization to Lamont Doherty Earth
Observatory to Take Marine Mammals
by Harassment Incidental to a Marine
Geophysical Survey in the Northwest
Atlantic Ocean, June–August, 2014,’’
and FONSI in accordance with NEPA
and NOAA Administrative Order 216–6.
We provided relevant environmental
information to the public through our
notice of proposed Authorization (79 FR
14779, March 17, 2014) and considered
public comments received prior to
finalizing our EA and deciding whether
or not to issue a Finding of No
Significant Impact (FONSI). We
concluded that issuance of an Incidental
Harassment Authorization would not
significantly affect the quality of the
human environment and have issued a
FONSI. Because of this finding, it is not
necessary to prepare an environmental
impact statement for the issuance of an
Authorization to the Observatory for
this activity. Our EA and FONSI for this
activity are available upon request (see
ADDRESSES).
Christopher J. Kirkpatrick, 202–418–
5964.
Dated: July 2, 2014.
Todd A. Stevenson,
Secretary.
Christopher J. Kirkpatrick,
Acting Secretary.
UNITED STATES OF AMERICA
CONTACT PERSON FOR MORE INFORMATION:
[FR Doc. 2014–15934 Filed 7–3–14; 11:15 am]
BILLING CODE 6351–01–P
CONSUMER PRODUCT SAFETY
COMMISSION
[CPSC Docket No. 14–C0003]
HMI Industries, Inc., Provisional
Acceptance of a Settlement Agreement
and Order
Consumer Product Safety
Commission.
ACTION: Notice.
AGENCY:
[FR Doc. 2014–15842 Filed 7–7–14; 8:45 am]
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 HMI
Industries, Inc., containing a civil
penalty of $725,000.00, within twenty
(20) days of service of the Commission’s
final Order accepting the Settlement
Agreement.1
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 July 23,
2014.
BILLING CODE 3510–22–P
ADDRESSES:
Authorization
We have issued an Incidental
Harassment Authorization to the
Observatory for the take of marine
mammals incidental to conducting a
marine seismic survey in the Atlantic
Ocean, July 1, 2014 to August 17, 2014.
Dated: July 1, 2014.
Perry F. Gayaldo,
Deputy Director, Office of Protected
Resources, National Marine Fisheries Service.
COMMODITY FUTURES TRADING
COMMISSION
Sunshine Act Meetings
TIME AND DATE:
10 a.m., Friday, July 11,
2014.
1155 21st St. NW., Washington,
DC, 9th Floor Commission Conference
Room.
PLACE:
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STATUS:
Closed.
MATTERS TO BE CONSIDERED:
Surveillance, Enforcement Matters, and
Examinations. In the event that the
times, dates, or locations of this or any
future meetings change, an
announcement of the change, along with
the new time and place of the meeting
will be posted on the Commission’s
Web site at https://www.cftc.gov.
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SUMMARY:
Persons wishing to
comment on this Settlement Agreement
should send written comments to the
Comment 14–C0003 Office of the
Secretary, Consumer Product Safety
Commission, 4330 East West Highway,
Room 820, Bethesda, Maryland 20814–
4408.
FOR FURTHER INFORMATION CONTACT:
Mary B. Murphy, Assistant General
Counsel, Office of the General Counsel,
Consumer Product Safety Commission,
4330 East West Highway, Bethesda,
Maryland 20814–4408; telephone (301)
504–7809.
SUPPLEMENTARY INFORMATION: The text of
the Agreement and Order appears
below.
1 The Commission voted (2–1) to provisionally
accept this Settlement Agreement and Order. Acting
Chairman Robert S. Adler and Commissioner
Marietta S. Robinson voted to provisionally accept
Settlement Agreement and Order. Commissioner
Ann Marie Buerkle voted to reject the attached
Settlement Agreement and Order.
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CONSUMER PRODUCT SAFETY
COMMISSION
In the Matter of:
HMI Industries Inc.
CPSC Docket No.: 14–C0003
SETTLEMENT AGREEMENT
1. In accordance with the Consumer
Product Safety Act (CPSA), 15 U.S.C.
§§ 2051–2089 and 16 C.F.R. § 1118.20,
HMI Industries Inc. (HMI), 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
C.F.R. § 1118.20(b). The Commission
issues the Order under the provisions of
the CPSA.
3. HMI is a corporation, organized and
existing under the laws of the state of
Delaware with its principal corporate
office located in Strongsville, Ohio. HMI
is a manufacturer of floor cleaners and
indoor air purifiers.
STAFF CHARGES
4. Between September 2004 and
August 2006, HMI manufactured and
distributed approximately 44,000 Filter
Queen Majestic 360 floor cleaners
(Subject Products, or Floor Cleaners).
The Floor Cleaners were sold through
independent distributors nationwide for
approximately $1,800.
5. The Floor cleaners are ‘‘consumer
products,’’ and at all relevant times,
HMI was a ‘‘manufacturer’’ of these
consumer products, which were
‘‘distributed in commerce,’’ as those
terms are defined or used in sections
3(a)(5) and (11), of the CPSA, 15 U.S.C.
§ 2052(a)(5) and (11).
6. The Floor Cleaners are defective
because their wiring can overheat,
causing electrical arcing and melting.
This poses a burn hazard to consumers.
7. HMI received notice of the defect
shortly after distribution began in
September 2004. Between 2005 and
2008, HMI received hundreds of reports
of electrical arcing, sparking, and fire,
including reports of property damage
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and injuries to consumers. During that
same time, HMI implemented four
separate design changes to alleviate the
hazard posed by the product. HMI
distributed product information notices
to consumers in March 2006 and May
2006, alerting users to the defect which
the design change attempted to correct.
Throughout this period, HMI also paid
out claims filed by consumers who
reported that the product failed and
caused fires and/or property damage.
8. By March 2006, HMI had sufficient
information that reasonably supported
the conclusion that the Floor Cleaners
contained a defect that could create a
substantial product hazard or created an
unreasonable risk of serious injury or
death. HMI 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, the
Firm had received approximately 500
reports of arcing, had instituted its third
design change, and had sent product
information notices to consumers
alerting them to the defect.
9. Despite having information
regarding the Floor Cleaner’s defect or
risk, HMI 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).
10. In failing to inform the
Commission about the Subject Products
immediately, HMI 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).
11. HMI did not file its Full Report
with the Commission until February
2009. By that date, HMI was aware of
approximately 2,000 incidents of arcing
involving the Floor Cleaners,
approximately 120 consumer reports of
overheating and property damage, and
injuries to two consumers. However,
HMI advised staff that it knew of only
40 consumer complaints of overheating
and damage to carpets, with no reports
of injury. Staff relied upon that
information and included that
information in the joint press release
issued on April 29, 2009.
12. In underreporting to Commission
staff the number of incidents and
injuries associated with the Floor
Cleaners, HMI knowingly committed a
material misrepresentation to an officer
or employee in the course of an
investigation under the CPSA in
violation of section 19(a)(13) of the
CPSA, 15 U.S.C. § 2068(a)(13).
13. Pursuant to section 20 of the
CPSA, 15 U.S.C. § 2069, HMI is subject
to civil penalties for its knowing failure
to report, as required by section 15(b) of
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the CPSA, 15 U.S.C. § 2064(b), and for
HMI’s material misrepresentation in
violation of CPSA Section 19(a)(13).
HMI’s RESPONSE
14. This Agreement does not
constitute an admission by HMI to the
charges set forth in paragraphs 4
through 13, including, but not limited
to, the charge that the Floor Cleaners
contained a defect which could create a
substantial product hazard or created an
unreasonable risk of serious injury or
death, and the contention that HMI
failed to notify the Commission in a
timely manner, in accordance with
section 15(b) of the CPSA, 15 U.S.C.
§ 2064(b), and the charge that HMI
knowingly committed a material
misrepresentation to an officer or
employee in the course of an
investigation in violation of Section
19(a)(13) of the CPSA.
AGREEMENT OF THE PARTIES
15. Under the CPSA, the Commission
has jurisdiction over the matter
involving the Floor Cleaners described
herein and over HMI.
16. In settlement of staff’s charges,
and to avoid the cost, distraction, delay,
uncertainty, and inconvenience of
protracted litigation or other
proceedings, HMI shall pay a civil
penalty in the amount of seven hundred
twenty-five thousand dollars ($725,000),
with three hundred twenty-five
thousand ($325,000) of that sum
suspended. The remaining four hundred
thousand dollars ($400,000) is to be
paid in forty equal payments of $10,000,
with the first payment due and payable
within twenty (20) calendar days after
receiving service of the Commission’s
final Order accepting the Agreement,
and each subsequent payment due and
payable no later than the 15th day of
each succeeding month until all
amounts due and payable under this
Agreement are paid in full. Interest at
the federal legal rate of interest set forth
at 28 U.S.C. § 1961(a) and (b) shall
accrue only on amounts not timely paid
as provided in this Agreement and shall
be payable by HMI. All payments shall
be applied first to accrued but unpaid
interest, if any, and then to principal.
All payments to be made under this
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 for
allocation to and credit against the
payment obligations of HMI hereunder.
17. The parties agree that this
settlement figure has been agreed to by
staff, and is predicated, among other
things, upon the accuracy of oral and
written representations of, and
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statements by, HMI and HMI’s
representatives (including
representations and warranties set forth
in this Agreement) regarding (a) facts
that establish HMI’s status as a small
business and (b) the financial condition
of HMI, including statements
concerning HMI’s inability to pay a
greater penalty due to restrictions
imposed by a tangible net worth
covenant in an existing loan agreement.
18. HMI warrants and represents that
the financial statements and financial
information provided to staff are true,
accurate, and complete and have been
prepared in accordance with GAAP
applied on a consistent basis throughout
the periods indicated and with each
other; and that the financial statements
and financial information fairly present
the financial condition and results of
operations and cash flow of HMI as of
the dates, and for the periods, indicated
therein, all in conformity with GAAP
consistently applied during the periods
involved except as otherwise noted.
HMI additionally warrants and
represents that all information provided
to staff in connection with this civil
penalty matter is true, accurate, and
complete. To the extent that financial
information provided by the Firm
during the course of this civil penalty
matter included projections and/or
forward looking statements, such
projections or statements represented
HMI’s good faith assessment of the
HMI’s future performance, and had a
reasonable basis.
19. HMI has provided staff with its
consolidated financial statements as of
and for the years ending September 30,
2012 and September 30, 2013 and, along
with related notes to the financial
statements, as reviewed and audited by
independent auditors.
20. The parties agree that an amount
equal to $725,000 (representing the
entire civil penalty including the
suspended portion) plus any accrued
and unpaid interest minus any penalty
amounts paid by HMI shall become
immediately due and payable upon the
occurrence of an ‘‘Event of Default.’’ An
Event of Default means: (1) HMI’s
breach or failure to perform in any
respect any of its agreements, covenants,
representations or warranties contained
in this Agreement (including the failure
of HMI to timely pay any payment
obligation under this Agreement as set
forth in this Agreement); or (2) a
violation by HMI of any CPSC statute or
regulation.
21. The suspended portion of the civil
penalty ($325,000), and any obligations
of HMI related to such payment, will
terminate upon the payment in full by
HMI as provided in this Agreement of
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an amount equal to $400,000 plus
accrued and unpaid interest, if any,
provided that no Event of Default has
occurred.
22. The parties enter into this
Agreement for settlement purposes only.
The Agreement does not constitute an
admission by HMI that HMI violated the
CPSA.
23. Following staff’s receipt of this
Agreement executed on behalf of HMI,
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 C.F.R.
§ 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
C.F.R. § 1118.20(f).
24. 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 C.F.R.
§ 1118.20(h). Upon the later of: (i) the
Commission’s final acceptance of this
Agreement and service of the accepted
Agreement upon HMI, 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.
25. Effective upon the later of: (i) the
Commission’s final acceptance of the
Agreement and service of the accepted
Agreement upon HMI, and (ii) the date
of issuance of the final Order, for good
and valuable consideration, HMI 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 HMI 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.
26. HMI shall implement and
maintain a 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)
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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 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) board
oversight of compliance (if applicable);
and (vii) retention of all compliancerelated records for at least five (5) years
and availability of such records to staff
upon request.
27. HMI shall maintain and enforce a
system of internal controls and
procedures designed to ensure that: (i)
information required to be disclosed by
HMI 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 HMI
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
HMI’s ability to record, process, and
report to the Commission in accordance
with applicable law.
28. Upon request of staff, HMI shall
provide written documentation of its
compliance program, and internal
controls and procedures including, but
not limited to, the effective dates
thereof. HMI shall cooperate fully and
truthfully with staff and shall make
available all information, materials, and
personnel deemed necessary by staff to
evaluate HMI’s compliance with the
terms of the Agreement.
29. The parties acknowledge and
agree that the Commission may make
public disclosure of the terms of the
Agreement and the Order.
30. HMI 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 HMI, and each of its
successors and/or assigns, enforceable
against HMI in accordance with the
Agreement’s terms. The individuals
signing the Agreement on behalf of HMI
represent and warrant that they are duly
authorized by HMI to execute the
Agreement.
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38521
31. The Commission signatories
represent that they are signing the
Agreement in their official capacities
and that they are authorized to execute
this Agreement.
32. The Agreement is governed by the
laws of the United States.
33. The Agreement and the Order
shall apply to, and be binding upon,
HMI and each of its subsidiaries,
successors, transferees, and assigns, and
a violation of the Agreement or Order
may subject HMI and each of its
successors, transferees, and assigns to
appropriate legal action.
34. The Agreement and the Order
constitute the complete agreement
between the parties on the subject
matter contained herein and therein.
35. 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.
36. The Agreement shall not be
waived, amended, modified, or
otherwise altered, except as in
accordance with the provisions of 16
C.F.R. § 1118.20(h). The Agreement may
be executed in counterparts.
37. 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 HMI agree
that severing the provision materially
affects the purpose of the Agreement
and Order.
HMI, INDUSTRIES INC.
Dated: June 10, 2014
By: llllllllllllllll
Kirk W. Foley, Chairman and CEO, HMI
Industries Inc., 13325 Darice Parkway,
Unit A, Strongsville, Ohio 44149
Dated: June 11, 2014
By: llllllllllllllll
Elizabeth Abbene Coleman, Jenner &
Block, LLP, 353 North Clark Street,
Chicago, Illinois 60654, Counsel for HMI
Industries Inc.
Dated: June 10, 2014
By: llllllllllllllll
Mary B. Murphy, Assistant General
Counsel
U.S. CONSUMER PRODUCT SAFETY
COMMISSION STAFF
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Stephanie Tsacoumis, General Counsel
UNITED STATES OF AMERICA
CONSUMER PRODUCT SAFETY
COMMISSION
In the Matter of: HMI, Industries Inc.
CPSC Docket No.: 14–C0003
ORDER
Upon consideration of the Settlement
Agreement entered into between HMI,
Industries Inc. (HMI), and the U.S.
Consumer Product Safety Commission
(Commission), and the Commission
having jurisdiction over the subject
matter and over HMI, 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 HMI shall
comply with the terms of the Settlement
Agreement and shall pay a civil penalty
of $725,000 ($725,000, with $325,000 of
the total suspended) subject to the terms
and conditions of the Settlement
Agreement. HMI shall pay the nonsuspended portion of the penalty,
$400,000, in accordance with the
schedule and terms set forth in the
Settlement Agreement. Upon the
occurrence of an Event of Default as set
forth in the Settlement Agreement, an
amount equal to $725,000 (representing
the entire civil penalty including the
suspended portion) plus any accrued
and unpaid interest minus any penalty
amounts paid by HMI immediately shall
become due and payable.
Provisionally accepted and provisional
Order issued on the 2nd day of July,
2014.
By Order of the Commission:
llllllllllllllllll
l
Todd A. Stevenson, Secretary,
U.S. Consumer Product Safety
Commission.
[FR Doc. 2014–15905 Filed 7–7–14; 8:45 am]
BILLING CODE 6355–01–P
DEPARTMENT OF DEFENSE
Office of the Secretary
[Docket ID: DoD–2014–OS–0100]
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Washington Headquarters
Service, Acquisition Directorate (WHS/
AD), DoD.
ACTION: Notice.
AGENCY:
In compliance with Section
3506(c)(2)(A) of the Paperwork
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You may submit comments,
identified by docket number and title,
by any of the following methods:
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• Mail: Federal Docket Management
System Office, 4800 Mark Center Drive,
East Tower, Suite 02G09, Alexandria,
VA 22350–3100.
Instructions: All submissions received
must include the agency name, docket
number and title for this Federal
Register document. The general policy
for comments and other submissions
from members of the public is to make
these submissions available for public
viewing on the Internet at https://
www.regulations.gov as they are
received without change, including any
personal identifiers or contact
information.
ADDRESSES:
To
request more information on this
proposed information collection or to
obtain a copy of the proposal and
associated collection instruments,
please write to the Director, Washington
Headquarters Services Acquisition
Directorate, 1225 S. Clark Street, Suite
1202, Arlington, VA 22302 (703–545–
0423).
FOR FURTHER INFORMATION CONTACT:
SUPPLEMENTARY INFORMATION:
Proposed Collection; Comment
Request
SUMMARY:
Reduction Act of 1995, the Washington
Headquarters Service, Acquisition
Directorate (WHS/AD), announces a
proposed public information collection
and seeks public comment on the
provisions thereof. Comments are
invited on: (a) Whether the proposed
collection of information is necessary
for the proper performance of the
functions of the agency, including
whether the information shall have
practical utility; (b) the accuracy of the
agency’s estimate of the burden of the
proposed information collection; (c)
ways to enhance the quality, utility, and
clarity of the information to be
collected; and (d) ways to minimize the
burden of the information collection on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
DATES: Consideration will be given to all
comments received by September 8,
2014.
Title; Associated Form; and OMB
Number: OFPP Rate the Agency
Initiative; OMB Control Number 0704–
TBD.
Needs and Uses: The information
collection requirement is necessary to
obtain offerors’ feedback on the preaward phase of WHS/AD Requests for
Proposals (RFPs) greater than $1M.
Their answers will help WHS/AD assess
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performance and identify strengths and
weaknesses. The survey is optional and
anonymous. The results from the survey
will not be published or made publicly
available. The survey will be provided
to all those firms submitting offers in
response to specific Requests for
Proposals greater than $1M.
Affected Public: Business or other for
profit.
Annual Burden Hours: 133.
Number of Respondents: 800.
Responses per Respondent: 1.
Average Burden per Response: 10
minutes.
Frequency: On occasion.
OMB has asked the Acquisitions
Directorate (AD) of Washington
Headquarters Service to participate in a
pilot program whereby AD surveys its
contractors after the pre-award phase of
the acquisition process to obtain their
feedback. Responses to the survey will
help assess AD’s performance and
identify its strengths and weaknesses.
The survey contains 17 questions and
should take no more than 10 minutes to
complete.
Dated: July 1, 2014.
Aaron Siegel,
Alternate OSD Federal Register Liaison
Officer, Department of Defense.
[FR Doc. 2014–15827 Filed 7–7–14; 8:45 am]
BILLING CODE 5001–06–P
DEPARTMENT OF DEFENSE
Office of the Secretary
Independent Review Panel on Military
Medical Construction Standards;
Notice of Federal Advisory Committee
Meeting
Department of Defense (DoD).
Notice of meeting.
AGENCY:
ACTION:
The Department of Defense is
publishing this notice to announce the
following Federal Advisory Committee
meeting of the Independent Review
Panel on Military Medical Construction
Standards (‘‘the Panel’’).
DATES:
SUMMARY:
Monday, July 21, 2014
10:00 a.m.–12:15 p.m. CST (Open
Session)
12:15 p.m.–3:30 p.m. CST
(Administrative Working Meeting)
Tuesday, July 22, 2014
8:00 a.m.–9:00 a.m. (Administrative
Working Meeting)
9:00 a.m.–11:15 a.m. (Open Session)
11:15 a.m.–2:30 p.m. (Administrative
Working Meeting)
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[Federal Register Volume 79, Number 130 (Tuesday, July 8, 2014)]
[Notices]
[Pages 38519-38522]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-15905]
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CONSUMER PRODUCT SAFETY COMMISSION
[CPSC Docket No. 14-C0003]
HMI Industries, 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
HMI Industries, Inc., containing a civil penalty of $725,000.00, within
twenty (20) days of service of the Commission's final Order accepting
the Settlement Agreement.\1\
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\1\ The Commission voted (2-1) to provisionally accept this
Settlement Agreement and Order. Acting Chairman Robert S. Adler and
Commissioner Marietta S. Robinson voted to provisionally accept
Settlement Agreement and Order. Commissioner Ann Marie Buerkle voted
to reject the attached Settlement Agreement and Order.
DATES: Any interested person may ask the Commission not to accept this
agreement or otherwise comment on its contents by filing a written
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request with the Office of the Secretary by July 23, 2014.
ADDRESSES: Persons wishing to comment on this Settlement Agreement
should send written comments to the Comment 14-C0003 Office of the
Secretary, Consumer Product Safety Commission, 4330 East West Highway,
Room 820, Bethesda, Maryland 20814-4408.
FOR FURTHER INFORMATION CONTACT: Mary B. Murphy, Assistant General
Counsel, Office of the General Counsel, Consumer Product Safety
Commission, 4330 East West Highway, Bethesda, Maryland 20814-4408;
telephone (301) 504-7809.
SUPPLEMENTARY INFORMATION: The text of the Agreement and Order appears
below.
Dated: July 2, 2014.
Todd A. Stevenson,
Secretary.
UNITED STATES OF AMERICA
CONSUMER PRODUCT SAFETY COMMISSION
In the Matter of:
HMI Industries Inc.
CPSC Docket No.: 14-C0003
SETTLEMENT AGREEMENT
1. In accordance with the Consumer Product Safety Act (CPSA), 15
U.S.C. Sec. Sec. 2051-2089 and 16 C.F.R. Sec. 1118.20, HMI Industries
Inc. (HMI), 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 C.F.R. Sec. 1118.20(b). The Commission
issues the Order under the provisions of the CPSA.
3. HMI is a corporation, organized and existing under the laws of
the state of Delaware with its principal corporate office located in
Strongsville, Ohio. HMI is a manufacturer of floor cleaners and indoor
air purifiers.
STAFF CHARGES
4. Between September 2004 and August 2006, HMI manufactured and
distributed approximately 44,000 Filter Queen Majestic 360 floor
cleaners (Subject Products, or Floor Cleaners). The Floor Cleaners were
sold through independent distributors nationwide for approximately
$1,800.
5. The Floor cleaners are ``consumer products,'' and at all
relevant times, HMI was a ``manufacturer'' of these consumer products,
which were ``distributed in commerce,'' as those terms are defined or
used in sections 3(a)(5) and (11), of the CPSA, 15 U.S.C. Sec.
2052(a)(5) and (11).
6. The Floor Cleaners are defective because their wiring can
overheat, causing electrical arcing and melting. This poses a burn
hazard to consumers.
7. HMI received notice of the defect shortly after distribution
began in September 2004. Between 2005 and 2008, HMI received hundreds
of reports of electrical arcing, sparking, and fire, including reports
of property damage
[[Page 38520]]
and injuries to consumers. During that same time, HMI implemented four
separate design changes to alleviate the hazard posed by the product.
HMI distributed product information notices to consumers in March 2006
and May 2006, alerting users to the defect which the design change
attempted to correct. Throughout this period, HMI also paid out claims
filed by consumers who reported that the product failed and caused
fires and/or property damage.
8. By March 2006, HMI had sufficient information that reasonably
supported the conclusion that the Floor Cleaners contained a defect
that could create a substantial product hazard or created an
unreasonable risk of serious injury or death. HMI 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. Sec. Sec.
2064(b)(3) and (4). By that date, the Firm had received approximately
500 reports of arcing, had instituted its third design change, and had
sent product information notices to consumers alerting them to the
defect.
9. Despite having information regarding the Floor Cleaner's defect
or risk, HMI failed to inform the Commission immediately, as required
by sections 15(b)(3) and (4) of the CPSA, 15 U.S.C. Sec. Sec.
2064(b)(3) and (4).
10. In failing to inform the Commission about the Subject Products
immediately, HMI 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).
11. HMI did not file its Full Report with the Commission until
February 2009. By that date, HMI was aware of approximately 2,000
incidents of arcing involving the Floor Cleaners, approximately 120
consumer reports of overheating and property damage, and injuries to
two consumers. However, HMI advised staff that it knew of only 40
consumer complaints of overheating and damage to carpets, with no
reports of injury. Staff relied upon that information and included that
information in the joint press release issued on April 29, 2009.
12. In underreporting to Commission staff the number of incidents
and injuries associated with the Floor Cleaners, HMI knowingly
committed a material misrepresentation to an officer or employee in the
course of an investigation under the CPSA in violation of section
19(a)(13) of the CPSA, 15 U.S.C. Sec. 2068(a)(13).
13. Pursuant to section 20 of the CPSA, 15 U.S.C. Sec. 2069, HMI
is subject to civil penalties for its knowing failure to report, as
required by section 15(b) of the CPSA, 15 U.S.C. Sec. 2064(b), and for
HMI's material misrepresentation in violation of CPSA Section
19(a)(13).
HMI's RESPONSE
14. This Agreement does not constitute an admission by HMI to the
charges set forth in paragraphs 4 through 13, including, but not
limited to, the charge that the Floor Cleaners contained a defect which
could create a substantial product hazard or created an unreasonable
risk of serious injury or death, and the contention that HMI failed to
notify the Commission in a timely manner, in accordance with section
15(b) of the CPSA, 15 U.S.C. Sec. 2064(b), and the charge that HMI
knowingly committed a material misrepresentation to an officer or
employee in the course of an investigation in violation of Section
19(a)(13) of the CPSA.
AGREEMENT OF THE PARTIES
15. Under the CPSA, the Commission has jurisdiction over the matter
involving the Floor Cleaners described herein and over HMI.
16. In settlement of staff's charges, and to avoid the cost,
distraction, delay, uncertainty, and inconvenience of protracted
litigation or other proceedings, HMI shall pay a civil penalty in the
amount of seven hundred twenty-five thousand dollars ($725,000), with
three hundred twenty-five thousand ($325,000) of that sum suspended.
The remaining four hundred thousand dollars ($400,000) is to be paid in
forty equal payments of $10,000, with the first payment due and payable
within twenty (20) calendar days after receiving service of the
Commission's final Order accepting the Agreement, and each subsequent
payment due and payable no later than the 15th day of each succeeding
month until all amounts due and payable under this Agreement are paid
in full. Interest at the federal legal rate of interest set forth at 28
U.S.C. Sec. 1961(a) and (b) shall accrue only on amounts not timely
paid as provided in this Agreement and shall be payable by HMI. All
payments shall be applied first to accrued but unpaid interest, if any,
and then to principal. All payments to be made under this 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
for allocation to and credit against the payment obligations of HMI
hereunder.
17. The parties agree that this settlement figure has been agreed
to by staff, and is predicated, among other things, upon the accuracy
of oral and written representations of, and statements by, HMI and
HMI's representatives (including representations and warranties set
forth in this Agreement) regarding (a) facts that establish HMI's
status as a small business and (b) the financial condition of HMI,
including statements concerning HMI's inability to pay a greater
penalty due to restrictions imposed by a tangible net worth covenant in
an existing loan agreement.
18. HMI warrants and represents that the financial statements and
financial information provided to staff are true, accurate, and
complete and have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods indicated and with each other;
and that the financial statements and financial information fairly
present the financial condition and results of operations and cash flow
of HMI as of the dates, and for the periods, indicated therein, all in
conformity with GAAP consistently applied during the periods involved
except as otherwise noted. HMI additionally warrants and represents
that all information provided to staff in connection with this civil
penalty matter is true, accurate, and complete. To the extent that
financial information provided by the Firm during the course of this
civil penalty matter included projections and/or forward looking
statements, such projections or statements represented HMI's good faith
assessment of the HMI's future performance, and had a reasonable basis.
19. HMI has provided staff with its consolidated financial
statements as of and for the years ending September 30, 2012 and
September 30, 2013 and, along with related notes to the financial
statements, as reviewed and audited by independent auditors.
20. The parties agree that an amount equal to $725,000
(representing the entire civil penalty including the suspended portion)
plus any accrued and unpaid interest minus any penalty amounts paid by
HMI shall become immediately due and payable upon the occurrence of an
``Event of Default.'' An Event of Default means: (1) HMI's breach or
failure to perform in any respect any of its agreements, covenants,
representations or warranties contained in this Agreement (including
the failure of HMI to timely pay any payment obligation under this
Agreement as set forth in this Agreement); or (2) a violation by HMI of
any CPSC statute or regulation.
21. The suspended portion of the civil penalty ($325,000), and any
obligations of HMI related to such payment, will terminate upon the
payment in full by HMI as provided in this Agreement of
[[Page 38521]]
an amount equal to $400,000 plus accrued and unpaid interest, if any,
provided that no Event of Default has occurred.
22. The parties enter into this Agreement for settlement purposes
only. The Agreement does not constitute an admission by HMI that HMI
violated the CPSA.
23. Following staff's receipt of this Agreement executed on behalf
of HMI, 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 C.F.R. Sec. 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 C.F.R. Sec. 1118.20(f).
24. 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 C.F.R. Sec. 1118.20(h). Upon the later of: (i)
the Commission's final acceptance of this Agreement and service of the
accepted Agreement upon HMI, 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.
25. Effective upon the later of: (i) the Commission's final
acceptance of the Agreement and service of the accepted Agreement upon
HMI, and (ii) the date of issuance of the final Order, for good and
valuable consideration, HMI 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
HMI 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.
26. HMI shall implement and maintain a 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 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 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) board oversight of compliance (if
applicable); and (vii) retention of all compliance-related records for
at least five (5) years and availability of such records to staff upon
request.
27. HMI shall maintain and enforce a system of internal controls
and procedures designed to ensure that: (i) information required to be
disclosed by HMI 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 HMI 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 HMI's ability to record, process, and report to the Commission
in accordance with applicable law.
28. Upon request of staff, HMI shall provide written documentation
of its compliance program, and internal controls and procedures
including, but not limited to, the effective dates thereof. HMI shall
cooperate fully and truthfully with staff and shall make available all
information, materials, and personnel deemed necessary by staff to
evaluate HMI's compliance with the terms of the Agreement.
29. The parties acknowledge and agree that the Commission may make
public disclosure of the terms of the Agreement and the Order.
30. HMI 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 HMI, and each of its successors and/or assigns,
enforceable against HMI in accordance with the Agreement's terms. The
individuals signing the Agreement on behalf of HMI represent and
warrant that they are duly authorized by HMI to execute the Agreement.
31. The Commission signatories represent that they are signing the
Agreement in their official capacities and that they are authorized to
execute this Agreement.
32. The Agreement is governed by the laws of the United States.
33. The Agreement and the Order shall apply to, and be binding
upon, HMI and each of its subsidiaries, successors, transferees, and
assigns, and a violation of the Agreement or Order may subject HMI and
each of its successors, transferees, and assigns to appropriate legal
action.
34. The Agreement and the Order constitute the complete agreement
between the parties on the subject matter contained herein and therein.
35. 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.
36. The Agreement shall not be waived, amended, modified, or
otherwise altered, except as in accordance with the provisions of 16
C.F.R. Sec. 1118.20(h). The Agreement may be executed in counterparts.
37. 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 HMI agree that severing the provision materially affects the
purpose of the Agreement and Order.
HMI, INDUSTRIES INC.
Dated: June 10, 2014
By:--------------------------------------------------------------------
Kirk W. Foley, Chairman and CEO, HMI Industries Inc., 13325 Darice
Parkway, Unit A, Strongsville, Ohio 44149
Dated: June 11, 2014
By:--------------------------------------------------------------------
Elizabeth Abbene Coleman, Jenner & Block, LLP, 353 North Clark Street,
Chicago, Illinois 60654, Counsel for HMI Industries Inc.
Dated: June 10, 2014
By:--------------------------------------------------------------------
Mary B. Murphy, Assistant General Counsel
U.S. CONSUMER PRODUCT SAFETY COMMISSION STAFF
[[Page 38522]]
Stephanie Tsacoumis, General Counsel
UNITED STATES OF AMERICA
CONSUMER PRODUCT SAFETY COMMISSION
In the Matter of: HMI, Industries Inc.
CPSC Docket No.: 14-C0003
ORDER
Upon consideration of the Settlement Agreement entered into between
HMI, Industries Inc. (HMI), and the U.S. Consumer Product Safety
Commission (Commission), and the Commission having jurisdiction over
the subject matter and over HMI, 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 HMI shall comply with the terms of the
Settlement Agreement and shall pay a civil penalty of $725,000
($725,000, with $325,000 of the total suspended) subject to the terms
and conditions of the Settlement Agreement. HMI shall pay the non-
suspended portion of the penalty, $400,000, in accordance with the
schedule and terms set forth in the Settlement Agreement. Upon the
occurrence of an Event of Default as set forth in the Settlement
Agreement, an amount equal to $725,000 (representing the entire civil
penalty including the suspended portion) plus any accrued and unpaid
interest minus any penalty amounts paid by HMI immediately shall become
due and payable.
Provisionally accepted and provisional Order issued on the 2nd day of
July, 2014.
By Order of the Commission:
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Todd A. Stevenson, Secretary,
U.S. Consumer Product Safety Commission.
[FR Doc. 2014-15905 Filed 7-7-14; 8:45 am]
BILLING CODE 6355-01-P
