Keurig Green Mountain, Inc., Provisional Acceptance of a Settlement Agreement and Order, 11348-11351 [2017-03409]

Agencies

• Consumer Product Safety Commission

[Federal Register Volume 82, Number 34 (Wednesday, February 22, 2017)]
[Notices]
[Pages 11348-11351]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-03409]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 17-C0002]


Keurig Green Mountain, 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 the Consumer 
Product Safety Commission's regulations. Published below is a 
provisionally-accepted Settlement Agreement with Keurig Green Mountain, 
Inc., containing a civil penalty in the amount of five million, eight 
hundred thousand dollars ($5,800,000) within thirty (30) days of

[[Page 11349]]

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 March 9, 2017.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 17-C0002, Office of the 
Secretary, Consumer Product Safety Commission, 4330 East-West Highway, 
Room 820, Bethesda, Maryland 20814-4408.

FOR FURTHER INFORMATION CONTACT: Daniel R. Vice, Trial Attorney, 
Division of Compliance, Office of the General Counsel, Consumer Product 
Safety Commission, 4330 East-West Highway, Bethesda, Maryland 20814-
4408; telephone (301) 504-6996.

SUPPLEMENTARY INFORMATION:  The text of the Agreement and Order appears 
below.\1\
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    \1\ The Commission voted (4-1) to provisionally accept the 
Settlement Agreement and Order regarding Keurig Green Mountain, Inc. 
Commissioner Kaye, Commissioner Adler, Commissioner Robinson and 
Commissioner Mohorovic voted to provisionally accept the Settlement 
Agreement and Order. Acting Chairman Buerkle voted to reject the 
Settlement Agreement and Order.

    Dated: February 16, 2017.
Todd A. Stevenson,
Secretary.

United States of America

Consumer Product Safety Commission

    In the Matter of: Keurig Green Mountain, Inc.

CPSC Docket No.: 17-C0002

SETTLEMENT AGREEMENT

    1. In accordance with the Consumer Product Safety Act, 15 U.S.C. 
2051-2089 (``CPSA'') and 16 CFR 1118.20, Keurig Green Mountain, Inc. 
(``Keurig'') and the United States Consumer Product Safety Commission 
(``Commission''), through its staff, hereby enter into this Settlement 
Agreement (``Agreement''). The Agreement and the incorporated attached 
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, 15 U.S.C. 2051-2089. 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. Keurig is a corporation, organized and existing under the laws 
of the state of Delaware, with its executive offices in Waterbury, VT.

STAFF CHARGES

    4. Between December 2009 and December 2014, Keurig imported and 
offered for sale in the United States approximately 6.6 million Keurig 
MINI Plus Brewing Systems (model K10, previously identified as model 
B31) (``Brewers'' or ``Subject Products'').
    5. The Brewer is a ``consumer product'' ``distribut[ed] in 
commerce,'' as those terms are defined or used in sections 3(a)(5) and 
(8) of the CPSA, 15 U.S.C. 2052(a)(5) and (8). Keurig is a 
``manufacturer'' of the Brewers, as such term is defined in section 
3(a)(11) of the CPSA, 15 U.S.C. 2052(a)(11).
    6. The Brewers contain a defect which could create a substantial 
product hazard and create an unreasonable risk of serious injury 
because hot water, coffee, and coffee grounds can spray out of the 
Brewers, posing a burn hazard to consumers.
    7. Between February 2010 and November 2014, Keurig received 
approximately 200 incident reports of hot water, coffee, and coffee 
grounds spraying out of the Brewers (``Incidents'').
    8. In more than 100 of these Incidents, consumers suffered burn-
related injuries to their faces, hands, and bodies. Some of these 
injuries resulted in severe burns, including second and third-degree 
burns. Multiple consumers sought medical treatment for severe burns, 
including one consumer who was seen by a plastic surgeon. These severe 
burns included two reports of burns that resulted in facial scarring 
and three consumers who reported that Brewers sprayed them in the face 
with hot liquid, including one consumer who reported an eye injury. 
Keurig also paid two claims brought by consumers who were injured when 
the Brewers sprayed them with hot water, coffee, and coffee grounds.
    9. On two occasions, Keurig was notified by a retailer of 
Incidents, including one that caused first-degree burns requiring 
medical attention. Each time, the retailer requested that Keurig 
undertake a product safety investigation and asked Keurig whether there 
were any potentially reportable safety concerns regarding the Brewers. 
Keurig did not immediately report to CPSC after learning of either of 
these Incidents.
    10. In late June 2014, Keurig began an investigation of the 
Brewers. By late August 2014, Keurig began to consider developing a 
splash guard to prevent consumers from being injured if Brewers 
expelled hot water, coffee or coffee grounds.
    11. Firms may conduct a reasonably expeditious investigation, not 
normally exceeding 10 days, to evaluate their reporting obligations. 
See 16 CFR 1115.14(d). Keurig's investigation took more than 4 months 
to complete.
    12. Keurig delayed filing a Full Report with the Commission under 
15 U.S.C. 2064(b), until November 25, 2014.
    13. Keurig and the Commission jointly announced a recall of 6.6 
million Brewers on December 23, 2014.
    14. Despite having information reasonably supporting the conclusion 
that the Brewers contained a defect and created an unreasonable risk of 
serious injury, Keurig did not notify 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 violation of section 19(a)(4) of 
the CPSA, 15 U.S.C. 2068(a)(4).
    15. Because the information in Keurig's possession constituted 
actual and presumed knowledge, Keurig knowingly violated section 
19(a)(4) of the CPSA, 15 U.S.C. 2068(a)(4), as the term ``knowingly'' 
is defined in section 20(d) of the CPSA, 15 U.S.C. 2069(d).
    16. Pursuant to Section 20 of the CPSA, 15 U.S.C. 2069, Keurig is 
subject to civil penalties for its knowing violation of section 
19(a)(4) of the CPSA, 15 U.S.C. 2068(a)(4).

RESPONSE OF KEURIG

    17. The signing of this Agreement does not constitute an admission 
by Keurig of the staff's charges in paragraphs 4 through 16, including, 
but not limited to, the charge that (a) the Brewers contained a defect 
that could create a substantial product hazard and created an 
unreasonable risk of serious injury; (b) the Firm failed to notify the 
Commission in a timely manner, in accordance with Sections 15(b)(3) and 
(4) of the CPSA, 15 U.S.C. 2064(b)(3) and (4); (c) the Firm failed to 
furnish information required as required by sections 15(b)(3) and (4) 
of the CPSA, 15 U.S.C. 2064(b)(3) and (4), in violation of section 
19(a)(4) of the CPSA, 15 U.S.C. 2068(a)(4); and (d) there was any 
``knowing'' violation of the CPSA as that term is defined in section 
20(d) of the CPSA, 15 U.S.C. 2069(d).
    18. The Firm conducted a reasonable, expeditious, and diligent 
investigation about consumer complaints relating to the Brewers after 
personnel monitoring customer reports noticed a slightly higher rate of 
Incidents. Due to the

[[Page 11350]]

nature of the product, consumer report data can be difficult to 
evaluate, since the Brewers, like all coffeemakers, involve hot water, 
coffee, and steam, and necessarily include pressure-brewing to force 
water from the attached water tank through the K-Cup[supreg] portion 
pack and rapidly dispense it out of the Brewers and into a cup placed 
on the drip tray.
    19. The voluntary recall of the Brewers, as well as the Section 
15(b) reporting, by the Firm was conducted out of an abundance of 
caution and without the Firm having determined or concluded that the 
Brewers contained a defect or posed an unreasonable risk of serious 
injury.
    20. The Firm enters into this Agreement to settle this matter 
without the delay and unnecessary expense of litigation.

AGREEMENT OF THE PARTIES

    21. Under the CPSA, the Commission has jurisdiction over the matter 
involving the Brewers and over Keurig.
    22. The parties enter into the Agreement for settlement purposes 
only. The Agreement does not constitute an admission by Keurig or a 
determination by the Commission that Keurig violated the CPSA's 
reporting requirements.
    23. In settlement of staff's charges, and to avoid the cost, 
distraction, delay, uncertainty, and inconvenience of protracted 
litigation or other proceedings, Keurig shall pay a civil penalty in 
the amount of $5.8 million ($5,800,000) within thirty (30) 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, 
for allocation to, and credit against, the payment obligations of 
Keurig under this Agreement. Failure to make such payment by the date 
specified in the Commission's final Order shall constitute Default.
    24. All unpaid amounts, if any, due and owing under the Agreement, 
shall constitute a debt due and immediately owing by Keurig to the 
United States, and interest shall accrue and be paid by Keurig at the 
federal legal rate of interest set forth at 28 U.S.C. 1961(a) and (b) 
from the date of Default, until all amounts due have been paid in full 
(hereinafter ``Default Payment Amount'' and ``Default Interest 
Balance''). Keurig shall consent to a Consent Judgment in the amount of 
the Default Payment Amount and Default Interest Balance, and the United 
States, at its sole option, may collect the entire Default Payment 
Amount and Default Interest Balance, or exercise any other rights 
granted by law or in equity, including, but not limited to, referring 
such matters for private collection, and Keurig agrees not to contest, 
and hereby waives and discharges, any defenses to, any collection 
action undertaken by the United States, or its agents or contractors, 
pursuant to this paragraph. Keurig shall pay the United States all 
reasonable costs of collection and enforcement under this paragraph, 
respectively, including reasonable attorney's fees and expenses.
    25. After staff receives this Agreement executed on behalf of 
Keurig, 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 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 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 it 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 Keurig, 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 
Keurig, and (ii) and the date of issuance of the final Order, for good 
and valuable consideration, Keurig 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 this 
Agreement: (i) an administrative or judicial hearing; (ii) judicial 
review or other challenge or contest of the Commission's actions; (iii) 
a determination by the Commission of whether Keurig failed to comply 
with the CPSA and the underlying regulations; (iv) a statement of 
findings of fact and conclusions of law; and (v) any claims under the 
Equal Access to Justice Act.
    28. Keurig shall develop, implement, and maintain a compliance 
program designed to ensure compliance with the CPSA with respect to any 
consumer product imported, manufactured, distributed or sold by the 
Firm, and which shall contain the following elements:
    (i) written standards, policies and procedures, including those 
designed to ensure that information that may relate to or impact CPSA 
compliance (including information obtained by quality control 
personnel) is conveyed effectively to personnel responsible for CPSA 
compliance, whether or not an injury is referenced;
    (ii) 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;
    (iii) effective communication of company compliance-related 
policies and procedures regarding the CPSA to all applicable employees 
through training programs or otherwise;
    (iv) the Firm's senior management responsibility for, and general 
board oversight of, CPSA compliance; and
    (v) retention of all CPSA compliance-related records for at least 
five (5) years, and availability of such records to staff upon request.
    29. Keurig shall maintain and enforce a system of internal controls 
and procedures designed to ensure that, with respect to all consumer 
products imported, manufactured, distributed or sold by Keurig: (i) 
information required to be disclosed by Keurig to the Commission is 
recorded, processed and reported in accordance with applicable law; 
(ii) all reporting made to the Commission is timely, truthful, 
complete, accurate and in accordance with applicable law; and (iii) 
prompt disclosure is made to Keurig's management of any significant 
deficiencies or material weaknesses in the design or operation of such 
internal controls that are reasonably likely to affect adversely, in 
any material respect, Keurig's ability to record, process and report to 
the Commission in accordance with applicable law.
    30. Upon reasonable request of staff, Keurig shall provide written 
documentation of its internal controls and procedures, including, but 
not limited to, the effective dates of the procedures and improvements 
thereto. Keurig shall cooperate fully and truthfully with staff and 
shall make available all non-privileged information and materials, and 
personnel deemed necessary by staff to evaluate Keurig's compliance 
with the terms of the Agreement.

[[Page 11351]]

    31. The parties acknowledge and agree that the Commission may 
publicize the terms of the Agreement and the Order.
    32. Keurig 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 Keurig, enforceable against Keurig in 
accordance with its terms. Keurig will not directly or indirectly 
receive any reimbursement, indemnification, insurance-related payment, 
or other payment in connection with the civil penalty to be paid by 
Keurig pursuant to the Agreement and Order. The individuals signing the 
Agreement on behalf of Keurig represent and warrant that they are duly 
authorized by Keurig to execute the Agreement.
    33. The signatories represent 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, Keurig and each of its successors, transferees, and assigns, and 
a violation of the Agreement or Order may subject Keurig, 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 may 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 Keurig agree in writing that severing the provision materially 
affects the purpose of the Agreement and the Order.

KEURIG GREEN MOUNTAIN, INC.

Dated: 2/2/17

By:--------------------------------------------------------------------
Michael J. Degnan,
Chief Legal Officer & Corporate General Counsel, Keurig Green 
Mountain, Inc., 33 Coffee Lane, Waterbury, VT 05676.

Dated: 2/2/17

By:--------------------------------------------------------------------
Christie Grymes Thompson,
Kelley Drye & Warren LLP, Washington Harbour, Suite 400, 3050 K 
Street NW., Washington, DC 20007, Counsel to Keurig Green Mountain, 
Inc.

U.S. CONSUMER PRODUCT SAFETY COMMISSION

Mary T. Boyle,
General Counsel.

Mary B. Murphy,
Assistant General Counsel.

Dated: January 31, 2017
By:--------------------------------------------------------------------
Daniel R. Vice,
Trial Attorney, Division of Compliance, Office of the General 
Counsel.

United States of America

Consumer Product Safety Commission

    In the Matter of: Keurig Green Mountain, Inc.

CPSC Docket No.: 17-C0002

ORDER

    Upon consideration of the Settlement Agreement entered into between 
Keurig Green Mountain, Inc. (``Keurig''), and the U.S. Consumer Product 
Safety Commission (``Commission''), and the Commission having 
jurisdiction over the subject matter and over Keurig, 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 Keurig shall comply with the terms of the 
Settlement Agreement and shall pay a civil penalty in the amount of 
five million, eight hundred thousand dollars ($5,800,000) within thirty 
(30) days after service of the Commission's final Order accepting the 
Settlement Agreement. The payment shall be made by electronic wire 
transfer to the Commission via: https://www.pay.gov. Upon the failure of 
Keurig to make the foregoing payment when due, interest on the unpaid 
amount shall accrue and be paid by Keurig at the federal legal rate of 
interest set forth at 28 U.S.C. 1961(a) and (b). If Keurig fails to 
make such payment or to comply in full with any other provision of the 
Settlement Agreement, such conduct will be considered a violation of 
the Settlement Agreement and Order.
    Provisionally accepted and provisional Order issued on the 16th day 
of February, 2017.

By order of the Commission

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

[FR Doc. 2017-03409 Filed 2-21-17; 8:45 am]
 BILLING CODE 6355-01-P