Settlement Agreement With Core Health & Fitness, LLC, 6148-6151 [2022-02211]

Agencies

• Consumer Product Safety Commission

[Federal Register Volume 87, Number 23 (Thursday, February 3, 2022)]
[Notices]
[Pages 6148-6151]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-02211]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 22-C0001]


Settlement Agreement With Core Health & Fitness, LLC

AGENCY: Consumer Product Safety Commission.

ACTION: Notice.

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SUMMARY: The Commission publishes in the Federal Register any 
settlement that it provisionally accepts under the Consumer Product 
Safety Act. Published below is a provisionally accepted Settlement 
Agreement with Core Health and Fitness, LLC, containing a civil penalty 
in the amount of six million, five hundred thousand dollars 
($6,500,000), subject to the terms and conditions of the Settlement 
Agreement. The Commission voted unanimously (4-0) to provisionally 
accept the proposed Settlement Agreement and Order pertaining to Core 
Health and Fitness, LLC.

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 Division of the Secretariat by February 18, 2022.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to Comment 22-C0001, Division of the 
Secretariat, Consumer Product Safety Commission, Room 820, 4330 East-
West Highway, Bethesda, MD 20814; telephone: (240) 863-8938 (mobile), 
(301) 504-7479 (office); email: [email protected].

FOR FURTHER INFORMATION CONTACT: Liana G.T. Wolf, Trial Attorney, 
Division of Enforcement and Litigation, Office of Compliance and Field 
Operations, Consumer Product Safety Commission, 4330 East-West Highway, 
Bethesda, Maryland 20814-4408; [email protected], 301-504-7733.

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

    Dated: January 31, 2022.
Alberta E. Mills,
Secretary.

United States of America

Consumer Product Safety Commission

    In the Matter of: CORE HEALTH & FITNESS, LLC.

CPSC Docket No.: 22-C0001

Settlement Agreement

    1. In accordance with the Consumer Product Safety Act (``CPSA''), 
15 U.S.C. 2051-2089, and 16 CFR 1118.20, Core Health & Fitness, LLC 
(``Core'') 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. Core is a privately held company, organized and existing under 
the laws of the state of Nevada, with its principal place of business 
in Vancouver, Washington.

Staff Charges

    4. Between 2001 and 2017, Unisen Inc. and Core manufactured, 
distributed, and offered for sale approximately 3,600 Cable Cross Over 
Machines and Dual Adjustable Pulley Machines.
    5. Between 2001 and 2010, Unisen Inc. manufactured, distributed, 
and

[[Page 6149]]

offered for sale in the United States the Cable Cross Over Machines and 
Dual Adjustable Pulley Machines.
    6. In November 2010, Core purchased the assets of Unisen Inc. and 
took over the distribution of the Cable Cross Over Machines and Dual 
Adjustable Pulley Machines.
    7. Between 2010 and 2017, Core manufactured, distributed, and 
offered for sale in the United States the Cable Cross Over Machines and 
Dual Adjustable Pulley Machines.
    8. The Cable Cross Over Machines and Dual Adjustable Pulley 
Machines (collectively, the ``Subject Products'') are ``consumer 
products'' that were ``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), (8). Core is a ``manufacturer'' and ``distributor'' of the 
Subject Products, as such terms are defined in sections 3(a)(7) and 
(11) of the CPSA, 15 U.S.C. 2052(a)(7), (11).
Violation of CPSA Section 19(a)(4)
    9. The Subject Products contain a defect which could create a 
substantial product hazard and create an unreasonable risk of serious 
injury or death because the height adjusting carriages on the machines 
can loosen and fall on the consumer, posing an impact injury hazard.
    10. Although the Subject Products were sold between 2001 and 2017, 
Core was only able to produce incident information Core received after 
August 2012.
    11. Between 2012 and February 2017, Core received reports of 55 
incidents involving falling carriages, including 11 incidents that 
resulted in head lacerations requiring stitches or staples.
    12. Despite information that reasonably supported the conclusion 
that the Subject Products contained a defect that could create a 
substantial product hazard or created an unreasonable risk of serious 
injury or death, Core did not immediately report to the Commission.
    13. In February 2017, Core filed a Full Report with the Commission 
under 15 U.S.C. 2064(b) concerning the Subject Products.
    14. Core and the Commission jointly announced a Fast Track recall 
of the Subject Products on July 12, 2017. The press release announcing 
the recall noted that the height adjusting carriage assembly can loosen 
and fall on the consumer, posing an impact injury hazard.
Failure to Timely Report
    15. Despite having information reasonably supporting the conclusion 
that the Subject Products contained a defect or created an unreasonable 
risk of serious injury or death, Core 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), (4), in violation of section 
19(a)(4) of the CPSA, 15 U.S.C. 2068(a)(4).
    16. Because the information in Core's possession about the Subject 
Products constituted actual and presumed knowledge, Core 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).
    17. Pursuant to section 20 of the CPSA, 15 U.S.C. 2069, Core 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 Core

    18. This Agreement does not constitute an admission by Core to the 
staff's charges set forth in paragraphs 4 through 17 above, and Core 
specifically refutes the staff's findings that the Cable Cross Over 
Machines and Dual Adjustable Pulley Machines contained a defect that 
could create a substantial product hazard or created an unreasonable 
risk of serious injury or death; that Core 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 that there was any ``knowing'' violation 
of the CPSA as that term is defined in 15 U.S.C. 2069(d).
    19. Core enters into this Agreement to settle this matter without 
the delay and expense of litigation and agrees to pay the amount 
referenced below in compromise of the staff's charges.
    20. Over the relevant time period, Core took various steps to 
address safety issues gyms brought to its attention in an effort to 
support their service and maintain the Subject Products. Due to the 
role of fitness clubs in monitoring and maintaining the equipment, and 
communicating any such issues to the manufacturer, consumer reports can 
be difficult for a manufacturer to obtain and evaluate, may not be 
received promptly, and may not include complete and accurate 
information. Core was not aware of a systemic or overarching issue with 
the Subject Products, but rather was working to address what it viewed 
as a routine maintenance issue.
    21. Core voluntarily notified the Commission in connection with the 
Subject Products and carried out a voluntary recall in cooperation with 
the Commission.
    22. At all relevant times, Core had a product safety compliance 
program, including quality control personnel and a product safety 
testing program.

Agreement of the Parties

    23. Under the CPSA, the Commission has jurisdiction over the matter 
involving the Subject Products and over Core.
    24. The parties enter into the Agreement for settlement purposes 
only. The Agreement does not constitute an admission by Core or a 
determination by the Commission that Core violated the CPSA's reporting 
requirements.
    25. In settlement of staff's charges, and to avoid the cost, 
distraction, delay, uncertainty, and inconvenience of protracted 
litigation or other proceedings, Core shall pay a civil penalty in the 
amount of six million five hundred thousand dollars ($6,500,000) 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 Core under this Agreement. Failure to make such payment 
by the date specified in the Commission's final Order shall constitute 
Default.
    26. All unpaid amounts, if any, due and owing under the Agreement, 
shall constitute a debt due and immediately owing by Core to the United 
States, and interest shall accrue and be paid by Core 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''). Core 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 Core 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. Core shall pay the United States all reasonable 
costs of collection and enforcement under this paragraph, respectively, 
including reasonable attorney's fees and expenses.

[[Page 6150]]

    27. After staff receives this Agreement executed on behalf of Core, 
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).
    28. 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 Core, 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.
    29. Effective upon the later of: (i) The Commission's final 
acceptance of the Agreement and service of the accepted Agreement upon 
Core and (ii) the date of issuance of the final Order, for good and 
valuable consideration, Core 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 Core 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.
    30. Core shall maintain an improved compliance program designed to 
ensure compliance with the CPSA with respect to any consumer product 
imported, manufactured, distributed, or sold by Core, 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 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) Core'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 CPSC staff upon 
request.
    31. Core 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 Core:
    (i) Information required to be disclosed by Core 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 Core'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, Core's ability to record, 
process and report to the Commission in accordance with applicable law.
    32. Upon request of staff, Core shall provide written documentation 
of its internal controls and procedures, including, but not limited to, 
the effective dates of the procedures and improvements thereto. Core 
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 Core's compliance with the terms 
of the Agreement.
    33. The parties acknowledge and agree that the Commission may 
publicize the terms of the Agreement and the Order.
    34. Core 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 Core, enforceable against Core in accordance with 
its terms. The individuals signing the Agreement on behalf of Core 
represent and warrant that they are duly authorized by Core to execute 
the Agreement.
    35. The signatories represent that they are authorized to execute 
this Agreement.
    36. The Agreement is governed by the laws of the United States.
    37. The Agreement and the Order shall apply to, and be binding 
upon, Core and each of its successors, transferees, and assigns; and a 
violation of the Agreement or Order may subject Core, and each of its 
successors, transferees, and assigns, to appropriate legal action.
    38. The Agreement and the Order constitute the complete agreement 
between the parties on the subject matter contained therein.
    39. 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.
    40. 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.
    41. 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 Core agree in writing that severing the provision materially 
affects the purpose of the Agreement and the Order.

[[Page 6151]]

[GRAPHIC] [TIFF OMITTED] TN03FE22.045

U.S. CONSUMER PRODUCT SAFETY COMMISSION

Mary B. Murphy,

Director, Division of Enforcement and Litigation, Office of 
Compliance and Field Operations.

    Dated: 1/12/2022
By: Liana G. T. Wolf,
Digitally signed by Liana G.T. Wolf.

    Date: 2022.01.12 17:58:59 -05'00'

Liana G.T. Wolf,

Trial Attorney, Division of Enforcement and Litigation, Office of 
Compliance and Field Operations.

United States of America, Consumer Product Safety Commission

    In the Matter of: CORE HEALTH & FITNESS, LLC, CPSC Docket No.: 22-
C0001

Order

    Upon consideration of the Settlement Agreement entered into between 
Core Health & Fitness, LLC (``Core''), and the U.S. Consumer Product 
Safety Commission (``Commission''), and the Commission having 
jurisdiction over the subject matter and over Core, 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 Core shall comply with all terms of the 
Settlement Agreement including payment of a civil penalty in the amount 
of six million five hundred thousand dollars ($6,500,000), 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 Core to make the foregoing payment when due, 
interest on the unpaid amount shall accrue and be paid by Core at the 
federal legal rate of interest set forth at 28 U.S.C. 1961(a) and (b). 
If Core 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 25th, 
day of January 2022.

    By Order of the Commission:
/s/--------------------------------------------------------------------
Alberta Mills,
Secretary, U.S. Consumer Product Safety Commission.
[FR Doc. 2022-02211 Filed 2-2-22; 8:45 am]
BILLING CODE 6355-01-P