Proposed Settlement Agreement, Stipulation, Order and Judgement, etc.; Bestar, Inc., 91366-91371 [2024-26934]

Agencies

• Consumer Product Safety Commission

[Federal Register Volume 89, Number 223 (Tuesday, November 19, 2024)]
[Notices]
[Pages 91366-91371]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-26934]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 25-C0001]


Proposed Settlement Agreement, Stipulation, Order and Judgement, 
etc.; Bestar, Inc.

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 Bestar, Inc., containing a civil penalty in the amount 
of $16,025,000 subject to the terms and conditions of the Settlement 
Agreement. The Commission voted unanimously (5-0) to provisionally 
accept the proposed Settlement Agreement and Order pertaining to 
Bestar. Inc.

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 December 4, 2024.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to Comment 25-C0001, Office of the 
Secretary, Consumer Product Safety Commission, 4330 East West Highway, 
Bethesda, MD 20814; telephone: (240) 863-8938 (mobile), (301) 504-7479 
(office); email: [email protected].

FOR FURTHER INFORMATION CONTACT: Serena Anand, Trial Attorney, Division 
of Enforcement and Litigation, Office of Compliance and Field 
Operations, Consumer Product Safety Commission, 4330 East West Highway, 
Bethesda, Maryland 20814; [email protected]; 301-504-7498 (office).

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

    Dated: November 14, 2024.
Elina Lingappa,
Paralegal Specialist.

United States of America

Consumer Product Safety Commission

    In the Matter of: BESTAR, INC.

CPSC Docket No.: 25-C0001

Settlement Agreement

    1. In accordance with the Consumer Product Safety Act, 15 U.S.C. 
2051--2089 (``CPSA''), and 16 CFR 1118.20, Bestar, Inc. (``Bestar''), 
and the United States Consumer Product Safety Commission 
(``Commission'' or ``CPSC''), 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 Sec.  1118.20(b). The 
Commission issues the Order under the provisions of the CPSA.
    3. Bestar is a corporation, organized and existing under the laws 
of the province of Qu[eacute]bec, Canada, with its principal place of 
business in Lac-M[eacute]gantic, Qu[eacute]bec, Canada. Bestar also 
maintains a manufacturing facility in Jamestown, NY and distribution 
center in Erie, PA.

Staff Charges

    4. Between June 2014 and March 2022, Bestar manufactured and 
distributed in the United States approximately 129,000 wall beds (the 
``Subject Products'').
    5. The Subject Products are ``consumer products'' that were 
``manufactur[ed]''and ``distribut[ed] in commerce,'' as those terms are 
defined or used in Sections 3(a)(5), (7), and (10) of the CPSA, 15 
U.S.C. 2052(a)(5), (7), and (10). Bestar is a ``manufacturer'' and 
``distributor'' of the Subject Products, as such terms are defined in 
Sections 3(a)(8) and (11) of the CPSA, 15 U.S.C. 2052(a)(8) and (11).
Violation of CPSA Section 19(a)(4)
    6. The Subject Products contain a defect which could create a 
substantial product hazard or create an unreasonable risk of serious 
injury because the wall beds can detach from the wall and fall onto 
those nearby, posing a serious impact and crush hazard.

[[Page 91367]]

    7. Beginning in September 2014 and continuing through 2022, Bestar 
received numerous reports that the Subject Products had detached from 
the wall. By 2016, Bestar had received notice of two incidents in which 
consumers were injured by a falling Subject Product. Bestar engaged 
with CPSC and Health Canada in response to these two incidents, but did 
not inform regulators of the additional five incidents it had become 
aware of by that time.
    8. In 2018, a Subject Product detached and fell on top of a 
consumer, causing injuries which required immediate hospitalization and 
eventually led to her death later that year, constituting grievous 
bodily injury, as defined in 16 CFR 1115.12(d).
    9. During the relevant timeframe, Bestar continued to accumulate 
incident information, and by the time Bestar filed its Section 15(b) 
Full Report with the Commission under 15 U.S.C. 2064(b), Bestar was 
aware of at least 35 incidents, including 1 fatality and 15 injuries, 
some of which were serious.
    10. Despite possessing 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, Bestar did not immediately report to the 
Commission.
    11. The Commission and Bestar jointly announced a recall of the 
Subject Products on April 7, 2022.
 Failure To Timely Report
    12. Despite having information reasonably supporting the conclusion 
that the Subject Products contained a defect which could create a 
substantial product hazard or created an unreasonable risk of serious 
injury or death, Bestar 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).
    13. Because the information in Bestar's possession about the 
Subject Products constituted actual and presumed knowledge, Bestar 
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).
    14. Pursuant to Section 20 of the CPSA, 15 U.S.C. 2069, Bestar 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 Bestar

    15. This Agreement does not constitute an admission by Bestar to 
the allegations set forth in paragraphs 4 through 14, including 
allegations that Bestar violated any statute or regulation, or 
knowingly violated the CPSA or CPSIA.
    16. At all times, Bestar acted in good faith.
    17. Bestar has received no substantiated claims that the Subject 
Products have fallen or injured consumers when the beds were properly 
assembled and anchored to the wall.
    18. Bestar asserts that the Subject Products do not contain any 
defect, let alone a defect that could create a substantial product 
hazard or an unreasonable risk of serious injury or death.
    19. Bestar asserts that it timely submitted a report after the 2018 
incident in accordance with Section 15(b) of the CPSA, and its 
implementing regulations, following a reasonable investigation which 
indicated that despite robust instructions and warnings, the Subject 
Products may pose a risk of injury if improperly installed.

Agreement of the Parties

    20. Under the CPSA, the Commission has jurisdiction over the matter 
involving the Subject Products and Bestar.
    21. The parties enter into the Agreement for settlement purposes 
only. The Agreement does not constitute an admission by Bestar or a 
determination by the Commission that Bestar violated the CPSA.
    22. In settlement of staff's allegations, and to avoid the cost, 
distraction, delay, uncertainty, and inconvenience of protracted 
litigation or other proceedings, Bestar shall pay a civil penalty in 
the amount of sixteen million, twenty-five thousand dollars 
($16,025,000) (``Total Civil Penalty Amount''). In reliance on the 
accuracy, truthfulness, and completeness of Bestar's representations 
and the documentation referenced below in paragraph 23, the Commission 
agrees to suspend all but four million dollars ($4,000,000) of the 
Total Civil Penalty Amount (``$4,000,000 Payment''), on the terms and 
conditions set forth in this Agreement. The $4,000,000 Payment shall be 
paid in six total installments. The first installment, one million 
dollars ($1,000,000), shall be paid within thirty (30) calendar days 
after Bestar receives service of the Commission's Final Order accepting 
the Agreement. The remaining three million dollars ($3,000,000) shall 
be paid in installments annually on the following schedule: five 
hundred thousand dollars ($500,000) one (1) year from the date of final 
acceptance; five hundred thousand dollars ($500,000) two (2) years from 
the date of final acceptance; five hundred thousand dollars ($500,000) 
three (3) years from the date of final acceptance; five hundred 
thousand dollars ($500,000) four (4) years from the date of final 
acceptance; one million dollars ($1,000,000) five (5) years from the 
date of final acceptance. 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 
Bestar under this Agreement. Failure to make any payment by the dates 
specified in this paragraph shall constitute ``Default,'' making the 
Total Civil Penalty Amount, plus any accrued and unpaid interest minus 
any penalty amounts paid by Bestar, immediately due and payable.
    23. The Commission's agreement to suspend part of the Total Civil 
Penalty Amount is expressly premised upon Bestar's representations that 
the following financial documents, communications, and representations 
provided by Bestar do not contain any untrue statement of a material 
fact or omit any material fact necessary in order to make the statement 
therein, true, accurate, and not misleading:
    (i) the sworn Affidavit of Luc Mongeau (attached as Exhibit A to 
the Agreement) signed on October 17, 2024; and
    (ii) the Audited Financial Statements, documentation on the 
industry outlook and Bestar's decline in sales, and the Credit 
Forbearance Letter of Bestar, submitted to Commission counsel Serena 
Anand on June 19, 2024 and September 26, 2024 (collectively, ``Bestar's 
Representations'').
    24. If Bestar failed to disclose any material asset, materially 
misstated the value of any asset, or made any other material 
misstatement or omission in Bestar's Representations, or if Bestar 
fails to make a payment ordered pursuant to this agreement within the 
agreed upon time frame, the suspension of the Total Civil Penalty 
Amount shall be lifted, and the entire $16,025,000 Total Civil Penalty 
Amount shall become immediately due and payable.
    25. The Commission or the United States may seek enforcement for 
any breach of, or any failure to comply with, any provision of this 
Agreement and Order in United States District Court, to seek relief 
including, but not limited to,

[[Page 91368]]

lifting the suspension of the Total Civil Penalty Amount and collecting 
amounts due.
    26. All unpaid amounts, if any, due and owing under the Agreement, 
shall constitute a debt due and immediately owing by Bestar to the 
United States, and interest shall accrue and be paid by Bestar 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''). Bestar 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 Bestar 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. Bestar shall pay the United States all reasonable 
costs of collection and enforcement under this paragraph, respectively, 
including reasonable attorney's fees and expenses.
    27. After staff receives this Agreement executed on behalf of 
Bestar, 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) 
Commission's final acceptance of this Agreement and service of the 
accepted Agreement upon Bestar, 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: (1) the Commission's final 
acceptance of the Agreement and service of the accepted Agreement upon 
Bestar and (2) the date of issuance of the Final Order, for good and 
valuable consideration, Bestar 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 Bestar 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. Bestar shall maintain a compliance program designed to ensure 
compliance with the CPSA with respect to any consumer product imported, 
manufactured, distributed or sold by Bestar, which shall contain the 
following elements:
    (i) written standards, policies and procedures concerning products 
sold by Bestar in the United States, 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 has been reported;
    (ii) procedures and systems for tracking and reviewing claims, 
including warranty claims and reports for safety concerns, and for 
implementing corrective and preventive actions when compliance 
deficiencies or violations are identified;
    (iii) procedures requiring that information required to be 
disclosed by Bestar to the Commission is recorded, processed, and 
reported in accordance with applicable law;
    (iv) procedures requiring that all reporting made to the Commission 
is timely, truthful, complete, accurate, and in accordance with 
applicable law;
    (v) procedures requiring that immediate disclosure is made to 
Bestar'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, 
Bestar's ability to record, process and report to the Commission in 
accordance with applicable law;
    (vi) mechanisms to effectively communicate to all applicable Bestar 
employees, through training programs or other means, compliance-related 
company policies and procedures to prevent violations of the CPSA;
    (vii) 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;
    (viii) Bestar's senior management responsibility for CPSA 
compliance including the implementation of steps to ensure that 
incident and injury data is reviewed and analyzed for purposes of CPSA 
Section 15(b) reporting;
    (ix) for at least three (3) years, an annual internal audit of the 
effectiveness of policies, procedures, systems, and training related to 
CPSA compliance that evaluates opportunities for improvement, 
deficiencies or weaknesses, and the Firm's overall culture of 
compliance; and
    (x) retention of all CPSA compliance-related records for at least 
five (5) years, and availability of such records to CPSC staff upon 
request.
    31. Bestar shall submit a report under CPSA Section 16(b), sworn to 
under penalty of perjury:
    (i) describing in detail its compliance program and internal 
controls and the actions Bestar has taken to comply with each 
subparagraph of paragraph 30;
    (ii) affirming that during the reporting period Bestar has reviewed 
its compliance program and internal controls, including the actions 
referenced in subparagraph (i) of this paragraph, for effectiveness, 
and that it complies with each subparagraph of paragraph 30, or 
describing in detail any non-compliance with any such subparagraph; and
    (iii) identifying the results of the annual internal audit 
referenced in paragraph 30(ix) and any changes or modifications made 
during the reporting period to the Bestar's compliance program or 
internal controls to ensure compliance with the terms of the CPSA and, 
in particular, the requirements of CPSA Section 15 related to timely 
reporting.
    Such reports shall be submitted annually to the Director, Office of 
Compliance and Field Operations, Division of Enforcement and 
Litigation, for a period of three (3) years beginning 12 months after 
the Commission's Final Order of acceptance of the Agreement. The first 
report shall be submitted 30 days after the close of the first 12-month 
reporting period, and successive reports shall be due annually on the 
same date thereafter. Without limitation, Bestar acknowledges and 
agrees that failure to make such timely and accurate reports as 
required by this Agreement and Order may constitute a violation of 
Section 19(a)(3) of the CPSA.
    32. Notwithstanding and in addition to the above, Bestar shall 
promptly provide written documentation of any

[[Page 91369]]

changes or modifications to its compliance program or internal controls 
and procedures, including the effective dates of the changes or 
modifications thereto. Bestar 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 Bestar'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. Bestar 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 Bestar, 
enforceable against Bestar in accordance with its terms.
    35. The signatories represent that they are duly 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, Bestar and each of successors, transferees, and assigns; and a 
violation of the Agreement or Order may subject Bestar, and each of 
successors, transferees, and assigns, to appropriate legal action.
    38. The Agreement, any attachments, 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 Bestar agree in writing that severing the provision materially 
affects the purpose of the Agreement and the Order.

[[Page 91370]]

[GRAPHIC] [TIFF OMITTED] TN19NO24.006

BILLING CODE 6355-01-C

United States of America, Consumer Product Safety Commission

    In the Matter of: Bestar, Inc.

CPSC Docket No.: 25-C0001

Order

    Upon consideration of the Settlement Agreement entered into between 
Bestar, Inc. (``Bestar'') and the U.S. Consumer Product Safety 
Commission (``Commission'' or ``CPSC''), and the Commission having 
jurisdiction over the subject matter and over Bestar it appearing that 
the Settlement Agreement is in the public interest, the Settlement 
Agreement is incorporated by reference and it is:
    Provisionally accepted and provisional Order issued on the 12th day 
of November, 2024.

    By Order of the Commission:
/s/--------------------------------------------------------------------
Alberta E. Mills,
Secretary, U.S. Consumer Product Safety Commission.

Exhibit A to Settlement Agreement

Affidavit of Luc Mongeau, President of Bestar, Inc.

    I, the undersigned, swear and affirm that I am employed by Bestar, 
Inc. (``Bestar''), that I hold the position indicated below, and, by 
reason of my position, I am authorized and qualified to make the 
following statements. All capitalized terms not defined in this 
affidavit shall have the meanings given to them in the Settlement 
Agreement between Bestar and the U.S. Consumer Product Safety 
Commission (``CPSC'') dated the same date, of which this affidavit is a 
part:
    1. I have reviewed Bestar's financial statements and other 
documents identified in paragraph 23 of the Settlement Agreement, and 
they are complete, accurate and current, and fairly represent the 
financial conditions of Bestar as of the dates, and for the periods, 
indicated therein.

[[Page 91371]]

    2. To my knowledge and belief, Bestar has provided all available 
documents and information responsive to the CPSC's requests.
    3. To my knowledge and belief, the information provided by Bestar 
to the CPSC does not, as of the date of the Settlement Agreement, and 
did not, at the time provided to the CPSC, contain any untrue statement 
of a material fact or omit any material fact necessary in order to make 
the statement therein, in light of the circumstances under which they 
were made, not misleading.
    4. Bestar has insufficient cash or other liquid assets to satisfy a 
civil penalty payment in excess of $4,000,000. Bestar is wholly owned 
by shareholders who will not infuse additional capital into the 
company, and who are under no obligation to do so.
    5. As of December 31, 2023, Bestar breached certain loan covenants 
based on its financial ratios and was in Default under the terms of its 
Credit Agreement. Bestar has provided copies of the Tolerance Letter 
entered into between Bestar and its lenders to CPSC staff. As a result 
of this breach, Bestar has been unable to obtain additional funding 
from its existing lenders and was operating under a ``Tolerance 
Period'' while in Default. Since then, Bestar has been cooperating with 
its lenders to continue operations while it works toward a long-term 
solution for its dire financial condition.
    6. Bestar has attempted to obtain funding from unaffiliated third-
parties but has been unable to secure such funding. To my knowledge, 
Bestar has provided copies of these documents and communications to 
CPSC staff.
    7. Any civil penalty payment by Bestar in excess of $4,000,000, 
would cause Bestar significant financial hardship and compel Bestar to 
cease operations as an ongoing business.
    I declare under penalty of perjury that the foregoing is true and 
correct to my knowledge and belief. I understand that any intentional 
false statement in this declaration may be a criminal offense under 18 
U.S.C. 1001.
[GRAPHIC] [TIFF OMITTED] TN19NO24.007

[FR Doc. 2024-26934 Filed 11-18-24; 8:45 am]
BILLING CODE 6355-01-P