[Federal Register Volume 59, Number 157 (Tuesday, August 16, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-19800]
[[Page Unknown]]
[Federal Register: August 16, 1994]
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CONSUMER PRODUCT SAFETY COMMISSION
[CPSC Docket No. 94-C0013]
The Toro Company, Inc., a Corporation; Provisional Acceptance of
a Settlement Agreement and Order
AGENCY: Consumer Product Safety Commission.
ACTION: Provisional Acceptance of a Settlement Agreement under the
Consumer Product Safety Act.
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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 Part
1118.20(e)-(h). Published below is a provisionally-accepted Settlement
Agreement with The Toro Company, Inc., a corporation.
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 August 31, 1994.
ADDRESSES: Persons wishing to comment on this Settlement Agreement
should send written comments to the Comment 94-C0013, Office of the
Secretary, Consumer Product Safety Commission, Washington, D.C. 20207.
FOR FURTHER INFORMATION CONTACT:
Michael J. Gidding, Trial Attorney, Office of Compliance and
Enforcement, Consumer Product Safety Commission, Washington, D.C.
20207; telephone (301) 504-0626.
SUPPLEMENTARY INFORMATION: The text of the settlement agreement and
order appears below.
Dated: August 8, 1994.
Sadye E. Dunn,
Secretary.
Settlement Agreement and Order
1. This Settlement Agreement and Order, entered into between The
Toro Company, a corporation (hereinafter ``Toro''), and the staff of
the Consumer Product Safety Commission (hereinafter ``the staff'')
is a compromise resolution of the matter described herein, without a
hearing or determination of issues of law or fact.
I. The Parties
2. The Toro Company is a corporation organized and existing
under the laws of the state of Delaware, with its principal
corporate offices located at 8111 Lyndale Avenue South, Bloomington,
Minnesota 55420-1196.
3. The staff of the Consumer Product Safety Commission
(hereinafter ``the Commission'') are those members of the
Commission's staff responsible for enforcing the laws administered
by the Commission. The Commission is an independent federal
regulatory agency established by Congress pursuant to section 4 of
the Consumer Product Safety Act (hereinafter, ``the CPSA'' or ``the
Act''), 15 U.S.C. Sec. 2053.
II. Jurisdiction
4. On November 7, 1989, Toro acquired Lawn-Boy. Inc,
(hereinafter ``Lawn-Boy''), a manufacturer and distributor of
various models of lawn mowers. Lawn-Boy manufactured the lawn mowers
at issue in this proceeding for sale to consumers for use around
permanent or temporary households or residences. These lawn mowers
are ``consumer products'' within the meaning of section 3(a)(1) of
the CPSA, 15 U.S.C. Sec. 2051(a)(1).
5. Between approximately October 1, 1987 and August 29, 1989,
Lawn-Boy manufactured and distributed over 160,000 lawn mowers,
identified as ``L'' series lawn mowers, for sale to consumers
throughout the United States. During 1989 and 1990, Lawn-Boy also
manufactured lawn mowers under the ``M'' series and ``Model 8157''
designations, respectively, for sale to consumers throughout the
United States. Lawn-Boy, therefore, is a ``manufacturer'' of
consumer products which are ``distributed in Commerce'', as those
terms are defined in sections 3(a)(4) and (11) of the CPSA, 15
U.S.C. Sec. 2052(a)(4) and (11).
6. After its acquisition by Toro, Lawn-Boy operated as a wholly-
owned subsidiary of Toro until July 31, 1992, when its assets and
liabilities were transferred to Toro. Since its acquisition of Lawn-
Boy, Toro has been responsible for controlling the acts and
practices of Lawn-Boy, including assuring that Lawn-Boy complied
with the requirements of section 15(b) of the CPSA, 15 U.S.C.
Sec. 2064(b), and the regulations issued thereunder, 16 C.F.R.
Sec. 1115, et seq.
III. The Products
7. The products at issue in this matter are walk-behind lawn
mowers.
IV. Staff Allegations Concerning the ``L'' Series, ``M'' Series and
``Model 8157'' Lawn Mowers and the Failure of Toro To Assure That
its Subsidiary, Lawn-Boy Complied With the Reporting Requirements
of Section 15(b) of the CPSA
8. Section 15(b) of the Consumer Product Safety Act, 15 U.S.C.
Sec. 2064(b), requires a manufacturer of a consumer product who,
inter alia, obtains information that reasonably supports the
conclusion that the product contains a defect which could create a
substantial product hazard or that the product creates an
unreasonable risk of serious injury or death to inform the
Commission immediately of the defect or risk.
The ``L'' Series Lawn Mowers
9. Between October, 1987 and August, 1989, Lawn-Boy's ``L''
series lawn mowers were equipped with gas tanks that were
susceptible to leakage because of improper bonding of the tank
halves during a hot-plate welding process. Lawn-Boy learned of the
leakage problem in 1988 and replaced leaking gas tanks on lawn
mowers brought in for service through 1990. In early 1989, Lawn-
Boy's fuel tank supplier modified the tank design to improve bonding
of the gas tank halves. In August 1989, Lawn-Boy authorized its tank
supplier to build new machinery to improve the hot-welding process
to correct the leakage problem.
10. After Toro's acquisition of Lawn-Boy in 1989, Lawn-Boy
continued to receive complaints about seam leakage on ``L'' series
mower gas tanks, and Lawn-Boy dealers continued to replace leaking
tanks on mowers brought in for service. In its capacity as corporate
parent of its wholly-owned subsidiary, Lawn-Boy, Toro knew or, with
the exercise of due diligence, should have known that the tanks were
defective and that the defect could expose consumers to a
substantial risk of injury from fire.
11. Despite the pattern of tank seam failures that continued
after Toro's acquisition of Lawn-Boy, Toro failed to provide any
information concerning the failures to the Commission until a
Commission investigator inspected Lawn-Boy in November, 1990. Toro
did not file an initial report under section 15(b) until March,
1991.
12. Toro failed to report information concerning gas tank seam
failures on ``L'' series mowers to the Commission in a timely manner
as required by section 15(b) of the CPSA, as amended, 15 U.S.C.
Sec. 2064(b).
The ``M'' Series Lawn Mowers
13. During 1989 and 1990, Lawn-Boy manufactured and distributed
``M'' series lawn mowers that experienced gas tank leakage. The
method of mounting and attaching the tanks to the mower engines
resulted in wear on the tanks that caused the tanks to fail and
leak. Lawn-Boy received complaints of leakage after its acquisition
by Toro, redesigned the mounting system, and, in 1990, included
redesigned brackets and tanks in an ``upgrade kit'' to be installed
by Lawn-Boy distributors and dealers on ``M'' series mowers brought
in for service.
14. In its capacity as the corporate parent of its wholly-owned
subsidiary, Lawn-Boy, Toro knew, or with the exercise of due
diligence, should have known that the method of mounting the tanks
caused wear on the tanks and could expose consumers to a substantial
risk of injury from fire. Despite the pattern of tank failures, Toro
failed to provide any information concerning the failures to the
Commission until a Commission investigator inspected Lawn-Boy in
November, 1990.
15. Toro failed to report information relating to gas tank
failures on the ``M'' series lawn mowers to the Commission in a
timely manner as required by section 15(b) of the CPSA, as amended,
15 U.S.C. Sec. 2064(b).
The ``Model 8157'' Series Lawn Mowers
16. In 1987 and 1988, Lawn-Boy manufactured and distributed
Model 8157 series lawn mowers. In 1989, Lawn-Boy received complaints
that the gas tanks on these lawn mowers were experiencing gas
leakage as a result of fractures in the fuel tank nipples. In 1990,
a revised fuel tank nipple was incorporated in replacement tanks for
the Model 8157 series.
17. In its capacity as the corporate parent of its wholly-owned
subsidiary, Lawn-Boy, Toro knew, or, with the exercise of due
diligence, should have known that gas tank fuel nipples were
fracturing and could expose consumers to a substantial risk of
injury from fire. Despite the pattern of tank failures, Toro failed
to provide any information concerning the failures to the Commission
until a Commission investigator inspected Lawn-Boy in November,
1990.
18. Toro failed to report information relating to gas tank
failures on the Model 8157 series lawn mowers to the Commission in a
timely manner as required by section 15(b) of the CPSA, as amended,
15 U.S.C. Sec. 2064(b).
V. Response of Toro
19. Toro denies each and all of the staff allegations with
respect to the mowers identified in this agreement. Further, Toro
denies the allegations that the Lawn-Boy ``L'' series lawn mowers
identified in paragraph 9 of this agreement, the ``M'' series lawn
mowers identified in paragraph 13, and the ``Model 8157'' series
lawn mowers identified in paragraph 16 contained defects which
created or could have created a substantial product hazard within
the meaning of section 15(a) of the CPSA, 15 U.S.C. 2064(a). Toro
further denies that any of these lawn mowers created an unreasonable
risk of death or serious injury. Accordingly, Toro contends that it
had no obligation to report to the Commission under section 15(b).
20. Toro contends further that the complaints relating to the
Model 8157 mowers were as a result of a local manufacturer-
distributor dispute and that no unusual reports of problems were
received when the same mowers were redistributed to other parts of
the country.
21. Toro further asserts that it has received no reports of
injuries from the use of any of the products enumerated in this
agreement. Toro makes no admission whatsoever of any fault,
liability, or statutory violation in the event any person should
claim injuries resulting from the use of these products.
22. Toro further contends that, to the extent there were any
leakage problems with any of these lawn mowers, those problems arose
prior to Toro's acquisition of Lawn-Boy. Lawn-Boy's prior corporate
parent, Outboard Marine Corporation, failed to disclose any such
problem to Toro, despite representing in the agreement with Toro to
purchase the stock of Lawn-Boy that (1) Lawn-Boy had no liabilities
or obligations which would be required to be disclosed on a
Financial Statement prepared in conformity with generally accepted
accounting principles, (2) Lawn-Boy was not in violation of any
applicable law, statute, order, rule or regulation, which, if
violated, would be reasonably likely to have a material adverse
effect, and (3) since September 30, 1988, no material adverse change
or event that was reasonably likely to result in a material adverse
change in the assets, liabilities, financial condition, or business
of Lawn-Boy had occurred. Toro acted reasonably and with due
diligence in relying on these representations to conclude that its
newly acquired subsidiary, Lawn-Boy, was in full compliance with the
requirements of section 15(b) of the CPSA.
VI. Agreement of the Parties
23. The parties enter this agreement solely for the purposes of
settlement. Toro and the staff agree that the Commission has
jurisdiction in this matter for purposes of entry and enforcement of
this Settlement Agreement and Order.
24. Toro agrees to pay the Commission a civil penalty in the
amount of one hundred and seventy thousand dollars ($170,000)
payable within twenty (20) days after service of the Final Order.
This payment is made in settlement of the staff allegations that
Toro violated the reporting requirements of section 15(b) of the
CPSA with regard to the lawn mowers described above. In agreeing to
this settlement, Toro affirms that it does not accept the Commission
staff allegations as factual, nor does Toro admit to any liability
in this matter.
25. Toro further agrees to assist the Commission staff in any
further investigation of this matter by providing, upon specific
request and without the issuance of a subpoena duces tecum, such
testimony and evidence as Toro would otherwise be required to
produce if such a subpoena issued. Toro reserves the right to
contest any specific request for information that it believes it
would not be required to be produced in response to such a subpoena,
and further reserves the right to assert any claims of
confidentiality or privilege that would be available in the course
of a proceeding by the staff to enforce such a subpoena.
26. The agreement to settle this matter is based on the
information provided to the Commission staff by Toro as of May 20,
1994. The Commission reserves the right to seek an additional
penalty if it acquires information that establishes that, between
November 7, 1989 and November 28, 1990, Toro or its authorized
representatives received information from its subsidiary, Lawn-Boy,
that reasonably supported the conclusion that gas tank seam
separation and leakage in the ``L'' series mowers (a) constituted a
defect which could create a substantial product hazard, as that term
is defined in section 15(a)(2) of the CPSA, 15 U.S.C.
Sec. 2064(a)(2), or (b) created an unreasonable risk of serious
injury or death.
27. Payment of the full amount of the penalty shall settle fully
the staff's allegations set forth in paragraphs 9 through 18 above,
subject to the reservation contained in paragraph 26.
28. For the purposes of section 6(b) of the CPSA, 15 U.S.C.
Sec. 2055(b), this matter shall be treated as if a complaint had
issued.
29. Upon provisional acceptance of this Settlement Agreement and
Order, the agreement and order shall be placed on the public record
and shall be published in the Federal Register in accordance with
the procedure set forth in 16 CFR 1118.20(e). If, within 15 days of
publication, the Commission has not received any written request not
to accept the Settlement Agreement and Order, The Settlement
Agreement and Order will be deemed to be finally accepted on the
16th day after the date it is published in the Federal Register (16
CFR 1118.20(f)).
30. Upon final acceptance of this Settlement Agreement and Order
by the Commission, Toro knowingly, voluntarily, and completely
waives any rights it might have: (1) to an administrative or
judicial hearing with respect to the Commission's claim for a civil
penalty, (2) to judicial review or other challenge to or contest of
the validity of the Commission's action with regard to its claim for
a civil penalty, (3) to a determination by the Commission as to
whether a violation of section 15(b) of the CPSA, 15 U.S.C.
Sec. 2064(b), has occurred, and (4) to a statement of findings of
fact and conclusions of law with regard to the Commission's claim
for a civil penalty.
31. The parties further agree that the Commission shall issue
the incorporated Order under the CPSA, 15 U.S.C. Sec. 2051 et seq,,
and that a violation of the Order will subject Toro to appropriate
legal action.
32. No agreement, understanding, representation, or
interpretation not contained in this Settlement Agreement may be
used to vary or contradict its terms.
Dated: June 13, 1994.
The Toro Company
J. David McIntosh,
Vice President and General Manager Consumer Division
The Consumer Product Safety Commission
David Schmeltzer
Associate Executive Director, Office of Compliance and Enforcement
Eric C. Stone
Director, Division of Administrative Litigation, Office of Compliance
and Enforcement
Michael J. Gidding
Attorney, Division of Administrative Litigation, Office of Compliance
and Enforcement
Order
In the Matter of THE TORO COMPANY, INC., a corporation. CPSC
Docket No. 94-C0013.
Upon consideration of the Settlement Agreement entered between
respondent The Toro Company, a corporation, and the staff of the
Consumer Product Safety Commission; and the Commission having
jurisdiction over the subject matter and The Toro Company; and it
appearing the Settlement Agreement is in the public interest, it is
Ordered, that the Settlement Agreement be and hereby is accepted,
as indicated below; and it is
Further Ordered, that upon final acceptance of the Settlement
Agreement, The Toro Company shall pay to the order of the Consumer
Product Safety Commission a civil penalty in the amount of one hundred
and seventy thousand dollars ($170,000), within twenty (20) days after
receipt of the Final Order and Decision in this matter.
Provisionally accepted and Provisional Order issued on the 8th day
of August, 1994.
By order of the Commission.
Sadye E. Dunn,
Secretary, Consumer Product Safety Commission.
[FR Doc. 94-19800 Filed 8-15-94; 8:45 am]
BILLING CODE 6355-01-M