[Federal Register Volume 60, Number 77 (Friday, April 21, 1995)]
[Notices]
[Pages 19894-19896]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-9848]



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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 95-C0011]


Outboard Marine Corp., 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 1118.20(e). 
Published below is a provisionally-accepted Settlement Agreement with 
Outboard Marine Corporation, 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 May 8, 1995.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 95-C0011, Office of the 
Secretary, Consumer Product Safety Commission, Washington, DC 20207.

FOR FURTHER INFORMATION CONTACT:
Michael J. Gidding, Trial Attorney, Office of Compliance and 
Enforcement, Consumer Product Safety Commission, Washington, DC 20207; 
telephone (301) 504-0626.

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

    Dated: April 14, 1995.
Sadye E. Dunn,
Secretary.

Settlement Agreement

    In the matter of: Outboard Marine Corporation; a corporation. 
CPSC Docket No. 95-C0011.

    1. This Settlement Agreement, entered into between the Outboard 
Marine [[Page 19895]] Corporation, a corporation (hereinafter ``OMC''), 
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. Outboard Marine Corporation is a manufacturer of boats and 
boating equipment. During the period of time relevant to this matter, 
OMC also owned subsidiaries that manufactured lawn and garden 
equipment. From 1987 to May, 1989, OMC owned and operated a division 
known as Lawn-Boy, Inc. (hereinafter ``Lawn-Boy''), a manufacturer and 
distributor of various models of lawn mowers. From June, 1989 until 
November 7, 1989, when Lawn-Boy was sold to the Toro Company, Lawn-Boy 
operated as a wholly-owned corporate subsidiary of OMC.
    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 
Commision 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. 2053.

II. Jurisdiction

    4. Lawn-Boy, acting in its capacity as a division and, after June 
4, 1989, as a wholly-owned corporate subsidiary of OMC, 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 subsection 
3(a)(1) of the CPSA, 15 U.S.C. 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, 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. 2052(a)(4) and (11). With respect to lawn mowers 
manufactured during the time prior to June, 1989 when Lawn Boy was a 
division of OMC, OMC was also a ``manufacturer'' of consumer products 
which were distributed in commerce, as those terms are defined in 
sections 3(a)(4) and (11) of the CPSA.

III. The Products

    6. The products at issue in this matter are walk-behind lawn 
mowers.

IV. Staff Allegations

    7. OMC was responsible for controlling the acts and practices of 
Lawn-Boy, both as a division and subsequently as a corporate subsidiary 
of OMC, including complying with the requirements of section 15(b) of 
the CPSA, 15 U.S.C. 2064(b), and the regulations issued thereunder, 16 
CFR 1115, et seq.
    8. Section 15(b) of the Consumer Product Safety Act, 15 U.S.C. 
2064(b), requires a manufacturer of a consumer product who obtained 
information that reasonably supported the conclusion that the product 
contained a defect which could create a substantial product hazard to 
inform the Commission immediately of the defect or risk.

The ``L'' Series Lawn Mowers

    9. Between October, 1987 and August, 1989, Lawn-Boy/OMC ``L'' 
series lawn mowers were equipped with gas tanks that were susceptible 
to leakage and thus were defective because of improper bonding of the 
tank halves during a hot-plate welding process. Lawn-Boy/OMC learned of 
the leakage problem in 1988 and replaced leaking gas tanks on lawn 
mowers brought in for service through 1988 and 1989. In early 1989, 
Lawn-Boy's/OMC's fuel tank supplier modified the tank design to improve 
bonding of the gas tank halves. In August, 1989, Lawn-Boy/OMC 
authorized its tank supplier to build new machinery to improve the hot-
welding process to correct the leakage problem.
    10. Both as the manufacturer of the lawn mowers that are the 
subject of paragraph 9 and, after June, 1989, in its capacity as 
corporate parent of its wholly-owned subsidiary, Lawn-Boy, OMC knew or, 
with the exercise of due diligence, should have known that the tanks on 
the ``L'' series lawn mowers were defective and that the defect could 
expose consumers to a substantial risk of injury from fire.
    11. Despite the pattern of ``L'' series tank seam failures that 
occurred prior to the sale of Lawn-Boy, OMC failed to provide any 
information concerning the failures to the Commission.
    12. OMC's failure to report information relating to gas tank seam 
failures on ``L'' series mowers to the Commission violated section 
15(b) of the CPSA, as amended, 15 U.S.C. 2064(b).

The ``M'' Series Lawn Mowers

    13. During 1989, Lawn-Boy/OMC 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 leak. Lawn-Boy/OMC received 
complaints of fuel leakage caused by the defective mounting method.
    14. Both as the manufacturer of lawn mowers that are the subject of 
paragraph 13 and, after June, 1989, in its capacity as the corporate 
parent of its wholly-owned subsidiary, Lawn-Boy, OMC knew, or with the 
exercise of due diligence, should have known that the method of 
mounting the tanks was defective and could expose consumers to a 
substantial risk of injury from fire. Despite the pattern of ``M'' 
series tank failures, OMC failed to provide any information concerning 
the failures to the Commission.
    15. OMC's failure to report information relating to gas tank 
failures on the ``M'' series lawn mowers to the Commission violated the 
requirements section 15(b) of the CPSA, as amended, 15 U.S.C. 2064(b).

The ``Model 8157'' Series Lawn Mowers

    16. From 1987 to 1989, Lawn-Boy/OMC manufactured and distributed 
Model 8157 series lawn mowers. In 1989, Lawn-Boy/OMC received 
complaints that the gas tanks on these lawn mowers were experiencing 
gas leakage as a result of fractures in the fuel tank nipples.
    17. Both as a manufacturer of the lawn mowers that are the subject 
of paragraph 16 and, after June, 1989, in its capacity as the corporate 
parent of its wholly-owned subsidiary, Lawn-Boy, OMC knew, or, with the 
exercise of due diligence, should have known that the fracturing gas 
tank fuel nipples were defective and could expose consumers to a 
substantial risk of injury from fire. Despite the pattern of Model 8157 
tank failures, OMC failed to provide any information concerning the 
failures to the Commission.
    18. OMC's failure to report information relating to gas tank 
failures on the Model 8157 series lawn mowers to the Commission 
violated section 15(b) of the CPSA, as amended, 15 U.S.C. 2064(b).

V. Response of OMC

    19. OMC denies and does not accept as factual each and all of the 
staff [[Page 19896]] allegations with respect to the mowers identified 
in this agreement, nor does OMC admit to any liability in this matter. 
Further, OMC 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). Accordingly, OMC 
contends that no obligation to report to the Commission under section 
15(b) existed with respect to any of these lawn mowers.
    20. OMC further contends that the Commission's acceptance of a 
$170,000 civil penalty from the Toro Company for the failure to report 
to the Commission information relating to the gas tank failures 
identified in paragraphs 9, 13, and 16 of this Settlement Agreement and 
Order constitutes an election of remedies by the Commission which 
extinguishrs any alleged liability on the part of OMC.
    21. OMC further asserts that it received no reports of injuries 
from the use of any of the products enumerated in this agreement prior 
to and after the sale of Lawn-Boy to Toro. OMC 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.

VI. Agreement of the Parties

    22. The parties enter this agreement solely for the purposes of 
settlement. OMC and the staff agree that the Commission has 
jurisdiction in this matter for purposes of entry and enforcement of 
this Settlement Agreement and Order.
    23. OMC shall pay the Commission a civil penalty in the amount of 
seventy-five thousand dollars ($75,000) payable within twenty (20) days 
after service of the Final Order. Payment of the full amount of the 
penalty shall settle fully the staff's allegations set forth in 
paragraphs 9 through 18 above. OMC shall have no further liability to 
the Commission for any corrective action concerning the leaking gas 
tanks described in paragraphs 9, 13, and 16 of this complaint.
    24. For the purposes of settlement, OMC waives any rights it may 
have in this matter under section 6(b)(1) through (5) of the CPSA, 15 
U.S.C. 2055(a)(1)-(5).
    25. 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)). Upon 
final acceptance, the Commission shall issue and serve upon OMC the 
attached Order incorporated herein by reference.
    26. Upon final acceptance of this Settlement Agreement and Order by 
the Commission, OMC 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. 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.
    27. The parties further agree that the Commission shall issue the 
incorporated Order under the CPSA, 15 U.S.C. 2051 et seq., and that a 
violation of the Order will subject OMC to appropriate legal action.
    28. No agreement, understanding, representation, or interpretation 
not contained in this Settlement Agreement may be used to vary or 
contradict its terms.

Outboard Marine Corporation.

    Dated: April 12, 1995.
Michael A. Brown,
Counsel.
    The Consumer Product Safety Commission.
    Dated: April 12, 1995.
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: Outboard Marine Corporation; a corporation. 
CPSC Docket No. 95-C0011.

    Upon consideration of the Settlement Agreement entered between 
respondent Outboard Marine Corporation, a corporation, and the staff of 
the Consumer Product Safety Commission; and the Commission having 
jurisdiction over the subject matter and Outboard Marine Corporation; 
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, Outboard Marine Corporation shall pay to the order of the 
Consumer Product Safety Commission a civil penalty in the amount of 
seventy-five thousand dollars ($75,000), within twenty (20) days after 
receipt of the Final Order and Decision in this matter.

    Provisionally accepted and Provisional Order issued on the 14th 
day of April, 1995.

    By order of the Commission.
Sadye E. Dunn,
Secretary, Consumer Product Safety Commission.
[FR Doc. 95-9848 Filed 4-20-95; 8:45 am]
BILLING CODE 6355-01-M