[Federal Register Volume 61, Number 55 (Wednesday, March 20, 1996)]
[Notices]
[Pages 11382-11384]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-6733]



=======================================================================
-----------------------------------------------------------------------

CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 96-C00014]


SKR Resources, 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.

-----------------------------------------------------------------------

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)-
(h). Published below is a provisionally-accepted Settlement Agreement 
with SKR Resources, 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 April 4, 1996.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 96-C0004, Office of the 
Secretary, Consumer Product Safety Commission, Washington, D.C. 20207.

FOR FURTHER INFORMATION CONTACT:
Dennis C. Kacoyanis, 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 Agreement and Order appears 
below.

    Dated: March 15, 1996.
Sadye E. Dunn,
Secretary.

Settlement Agreement and Order

    1. SKR Resources, Inc. (hereinafter, ``SKR''), a corporation, 
enters into this Settlement Agreement (hereinafter, ``Agreement'') with 
the staff of the Consumer Product Safety Commission,

[[Page 11383]]

and agrees to the entry of the Order described herein. The purpose of 
the Agreement and Order is to settle the staffs allegations that SKR 
knowingly introduced or caused the introduction in interstate commerce; 
received in interstate commerce and delivered or proffered delivery 
thereof for pay or otherwise; and failed to comply or caused the 
failure to comply with the Commission's Procedures For Export 
Noncomplying Products, the ``Ghost Blaster,'' a banned hazardous toy, 
in violation of sections 4(a), (c), and (i) of the Federal Hazardous 
Substances Act (FHSA), 15 U.S.C. Secs. 1263(a), (c), and (i).

I. The Parties

    2. The ``staff'' is the staff of the Consumer Product Safety 
Commission, an independent regulatory commission of the United States 
established pursuant to section 4 of the CPSA, 15 U.S.C. 2053.
    3. SKR is a corporation organized and existing under the laws of 
the State of New York, since 1989, with its principal corporate offices 
located at 307 Fifth Avenue, New York, NY 10016. SKR is a media buying 
service and barter company.

II. Allegations of the Staff

    4. The Ghost Blaster toy is a small plastic box which is capable of 
making two unique electronic sounds when the user presses one of two 
buttons. The Ghost Blaster toy is available in white, black, red, and 
gray. Each unit makes its own unique sound. Each Ghost Blaster toy has 
an insignia (``logo'') which represents the logo used in the motion 
picture ``Ghost Busters.'' The insignia is of a ghost inside a red 
circle with a red line through it.
    5. The Ghost Blaster toy identified in paragraph 4 above is 
intended for use by children under three years of age.
    6. The Ghost Blaster, is subject to, but failed to comply with, the 
Commission's Small Parts Regulation, 16 C.F.R. Part 1501, in that when 
tested under the ``use and abuse'' test methods specified in 16 C.F.R. 
1500.51 and 1500.52, (a) one or more parts of the toy separated and (b) 
one or more of the separated parts from the toy fit completely within 
the small parts cylinder when tested using the procedures set forth in 
16 C.F.R. 1501.4.
    7. Because the separated parts fit completely within the test 
cylinders as described in paragraph 6 above, the Ghost Blaster toy 
identified in paragraph 4 above presents a ``mechanical hazard'' within 
the meaning of section 2(s) of the FHSA, 15 U.S.C. Sec. 1261(s) 
(choking, aspiration, and/or ingestion of small parts).
    8. The Ghost Blaster toy identified in paragraph 4 above is a 
``hazardous substance'' pursuant to section 2(f)(1)(D) of the FHSA, 15 
U.S.C. Sec. 1261(f)(1)(D).
    9. The Ghost Blaster toy identified in paragraph 4 above is a 
``banned hazardous substance'' pursuant to section 2(q)(1)(A) of the 
FHSA, 15 U.S.C. Sec. 1261(q)(1)(A) and 16 C.F.R. 1500.18(a)(9) because 
it is intended for use by children under three years of age and bears 
or contains a hazardous substance and because it presents a mechanical 
hazard as described in paragraph 7 above.
    10. On or about July 11, 1990, SKR learned that the Ghost Blaster 
toy failed to comply with the Commission's Small Parts Regulation at 16 
C.F.R. Part 1501 and before a firm could export the product, it had to 
notify the Commission under the Commission's Procedures For Export of 
Noncomplying Products at section 14(d) of the FHSA, 15 U.S.C. 
Sec. 1273(d) and 16 C.F.R. Part 1019.
    11. On or about March 17, 1993, Premier Promotions and Marketing, 
Inc. (hereinafter, ``Premier'') and SKR entered into a contract whereby 
SKR agreed to purchase from Premier approximately 2.5 million Ghost 
Blaster toys identified in paragraph 4 above. The contract provided no 
restrictions on the resale of the Ghost Blaster toys by SKR ``with the 
exception that the units shall only be offered for resale by SKR for 
export in accordance with the requirements of the Consumer Product 
Safety Commission (CPSC).''
    12. In March, 1993, SKR asked Premier to deliver all the Ghost 
Blaster toys identified in paragraph 4 above to Brooklyn Closeout 
Corporation (hereinafter ``Brooklyn Closeout''), 167 Clymer Street, 
Brooklyn, NY 12111.
    13. On or about June 7, 1993, SKR sold 2.5 million Ghost Blaster 
toys identified in paragraph 4 above to The Biggest A, 899 Howard 
Street, San Francisco, CA 94103 on the condition The Biggest A export 
all the Ghost Blaster toys.
    14. The Biggest A failed to purchase all of the Ghost Blaster toys. 
In August, 1993, SKR sold Brooklyn Closeout approximately 400,000 Ghost 
Blaster toys.
    15. The Biggest A distributed the Ghost Blaster toys in interstate 
commerce and to U.S. firms who exported the product without filing the 
required notification informing the Commission of their intent to 
export the product and/or distributed the product in domestic commerce.
    16. Brooklyn Closeout distributed the Ghost Blaster toys in 
interstate commerce and to U.S. firms who exported the product without 
filing the required notification informing the Commission of their 
intent to export the product and/or distributed the product in domestic 
commerce. Ultimately, some of these products were sold to American 
consumers because of these actions.
    17. SKR knowingly introduced or caused the introduction in 
interstate commerce or delivery for introduction in interstate 
commerce; received in interstate commerce and delivery or proffered 
delivery thereof for pay or otherwise; and failed to comply or caused 
the failure to comply with the Commission's Procedures For Export of 
Noncomplying Products, the Ghost Blaster toy, a banned hazardous toy, 
in violation of sections 4 (a), (c), and (i) of the FHSA, 15 U.S.C. 
Secs. 1263 (a), (c), and (i).

III. Response of SKR

    18. SKR denies it knowingly introduced or caused the introduction 
in interstate commerce or delivery for introduction in interstate 
commerce; received in interstate commerce and delivered or proffered 
delivery thereof for pay or otherwise; and failed to comply or caused 
the failure to comply with the Commission's Export of Noncomplying 
Products, the Ghost Buster, a banned hazardous toy, identified in 
paragraph 4 above, in violation of sections 4 (a), (c), and (i) of the 
FHSA, 15 U.S.C. Secs. 1263 (a), (c), and (i).
    19. SKR maintains that Premier intentionally and/or recklessly and/
or carelessly failed to disclose material matters to SKR before March 
1993 agreement was entered into. SKR maintains that had there been 
appropriate disclosure, SKR would not have entered into the contract 
with Premier. SKR maintains that Premier breached the representation 
contained within the contract. SKR maintains that it was knowingly and 
willingly mislead by Premier to believe that SKR's purchase of the 
Ghost Busters was lawful. Therefore, it is SKR's position that Premier 
was responsible for the products' introduction into commerce within the 
United States and that Premier was kept fully informed of all 
developments by SKR with third parties.

IV. Agreement of the Parties

    20. The Consumer Product Safety Commission has jurisdiction over 
SKR and the subject matter of this Settlement Agreement and Order under 
the

[[Page 11384]]

following acts: Consumer Product Safety Act, 15 U.S.C. Sec. 2051 et 
seq., and the Federal Hazardous Substances Act, 15 U.S.C. Sec. 1261 et 
seq.
    21. Upon final acceptance by the Commission of this Settlement 
Agreement and Order, the Commission shall issue the attached Order 
incorporated herein by this reference.
    22. The Commission does not make any determination that SKR 
knowingly violated the FHSA and/or the CPSA. This Agreement is entered 
into for the purposes of settlement only.
    23. Upon final acceptance of this Settlement Agreement by the 
Commission and issuance of the Final Order, SKR knowingly, voluntarily, 
and completely waives any rights it may have in this matter (1) to an 
administrative or judicial hearing, (2) to judicial review or other 
challenge or contest of the validity of the Commission's actions, (3) 
to a determination by the Commission as to whether SKR failed to comply 
with the FHSA and/or the CPSA as aforesaid, (4) to a statement of 
findings of fact and conclusions of law, and (5) to any claims under 
the Equal Access to Justice Act.
    24. SKR agrees to cooperate fully with the Commission and the U.S. 
Department of Justice in investigations of any other firms involving 
Ghost Blaster toys, including but not limited to testifying truthfully 
in any litigation arising from such investigations.
    25. For 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; and the Commission may publicize the terms of this Settlement 
Agreement and Order.
    26. Upon provisional acceptance of this Settlement Agreement and 
Order by the Commission, this Settlement Agreement and Order shall be 
placed on the public record and shall be published in the Federal 
Register in accordance with the procedures set forth in 16 C.F.R. 
Secs. 1118.20(e)-(h). If the Commission does not receive any written 
request not to accept the Settlement Agreement and Order within 15 
days, the Settlement Agreement and Order will be deemed finally 
accepted on the 16th day after the date it is published in the Federal 
Register.
    27. The parties further agree that the Commission shall issue the 
attached Order; and that a violation of the Order shall subject SKR to 
appropriate legal action.
    28. Agreements, understandings, representations, or interpretations 
made outside of this Settlement Agreement and Order may not be used to 
vary or to contradict its terms.
    29. The provisions of the Settlement Agreement and Order shall 
apply to SKR and each of its successors and assigns.

    Dated: January 30, 1996.

Robert J. Richards,
President, SKR Resources, Inc., 307 Fifth Avenue, New York, NY 10016.

    Commission Staff:
David Schmeltzer,
Assistant Executive Director, Office of Compliance.
Eric L. Stone,
Acting Director, Division of Administrative Litigation, Office of 
Compliance.

    Dated: February 7, 1996.
Dennis C. Kacoyanis,
Trial Attorney, Division of Administrative Litigation, Office of 
Compliance.

Order

    Upon consideration of the Settlement Agreement entered into between 
Respondent SKR Resources, Inc., a corporation, and the staff of the 
Consumer Product Safety Commission; and the Commission having 
jurisdiction over the subject matter and SKR Resources, Inc.; and it 
appearing that the Settlement Agreement and Order is in the public 
interest, it is
    Ordered, that the Settlement Agreement be and hereby is accepted; 
and it is
    Further ordered, that upon final acceptance of the Settlement 
Agreement and Order, SKR Resources, Inc. shall pay the Commission a 
civil penalty in the amount of forty thousand and 00/100 dollars 
($40,000.00) in two (2) payments. The first payment of twenty thousand 
and 00/100 dollars ($20,000.00) shall be due within twenty (20) days 
after service upon Respondent of the Final Order of the Commission 
accepting the Settlement Agreement. The second payment of twenty 
thousand and 00/100 dollars ($20,000.00) shall be made within one year 
after service of the Final Order upon Respondent. Payment of the full 
amount of the civil penalty shall settle fully the staff's allegations 
set forth in paragraphs 4 through 17 of the Settlement Agreement that 
SKR Resources, Inc. knowingly violated the FHSA. Upon the failure by 
SKR Resources, Inc. to make a payment or upon the making of a late 
payment by SKR Resources, Inc. the entire amount of the civil penalty 
shall be due and payable, and interest on the outstanding balance shall 
accrue and be paid at the federal legal rate of interest under the 
provisions of 28 U.S.C. Secs. 1961(a) and (b).
    Provisionally accepted and Provisional Order issued on the 15th day 
of March, 1996.

    By Order of the Commission:
Sadye E. Dunn, Secretary,
Consumer Product Safety Commission.
[FR Doc. 96-6733 Filed 3-19-96; 8:45 am]
BILLING CODE 6355-01-M