[Federal Register Volume 62, Number 109 (Friday, June 6, 1997)]
[Notices]
[Pages 31085-31086]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-14881]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 97-C0006]


In the Matter of the Toro Company, 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 Section 
1118.20(e). Published below is a provisionally-accepted Settlement 
Agreement with the Toro Company, 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 June 23, 1997.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 97-C0006, Office of the 
Secretary, Consumer Product Safety Commission, Washington, D.C. 20207.

FOR FURTHER INFORMATION CONTACT:
Melvin I. Kramer, 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: June 3, 1997.
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, ``staff''), 
pursuant to the procedures set forth in 16 CFR 1118.20, is a compromise 
resolution of the matter described herein, without a hearing or 
determination of issues of law and fact.

The Parties

    2. The ``Staff'' is the staff of the Consumer Product Safety 
Commission (hereinafter, ``Commission''), an independent federal 
regulatory agency of the United States government, established by 
Congress pursuant to section 4 of the Consumer Product Safety Act 
(hereinafter, ``CPSA''), as amended, 15 U.S.C. Sec. 2053.
    3. Respondent Toro is a corporation organized and existing under 
the laws of the State of Delaware with its principal corporate offices 
located at 8111 Lyndale Ave. South, Bloomington, MN 55420.

Staff Allegations

    4. Section 15(b) of the CPSA, 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 
immediately inform the Commission of the defect or risk.

Count I

    5. Among other lawn and garden products manufactured and 
distributed by Toro, between 1986 and 1988 Toro manufactured certain 
rear engine riding lawnnmowers (hereinafter, ``riding mowers''), model 
#'s 51638, 56145, 56150, 56155, 56170, and 56175, 8-12 horsepower 
mowers with 32'' cutting decks. Toro manufactured and distributed 
approximately 81,000 of these mowers for sale to and use by consumers 
in the United States between 1986 and 1988.
    6. The rear wheel axle bolt of the 1986-88 product version of these 
riding mowers had a short shank, thereby exposing the bolt threads to 
shear forces beyond its capacity and subjecting the bolt to fatigue and 
breakage. If the bolt breaks, the brakes may fail and the driver may be 
unable to stop the riding mower with the brakes.
    7. In late June of 1989, after learning of at least 4 incidents of 
bolt failure, Toro sent letters to known customers asking them to 
replace the original bolt with a replacement bolt of a different 
design. However, Toro failed to notify the Commission.
    8. In April of 1995, the staff learned of this bolt problem and 
sent a letter or inquiry to Toro. Toro responded on June 5, 1995 and 
filed a full report with the Commission.
    9. By April of 1995, Toro had notice of approximately 7 incidents 
associated with the failure of the original axle bolt, in all of which 
cases, consumers or dealers clearly identified the problem and alleged 
a loss of control of the riding mower. Several of these consumers also 
alleged that they suffered personal injury.
    10. Although Toro obtained sufficient information to reasonably 
support the conclusion that the riding mowers contained a defect which 
could create a substantial product hazard, or created an unreasonable 
risk of serious injury or death, it failed to report such information 
to the Commission as required by section 15(b) of the CPSA, 15 U.S.C. 
Sec. 2064(b). This is a violation of section 19(a)(4) of the CPSA, 15 
U.S.C. Sec. 2068(a) (4).
    11. Toro's failure to report to the Commission, as required by 
section 15(b) of the CPSA, 15 U.S.C. Sec. 2064(b), was committed 
``knowingly'', as that term is defined in Section 20(d) of the CPSA, 15 
U.S.C. Sec. 2069(d), and Toro is subject to civil penalties under 
Section 20 of the CPSA.

Count II

    12. Approximately 6,500 of Toro's Wheel Horse Yard and Garden 
Tractors (Model #264-6) and its Ford and New Holland brand LS 25 and 45 
Gear Yard Tractors, six-speed riding tractors (hereinafter, ``yard 
tractors'') were sold to consumers nationwide from January 1994 to May 
1996 for about $2,500 each.
    13. These tractors had brakes or braking systems, which, in a 
number of cases, failed prematurely, suddenly and without warning. If 
the brakes fail in this manner, while operating the yard tractor on a 
hill, the driver may be unable to stop the yard tractors with the 
brakes.
    14. From 1994-1996, Toro learned of approximately 24 reports of 
failures of the brakes on these yard tractors. In 2 incidents the user 
suffered fractured limbs.
    15. In March and May of 1995, Toro issued Service Bulletins to its 
authorized dealers and service centers advising them of the problem and 
asking them to correct them in response to complaints they receive.
    16. Although Toro did file a report with the Commission staff in 
April of 1996, Toro had obtained sufficient information to reasonably 
support the conclusion that the yard tractors contained a defect which 
could create a substantial product hazard, or created an unreasonable 
risk of serious injury or death, substantially before that time. 
Therefore, it failed to make such a report on a timely basis, as 
required by section 15(b) of the CPSA, 15 U.S.C. Sec. 2064(b). This is 
a violation of section

[[Page 31086]]

19(a)(4) of the CPSA, 15 U.S.C. Sec. 2068(a)(4).
    17. Toro's failure to report to the Commission as required by 
section 15(b) of the CPSA, 15 U.S.C. Sec. 2064(b), was committed 
``knowingly'' as that term is defined in section 20(d) of the CPSA, 15 
U.S.C. Sec. 2069(b), and Toro is subject to civil penalties under 
section 20 of the CPSA, 15 U.S.C. Sec. 2069.

Response of Toro

    18. Toro denies each and all of the staff allegations with respect 
to the products identified in the Agreement. Toro also denies the 
allegations that its products identified in paragraph 5 and 12 above 
contained a defect which created or could create a substantial product 
hazard within the meaning of section 15(a) of the CSPA, 15 U.S.C. 
Sec. 2064(a), or created an unreasonable risk of serious injury or 
death. Toro further denies any obligation to report information to the 
Commission under section 15(b) of the CPSA, 15 U.S.C. Sec. 2064(b), 
with respect to the products described in paragraphs 5 and 12 above and 
asserts that its report with respect to the products listed in 
paragraph 12 was on a timely basis, having been filed after Toro 
exercised its statutory discretion and determined that only then did a 
report need be filed. Toro makes no admission of any fault, liability 
or statutory violation whatsoever. Toro alleges further that there are 
no design or manufacturing defects with respect to any of the products 
covered by this Agreement and asserts that the incidents involving the 
use of the products enumerated in paragraphs 5 and 12 were caused by 
unusual conditions or through inappropriate use by the operators. Toro 
does not admit any liability for any accidents or injuries from the 
products covered by the Agreement. Additionally, Toro has entered into 
this Settlement Agreement in the interest of avoiding the time and cost 
of litigation.
    19. Specifically and without limitation on any of the denials set 
out above, Toro states that in each of the cases, as set forth above, 
it appropriately and responsibly took care of the customers, reworked 
the products on a timely basis, notified its customers, and issued 
service bulletins to dealers and distributors. It is Toro's position 
that the actions taken relating to products referenced in paragraph 5 
above were undertaken to deal with non-reportable safety or maintenance 
issues and to assure customer satisfaction. With respect to the 
products referenced in paragraph 12 above, only one of the customers 
claimed sudden, unexplained failure of the brakes. Gradual fading of 
the brakes, of which an operator would be aware, was more the rule.

Agreement of the Parties

    20. The Commission has jurisdiction in this matter for purposes of 
entry and enforcement of this Settlement Agreement and Order.
    21. Toro and the staff agree that this Settlement Agreement does 
not establish any legal or factual conclusions.
    22. Toro knowingly, voluntarily and completely waives any rights it 
may 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 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, (4) to a statement of findings of 
fact and conclusions of law with regard to the Commission's claim for a 
civil penalty, and (5) to any claims under the Equal Access to Justice 
Act.
    23. This Settlement Agreement and Order settles any allegations of 
violation of section 15(b) of the CPSA regarding the mowers and 
tractors described above. It further settles and discharges any claims 
for violation of any such reporting obligations with respect to old 
matters which were the subject of a search conducted by Toro at the 
staff's request, filed by Toro during the negotiations on the subject 
wheel bolt case, and reviewed by the staff without opening new files. 
This Settlement Agreement and Order becomes effective only upon its 
final acceptance by the Commission and service of the incorporated 
Order upon Respondent.
    24. Upon provisional acceptance of this Settlement Agreement and 
Order by the Commission, the Commission shall place this Agreement and 
Order on the public record and shall publish it in the Federal Register 
in accordance with the procedure set forth in 16 CFR 1118.20(e). If the 
Commission does not receive any written request not to accept the 
Settlement Agreement and Order within 15 days, the Agreement and Order 
shall be deemed finally accepted on the 16th day after the date it is 
published in the Federal Register, in accordance with 16 CFR 
Sec. 1118.20(f).
    25. Upon final acceptance of this Settlement Agreement and Order, 
the Commission shall issue the attached Order, incorporated herein by 
reference.
    26. The provisions of this settlement Agreement and Order shall 
apply to Toro and its successors and assigns.
    27. 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 the Settlement 
Agreement and Order.
    28. This Agreement may be used in interpreting the Order. 
Agreements, understandings, representations, or interpretations made 
outside of this Settlement Agreement and Order may not be used to vary 
or to contradict its terms.

    Dated: May 9, 1997.

    The Toro Company.
J. Lawrence McIntyre,
Vice President, Secretary, and General Counsel.
    The Consumer Product Safety Commission. David Schmeltzer, 
Associate Executive Directors, Office of Compliance, Eric L. Stone, 
Director, Division of Administrative Litigation, Office of 
Compliance.

    Dated: May 15, 1997.

    By:
Melvin I. Kramer,
Trial Attorney, Division of Administrative Litigation, Office of 
Compliance.

Order

    Upon consideration of the Settlement Agreement 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 over The Toro Company, and it appearing the 
Settlement Agreement is in the public interest, it is
    Ordered, that the Settlement Agreement be and hereby isaccepted, 
and it is
    Further Ordered, that within 20 days of the service of the Final 
Order upon Respondent, The Toro Company shall pay to the order of the 
U.S. Treasury a civil penalty in the amount of two hundred and fifty 
thousand dollars ($250,000).
    Provisionally accepted and Provisional Order issued on the 3rd day 
of June, 1997.

    By Order of the Commission.
Sadye E. Dunn,
Secretary Consumer Product Safety Commission.
[FR Doc. 97-14881 Filed 6-5-97; 8:45 am]
BILLING CODE 6355-01-M