[Federal Register Volume 63, Number 201 (Monday, October 19, 1998)]
[Notices]
[Pages 55847-55849]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-27990]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 99-C0002]


The Neiman Marcus Group, Inc., a Corporation; Provisional 
Acceptance of a Settlement Agreement and Order

AGENCY: Consumer Product Safety Commission.

ACTION: Notice.

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SUMMARY: It is the policy of the Commission to publish settlements 
which it provisionally accepts under the Flammable Fabrics 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 
the Neiman Marcus Group, Inc., a corporation, containing a civil 
penalty of $112,500.

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 November 3, 1998.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 99-C0002, Office of the 
Secretary, Consumer Product Safety Commission, Washington, D.C. 20207.

FOR FURTHER INFORMATION CONTACT: Ronald G. Yelenik, Trail Attorney, 
Office of Compliance and Enforcement, Consumer Product Safety 
Commission, Washington, D.C. 20207; telephone (301) 504-0626, 1351.

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

    Dated: October 14, 1998.
Sadye E. Dunn,
Secretary.

Settlement Agreement and Order

    1. This Settlement Agreement and Order, entered into between The 
Neiman Marcus Group, Inc. (hereinafter, ``Neiman Marcus'' or 
``Respondent''), a corporation, 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.

I. 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

[[Page 55848]]

Safety Act (hereinafter, ``CPSA''), as amended, 15 U.S.C. Sec. 2053.
    3. Respondent Neiman Marcus is a corporation organized and existing 
under the laws of the State of Delaware with its principal corporate 
offices located in Chestnut Hill, MA. Respondent is a retailer of 
women's and men's apparel and other products.

II. Allegations of the Staff

A. Violations of the FFA
    4. Between December 1998 and February 1997, Respondent sold or 
offered for sale, in commerce, approximately 6,300 EGERIA cotton terry 
cloth bathrobes for men and women (hereinafter, the ``robes'' or 
``robe'').
    5. The robes identified in paragraph 4 above are subject to the 
Standard for the Flammability of Clothing Textiles (hereinafter, 
``Clothing Standard''), 16 CFR 1610, issued under section 4 of the 
Flammable Fabrics Act (FFA), 15 U.S.C. Sec. 1193.
    6. On or about February 19, 1997, Neiman Marcus, after receiving 
reports of several incident in which the robes identified in paragraph 
4 above caught fire, tested samples of this robe model for compliance 
with the requirements of the Clothing Standard. See 16 CFR 1610.3, 
1610.4. The test results showed that the robes did not comply with the 
requirements of the Clothing Standard and, therefore, were dangerously 
flammable and unsuitable for clothing because of their rapid and 
intense burning.
    7. Respondent knowingly sold, or offered for sale, in commerce, the 
robes identified in paragraph 4 above, as the term ``knowingly'' is 
defined in section 5(e)(4) of the FFA, 15 U.S.C. 1194(e)(4), in 
violation of section 3 of the FFA, 15 U.S.C. Sec. 1192, for which a 
civil penalty may be imposed pursuant to section 5(e)(1) of the FFA, 15 
U.S.C. Sec. 1194(e)(1).
B. Violations of the CPSA
    8. The allegations contained in paragraphs 4 through 7 above are 
repeated and realleged, as applicable.
    9. Respondent is subject to section 15(b) of the CPSA, 15 U.S.C. 
Sec. 2064(b), which requires a retailer of a consumer product who, 
inter alia, obtains information that reasonably supports the conclusion 
that the product contains a defect which would create a substantial 
product hazard, or creates an unreasonable risk of serious injury or 
death, to immediately inform the Commission of the defect or risk.
    10. Between December 1988 and February 1997, Respondent sold 
certain robes through its retail stores nationwide. The robe is a 
``consumer product'' and Neiman Marcus is a ``retailer'' of a 
``consumer product'' which is ``distributed in commerce'' as those 
terms are defined in sections 3(a)(1), (6), (11) of the CPSA, 15 U.S.C. 
Secs. 2052(a)(1), (6), (11).
    11. The robes are flammable in nature as evidenced by the failing 
test results under the Clothing Standard and the incidents described in 
paragraph 12 below. If a robe were to ignite, it could cause serious 
burn injuries or death.
    12. Between June 1996 and February 1997. Neiman Marcus received 
reports of five incidents in which the robes caught fire, including two 
incidents which resulted in minor burn injuries.
    13. On March 5, 1997, when Neiman Marcus received the test results 
referenced in paragraph 6 above, it voluntarily filed a ``Full Report'' 
with the Commission pursuant to section 15(b) of the CPSA and 15 CFR 
1115.13, which stated that the robes may present a flammability risk.
    14. Although Neiman Marcus had obtained sufficient information to 
reasonably support the conclusion that the robes contained a defect 
which could create a substantial product hazard, or created an 
unreasonable risk of serious injury or death, it failed to immediately 
report such information to the Commission in a timely manner, as 
required by section 15(b) of the CPSA. This is a violation of section 
19(a)(4) of the CPSA.
    15. Neiman Marcus' failure to report to the Commission, as required 
by section 15(b) of the CPSA, was committed ``knowingly,'' as that term 
is defined in section 20(d) of the CPSA, and Respondent is subject to 
civil penalties under section 20 of the CPSA.

III. Response of Neiman Marcus

    16. Neiman Marcus specifically denies that it knowingly sold or 
offered for sale the robes described in paragraph 4 above in violation 
of the requirements of the Clothing Standard or reporting requirements 
of the Consumer Product Safety Act.
    17. Neiman Marcus purchased the robes identified in paragraph 4 
above subject to a provision contained on the back of the merchandise 
purchase order form which provides that such robes comply with all 
applicable government regulations including the Flammable Fabrics Act 
and the Consumer Product Safety Act.
    18. Prior to the time of the first reported incident, Neiman Marcus 
sold the robes described in paragraph 4 above, supplied by the same 
vendor, or over 10 years without any flammability problem.
    19. Immediately upon receipt of what Neiman Marcus perceived to be 
the first confirmed report of an unexplained flammability incident, 
Neiman Marcus tested the product for compliance with the Clothing 
Standard.
    20. Immediately upon receipt of test results indicating that the 
robes described in paragraph 4 above did not meet the requirements of 
the Clothing Standard, Neiman Marcus suspended all sales of the 
garment, promptly filed a written report to the CPSC, and implemented a 
voluntary recall of the garments.
    21. Neiman Marcus promptly and diligently assisted the Commission 
staff in its efforts to implement the voluntary recall or the robes 
described in paragraph 4 above.
    22. Neiman Marcus has received no reports of serious consumer 
injury resulting from the use of any robes described in paragraph 4 
above. The only injuries reported to Neiman Marcus involving these 
robes were two minor burns.

IV. Agreement of the Parties

    23. The Commission has jurisdiction over this matter under the 
CPSA, 15 U.S.C. Secs. 2051 et seq., the FFA, 15 U.S.C. Secs. 1191 et 
seq., and the Federal Trade Commission Act (FTCA), 15 U.S.C. Secs. 41 
et seq.
    24. Neiman Marcus agrees to pay to the Commission a civil penalty 
in the amount of one hundred twelve thousand five hundred dollars 
($112,500), in settlement of this matter, payable within twenty (20) 
days after service of the Final Order of the Commission accepting this 
Settlement Agreement.
    25. Respondent 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 Order, (3) to a determination by the 
Commission as to whether Respondent failed to comply with the FFA, as 
alleged, or the CPSA, as alleged, (4) to a settlement of findings of 
fact and conclusions of law, and (5) to any claims under the Equal 
Access to Justice Act.
    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 CFR 
1118.20(e). If the Commission does not receive any written request not 
to accept

[[Page 55849]]

the Settlement Agreement and order within 15 days, the Settlement 
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 1118.20(f).
    27. This Settlement Agreement and Order becomes effective upon its 
final acceptance by the Commission and service upon Respondent.
    28. 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 publicise the terms of the Settlement 
and Order.
    (29) The provisions of this Settlement Agreements and Order shall 
apply to Respondent, its successors and assigns, agents, 
representatives, and employees, directly or through any corporation, 
subsidiary, division, or other business entity, or through any agency, 
device or instrumentality.
    30. Neiman Marcus agrees to immediately inform the Commission if it 
learns of any additional incidents or flammability information about 
the robes.
    31. This Settlement 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 contradict its terms.

    Dated: August 19, 1998.
Eric P. Geller,
Senior Vice President and General Counsel, The Neiman Marcus Group, 
Inc., Chestnut Hill, MA.
    The Consumer Product Safety Commission.
Alan H. Schoem,
Assistant Executive Director, Office of Compliance.
Eric L. Stone,
Director, Legal Division, Office of Compliance.
    Dated: September 18, 1998.
Ronald G. Yelenik,
Trial Attorney, Legal Division, Office of Compliance.

Order

    Upon consideration of the Settlement Agreement between Respondent 
The Neiman Marcus Group, Inc., a corporation, and the staff of the 
Consumer Product Safety Commission, and the Commission having 
jurisdiction over the subject matter and over The Neiman Marcus Group, 
Inc., and it appearing the Settlement Agreement is in the public 
interest, it is
    Ordered, that the Settlement Agreement be and hereby is accepted, 
and it is
    Ordered, that within 20 days of the service of the Final Order upon 
Respondent. The Neiman Marcus Group, Inc. shall pay to the order of the 
U.S. Treasury a civil penalty in the amount of one hundred and twelve 
thousand five hundred dollars ($112,500).
    Further ordered, The Neiman Marcus Group, Inc. shall immediately 
inform the Commission if it learns of any additional incidents or 
flammability information about the products identified in the 
Settlement Agreement herein.

    Provisionally accepted and Provisional Order issued on the 14th 
day of October, 1998.

    By Order of the Commission.
Sadye E. Dunn,
Secretary, Consumer Product Safety Commission.
[FR Doc. 98-27990 Filed 10-16-98; 8:45 am]
BILLING CODE 6355-01-M