[Federal Register Volume 64, Number 104 (Tuesday, June 1, 1999)]
[Notices]
[Pages 29274-29275]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-13669]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 99-C0006]


Shimano American 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 Consumer Product Safety Act in 
the Federal Register in accordance with the terms of 16 CFR 1118.20. 
Published below is a provisionally-accepted Settlement Agreement with 
Shimano American Corporation, containing a civil penalty of $150,000.

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 16, 1999.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 99-C0006, Office of the 
Secretary, Consumer Product Safety Commission, Washington, DC 20207.

FOR FURTHER INFORMATION CONTACT: Deborah Lewis, Trial Attorney, Office 
of Compliance and Enforcement, Consumer Product Safety Commission, 
Washington DC 20207; telephone (301) 504-0626, 1346.

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

    Dated: May 25, 1999.
Sadye E. Dunn,
Secretary.

Settlement Agreement and Order

    1. Shimano American Corporation (``Shimano'') a corporation, enters 
into this Settlement Agreement and Order with the United States 
Consumer Product Safety Commission (``the CPSC'') in accordance with 16 
CFR 1118.20 of the Commission's Procedures for Investigations, 
Inspections, and Inquiries under the Consumer Product Safety Act 
(``CPSA'').

I. The Parties

    2. The Consumer Product Safety Commission is an independent federal 
regulatory agency responsible for the enforcement of the Consumer 
Product Safety Act, 15 U.S.C. 2051-2084.
    3. Shimano is a corporation organized and existing under the laws 
of the State of California. Its principal offices are located at One 
Holland Drive, Irvine, CA, 92618.

II. Staff Allegations

    4. Between March, 1994 and November, 1995, Shimano Inc. of Japan 
manufactured over one million bicycle cranks--models FC-CT90, FC-M290 
and FC-MC12--a significant number of which were imported and 
distributed in the United States by Shimano American Corporation. 
Shimano is, therefore, a distributor of bicycle cranks in commerce.
    5. The bicycle cranks attach to the pedals of bicycles. Shimano 
Inc. of Japan and Shimano sold the cranks to 49 bicycle manufacturers.
    6. The bicycle cranks can break during use. A consumer can be 
injured in a number of ways if the bicycle cranks break will he or she 
is riding it: (1) The broken crank or part exposed as a result of the 
crank breaking can injure the bicyclist; (2) The bicyclist can fall as 
a result of the broken crank, leading to injuries from contact with the 
ground; (3) The bicyclist can lose control and collide with another 
vehicle or object.
    7. Between June, 1995 and July, 1997, Shimano received 22 reports 
of injuries from consumers due to broken cranks. The injuries included 
fractures, lacerations, puncture wounds, head trauma, and severe 
bruising and swelling. Shimano conducted numerous tests on the bicycle 
cranks and held at least one meeting at a high level in the corporation 
in September, 1996, about its growing concern over the cranks. Yet, 
Shimano did not report the problem until July, 1997.
    8. Shimano obtained information which reasonably supported the 
conclusion that its bicycle cranks contained defects which could create 
a substantial product hazard but failed to report that information in a 
timely manner as required by section 15(b) of the CPSA, 15 U.S.C. 
20643(b).

III. Response of Shimano

    9. Shimano denies the allegations of the staff that the bicycle 
cranks contain a defect which could create a substantial product hazard 
pursuant to section 15(a) of the CPSA, 15 U.S.C. 2064(a), denies that 
it violated the reporting requirements of section 15(b) of the CPSA, 15 
U.S.C. 2064(b), and further denies the other allegations of the CPSC as 
stated herein.
    10. Shimano voluntarily contacted the CPSC in May 1997, to seek the 
CPSC's cooperation in conducting a recall of the three models of 
bicycle cranks. In June, Shimano filed a report under Section 15(b) of 
the CPSA and proposed a voluntary product recall under the CPSC's Fast 
Track program. Shimano's report and voluntary recall did not result 
from any investigation by the CPSC, but rather represented part of 
Shimano's effort to maintain its reputation for providing bicycle 
components of the highest quality.
    11. Prior to May 1997, Shimano did not have reason to believe that 
the cranks posed a substantial product hazard. Shimano believes the 
information available did not reasonably support the conclusion that 
the products were defective within the meaning of the CPSA, and, 
therefore, no report was required under Section 15(b) of the Act. 
During the time period in which the CPSC alleges Shimano wrongfully 
failed to file a report, Shimano conducted its own internal testing as 
well as independent testing of the cranks, and these tests suggested

[[Page 29275]]

that no defect was present. Likewise, the extremely low failure rate of 
the cranks and the rigorous conditions in which they were used, 
suggested that any failures were due to rigorous usage rather than an 
inherent product defect. For these reasons, Shimano was not required 
to, and did not, report to the CPSC prior to May 1997.
    12. By entering into this Settlement Agreement and Order, Shimano 
does not admit any liability or wrongdoing. This Settlement Agreement 
and Order is agreed to by Shimano to avoid incurring additional legal 
costs and does not constitute, and is not evidence of, an admission of 
any liability or wrongdoing by Shimano.

IV. Agreement of the Parties

    13. The Commission has jurisdiction over this matter under the 
Consumer Product Safety Act, 15 U.S.C. 2051 et seq.
    14. Shimano knowingly, voluntarily and completely waives any rights 
it may have to: (1) an administrative or judicial hearing with respect 
to the staff allegations discussed in paragraphs 4 through 8 above; (2) 
judicial review or other challenge or contest of the validity of the 
Commission's Order; (3) 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) a statement of findings of fact and conclusion of law 
with regard to the staff allegations.
    15. 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 16 CFR 1118.20.
    16. This Settlement Agreement and Order releases Shimano and 
Shimano Inc. from liability arising from any allegations of violation 
of section 15(b) of the CPSA regarding the bicycle cranks described in 
paragraph 4, above. The Settlement Agreement and Order becomes 
effective upon final acceptance by the Commission and its service upon 
Shimano.
    17. Upon final acceptance of this Settlement Agreement by the 
Commission, the Commission may issue a press release to advise the 
public of the civil penalty Settlement Agreement and Order.
    18. Shimano shall pay the Consumer Product Safety Commission a 
civil penalty in the amount of $150,000 within ten days of final 
acceptance of the Settlement Agreement and Order.
    19. Shimano agrees to entry of the attached Order, which is 
incorporated herein by reference, and to be bound by its terms.
    20. This Settlement Agreement and Order are entered into for 
settlement purposes only and shall not constitute an admission or 
determination arising from the allegations that the bicycle cranks 
contain a defect which could create a substantial product hazard.
    21. This Settlement Agreement is binding upon Shimano and the 
assigns or successors of Shimano.
    22. Agreements, understandings, representations, or interpretations 
made outside this Settlement Agreement and Order may not be used to 
vary or to contradict its terms.

    Dated: March 29, 1999.
By: Shimano American Corporation
U.S. Consumer Product Safety Commission
By: Alan Schoem,
Assistant Executive Director, Office of Compliance.
Eric Stone,
Director, Legal Division, Office of Compliance.
Deborah Lewis,
Attorney, Legal Division, Office of Compliance.

Order

    Upon consideration of the Settlement Agreement entered into between 
Shimano American Corporation, a corporation, and the staff of the U.S. 
Consumer Product Safety Commission; and the Commission having 
jurisdiction over the subject matter and Shimano American Corporation, 
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, Shimano American Corporation shall pay the 
Commission a civil penalty in the amount of one hundred fifty thousand 
and 00/100 dollars, ($150,000.00) within ten (10) days after service of 
this Final Order upon Shimano American Corporation.
    Provisionally accepted and Provisional Order issued on the 25th day 
of May, 1999.

    By Order of the Commission.
Sadye E. Dunn,
Secretary, U.S. Consumer Product Safety Commission.
[FR Doc. 99-13669 Filed 5-28-99; 8:45 am]
BILLING CODE 6355-01-M