[Federal Register Volume 64, Number 245 (Wednesday, December 22, 1999)]
[Notices]
[Pages 71737-71740]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-33103]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 00-C0003]


Eoff Electric Company, 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 
1115.20(b)(4). Published below is a provisionally-accepted Settlement 
Agreement with Eoff Electric Company, containing monetary payments 
totalling between $205,000 and $369,000.

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 January 6, 2000.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 00-C0003, Office of the 
Secretary, Consumer Product Safety Commission, Washington, DC 20207.

FOR FURTHER INFORMATION CONTACT:
Howard N. Tarnoff, Trial Attorney, Office of Compliance, Consumer 
Product Safety Commission, Washington, DC 20207; telephone (301) 504-
0626, 1382.

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

    Dated: December 16, 1999.
Sadye E. Dunn,
Secretary.

Consent Agreement

    This Consent Agreement is made by and between the staff of the 
Consumer Product Safety Commission, and Eoff Electric Company 
(``Eoff''), a domestic corporation, to settle the staff's allegations 
that Eoff distributed in commerce certain allegedly defective in-wall 
electric heaters manufactured by Cadet Manufacturing Company 
(``Cadet''), a domestic corporation, with its principal place of 
business located at 2500 West Fourth Plain Boulevard, Vancouver, 
Washington 98660.

Parties

    1. The ``staff'' is the staff of the Consumer Product Safety 
Commission (``the CPSC'' or ``the Commission''), an independent 
regulatory agency of the United States of America, established by 
Congress pursuant to Section 4 of the Consumer Product Safety Act 
(``CPSA''), 15 U.S.C. Sec. 2053, as amended.
    2. Respondent Eoff is a corporation organized and existing under 
the laws of the State of Oregon, with its principal place of business 
located at 131 Pine Street NE, Salem, OR 97303. Eoff is a distributor 
of electrical materials and products.

Subject Matter

    3. Since approximately 1978, Cadet has allegedly manufactured, sold 
and/or distributed in commerce in-wall electric heaters for use in 
homes and residences under the brand names ``Cadet'' and ``Encore.'' 
These include all models and variants within each model of the series 
FW (including models FW-051, FW-101, FW-122, FW-202, and FW-751), 
manufactured between 1978 and 1987; series FX (including models FX-051, 
FX-052, FX-071, FX-072, FX-101, FX-102, FX-122, FX-151, FX-152, FX-202, 
and FX-242), manufactured between 1985 and 1994; series LX (including 
models LX-242, LX-302, LX-402, and LX-482), manufactured between 1985 
and 1994; series TK (including models TK-051, TK-071, TK-072, TK-101, 
TK-102, TK-151, and TK-152), manufactured between 1984 and 1998; series 
ZA (including models ZA-051, ZA-052, ZA-071, ZA-072, ZA-101, ZA-102, 
ZA-122, ZA-151, ZA-152, ZA-202, and ZA-242), manufactured between 1985 
and 1994; series Z (including models Z-072, Z-101, Z-102, Z-151, Z-152, 
Z-202, and Z-208), manufactured between 1993 and 1999; and all series 
and models of the same or functionally identical heaters manufactured 
and distributed by Cadet under the Encore brand name, including series 
RX (including models RX-072, RX-101, RX-102, RX-151, RX-152, RX-202, 
and RX-242), manufactured between 1985 and 1994; series RLX (including 
models RLX-302, RLX-402, and RLX-482) manufactured between

[[Page 71738]]

1985 and 1994; series RK (including models RK-101 and RX-102), 
manufactured between 1984 and 1998; series RA (including models RA-101, 
RA-102, RA-151, RA-152, and RA-202), manufactured between 1985 and 
1994; and series ZC (including models ZC-072, ZC-101, ZC-102, ZC-151, 
ZC-152, ZC-202, and ZC-208), manufactured between 1993 and 1999. For 
each of these heaters, the variants signified by the suffix T (with 
thermostat), W (white color), and TW (with thermostat and white color) 
found after the model number are included. All the heaters and variants 
referred to in this paragraph shall hereinafter be collectively 
referred to as ``the Heaters.'' The Heaters were sold and/or 
distributed to consumers principally in the States of California, 
Idaho, Montana, Oregon, and Washington. Since approximately 1988, Eoff 
has allegedly sold and/or distributed certain of the Heaters in 
commerce.
    4. On January 14, 1999, the staff filed an Administrative Complaint 
(``Complaint'') against Cadet, seeking a determination that certain of 
the Heaters present a substantial produce hazard within the meaning of 
Section 15(a)(2) of the CPSA, 15 U.S.C. Sec. 2064(a)(2), and public 
notice and a recall of certain of the Heaters pursuant to Section 15(c) 
and (d) of the CPSA, 15 U.S.C. Secs. 2064(c) and (d). The Complaint 
alleged that certain of the Heaters are defective and present a 
substantial product hazard within the meaning of Section 15(a)(2) of 
the CPSA, 15 U.S.C. Sec. 2064(a)(2), because their design and/or 
manufacture causes them to overheat, fail, and catch fire; and/or allow 
lint, dirt, or debris to build up within the heaters and catch fire. 
The Complaint also alleged that the design of certain of the Heaters 
can cause the Heaters to spew flames and/or burning or molten 
particles, or eject sparks into the living space of a home or 
residence, or energize the Heaters creating a risk of electric shock. 
On July 30, 1999, the CPSC approved a Consent Agreement and Order 
(``the Cadet Order'') between the Staff and Cadet which, inter alia, 
required Cadet to undertake a remediation program for notification to 
consumers and for the replacement of the Heaters (``the Cadet 
Corrective Action Plan'' or ``the Plan''), upon final approval of the 
Plan by the United States Bankruptcy Court for the Western District of 
Washington at Tacoma (the date of final approval being referred to 
herein as the ``Effective Date'' of the Cadet Order).

Agreement of the Parties

    5. It is the express purpose of the parties entering this Consent 
Agreement to protect the public safety by assisting Cadet's recall and 
replacement of the Heaters.
    6. Fulfillment of the terms of this Consent Agreement and the 
attached Order (hereinafter ``Order'' or ``the Order''), which is 
hereby incorporated by reference, shall resolve all potential 
obligations of Eoff (and each of Eoff's predecessors, successors, 
assigns, parents, subsidiaries, affiliated entities, agents, 
representatives, attorneys, employees, officers, directors, 
stockholders, and principals) (collectively ``the Eoff Releasees'') 
under Sections 15(c) and (d) of the CPSA, 15 U.S.C. Secs. 2064(c) and 
(d), to give public notice of the alleged hazard presented by the 
Heaters, and to repair, replace, or refund the purchase price of the 
Heaters. Fulfillment of the terms of this Consent Agreement and Order 
shall also resolve all potential obligations and liabilities of the 
Eoff Releasees for all other claims and causes of action which could 
have been alleged by the CPSC against the Eoff Releasees relating to 
the Heaters, based upon information in the CPSC's possession, at the 
time the CPSC staff signs this Consent Agreement. Nothing in this 
Paragraph 6 is intended to limit the CPSC's rights under Paragraph 20 
of this Consent Agreement.
    7. The staff believes that this Consent Agreement and Order is an 
equitable resolution of consumer claims against Eoff for replacement 
heaters, and the staff has concluded that the Cadet Corrective Action 
Plan, and Eoff's participation in that Plan, will provide an effective, 
fair, reasonable and adequate remedy for consumers throughout the 
United States who own or are otherwise exposed to the Heaters by 
notifying consumers of the alleged hazard and providing replacement 
heaters to them, and that this Agreement is, therefore, in the best 
interests of consumers.
    8. This Consent Agreement and Order shall not be deemed or 
construed as an admission by Eoff or as evidence: (a) of any violation 
of law or regulation by Eoff; (b) of other wrongdoing by Eoff; (c) that 
the Heaters are defective, create a substantial product hazard, or are 
unreasonably dangerous; or (d) of the truth of any claims or other 
matters alleged or otherwise stated by the CPSC or any other person 
either against Eoff or with respect to the Heaters.
    9. The Heaters are ``consumer products'' within the meaning of 
Section 3(a)(1) of the CPSA, 15 U.S.C. Sec. 2052(a)(1).
    10. Eoff is a ``distributor'' of ``consumer product[s],'' which are 
``distributed in commerce,'' as those terms are defined in Sections 
3(a)(1), (5), and (11) of the CPSA, 15 U.S.C. Secs. 2052(a)(1), (5), 
and (11).
    11. The CPSC has jurisdiction over Eoff and the Heaters under 
Sections 3(a)(1), (5), and (11) and Section 15 of the CPSA, 15 U.S.C. 
Secs. 2052(a)(1), (5), and (11) and Sec. 2064.
    12. For purposes of this settlement only, Eoff agrees not to 
contest the staff's allegation, which Eoff denies, that the Heaters 
contain a ``defect which creates a substantial product hazard,'' as 
those terms are defined in Section 15(a) of the CPSA, 15 U.S.C. 
Sec. 2064(a).
    13. Upon final acceptance by the CPSC of this Consent Agreement and 
Order, Eoff knowingly, voluntarily, and completely waives and 
relinquishes any past, present, and/or future right or rights in this 
matter: (a) to an administrative or judicial hearing and to all further 
procedural steps--including findings of fact and conclusions of law--to 
determine whether the Heaters contain a defect which creates a 
substantial product hazard within the meaning of Section 15 of the 
CPSA; (b) to seek judicial review or otherwise challenge or contest the 
validity of this Consent Agreement and Order as issued and entered; (c) 
to seek judicial review of this or any past orders, findings, and/or 
determinations of the CPSC in this matter, except as set forth in 
Paragraphs 21 and 24 of this Consent Agreement; (d) to the issuance of 
a proposed complaint in accordance with 16 CFR Sec. 1115.20(b); and (e) 
to file any claim or to seek any remedy under the Equal Access to 
Justice Act.
    14. The Order is issued under Sections 15(c) and (d) of the CPSA, 
15 U.S.C. Secs. 2064(c) and (d), and a violation of this Consent 
Agreement and Order is a prohibited act within the meaning of Section 
19(a)(5) of the CPSA, 15 U.S.C. 2068(a)(5), and may subject Eoff to 
civil and/or criminal penalties under Sections 20 and 21 of the CPSA, 
15 U.S.C. Secs. 2069 and 2070.
    15. Eoff agrees to fulfill all requirements of this Consent 
Agreement and Order.
    16. for all purposes, this Consent Agreement and Order shall 
constitute an enforceable judgment obtained in an action or proceeding 
by a governmental unit to enforce its police and regulatory power. Eoff 
acknowledges and agrees that this Consent Agreement and Order are 
pursuant to the CPSC's police and regulatory power to remedy the 
alleged risk created by the Heaters, and that,

[[Page 71739]]

once Eoff signs the Consent Agreement and Order, the Consent Agreement 
and Order will not be subject to an automatic stay in any bankruptcy 
proceeding involving Eoff.
    17. Eoff acknowledges that any interested person may bring an 
action pursuant to Section 24 of the CPSA, 15 U.S.C. Sec. 2073, in any 
United States District Court in which Eoff is found or transacts 
business, to enforce the Order and to obtain appropriate injunctive 
relief.
    18. This Consent Agreement and Order shall be binding upon and 
inure to the benefit of the parties hereto and their successors, 
assigns, and any operating bankruptcy trustees or receivers. If, prior 
to the termination of this Consent Agreement and Order, Eoff merges 
with any other business entity or sells, assigns, or otherwise 
transfers substantially all of its assets, Eoff shall provide 
reasonable prior notice to the surviving corporation or to the 
purchaser, assignee, or tranferee of substantially all of Eoff's 
assets, of this Consent Agreement and Order, and of its binding effect 
upon said surviving corporation, purchaser, assignee, or tranferee. The 
existence of this Consent Agreement and Order and its binding effect 
shall be noted in any agreement between Eoff and such surviving 
corporation, purchaser, assignee, or transferee. It shall be a 
condition of any such merger, sale, assignment, or transfer that the 
surviving corporation or the purchaser, assignee, or transferee shall 
execute a document agreeing to be bound by the provisions of this 
Consent Agreement and Order and shall submit to the jurisdiction of the 
CPSC for purposes of enforcement of this Consent Agreement and Order. 
In the event of any merger, sale, assignment, or transfer of 
substantially all of Eoff's assets, Eoff shall provide written notice 
to the staff at least sixty (60) days prior to any such merger, asset 
sale, assignment, or transfer.
    19. The CPSC, the staff, and/or Eoff may disclose terms of this 
Consent Agreement and Order to the public.
    20. The CPSC, at its sole discretion and upon reasonable notice to 
the staff and Eoff, may void, suspend, or rescind this Consent 
Agreement and Order if: (a) Eoff has made material misrepresentations 
regarding its financial condition as of the date of this Consent 
Agreement and Order; or (b) in Eoff's submissions to the staff dated 
May 12, 1999, July 7, 1999, July 9, 1999, and August 23, 1999, Eoff 
materially misrepresented the quantity of Heaters it sold.
    21. If any provision of this Consent Agreement and Order is held to 
be illegal, invalid, or unenforceable under present or future laws 
effective during the term of this Consent Agreement and Order, such 
provision shall be fully severable. In such event, there shall be added 
as part of this Consent Agreement and Order a provision as similar in 
terms to such illegal, invalid, or unenforceable provision as may be 
possible and be legal, valid, and enforceable. The effective date of 
the added provision shall be the date upon which the prior provision 
was held to be invalid, illegal, or unenforceable. The rest of the 
Consent Agreement and Order shall remain in full effect, unless the 
CPSC determines, after providing Eoff with notice and a reasonable 
opportunity to comment, that severing the provision materially impacts 
the Cadet Corrective Action Plan. The CPSC determination shall 
constitute the final agency decision and shall be subject to judicial 
review, such review to be based upon the record of any such CPSC 
proceeding and according to law.
    22. This Consent Agreement and Order have been negotiated by the 
parties. Eoff is not relying on the advice of the staff, nor anyone 
associated with the staff, as to legal, tax, or other consequences of 
any kind arising out of this Consent Agreement and Order, and Eoff 
specifically assumes the risk of all legal, tax, and other 
consequences.
    23. Eoff acknowledges that this Consent Agreement and Order have 
been negotiated between unrelated, sophisticated, and knowledgeable 
parties acting in their own self-interest and represented by counsel, 
and the provisions of this Consent Agreement and Order shall not be 
interpreted or construed against any person or entity because that 
person or entity or any of its attorneys or representatives drafted or 
participated in drafting this Consent Agreement and Order.
    24. The provisions of this Consent Agreement and Order shall be 
interpreted in a reasonable manner to effect its purpose to remedy the 
alleged hazard that the Heaters pose and to resolve potential claims by 
the CPSC against Eoff with respect to the Heaters. In the event of a 
dispute between the parties arising under this Consent Agreement and 
Order, the parties agree to submit the issue for determination by the 
CPSC. The CPSC determination shall constitute the final agency decision 
and shall be subject to judicial review, such review to be based upon 
the record of any such CPSC proceeding and according to law.
    25. The existence of a dispute between the staff and Eoff over any 
provision of this Consent Agreement and Order shall not excuse, toll, 
or suspend any obligation or deadline imposed upon Eoff under this 
Consent Agreement and Order, other than the specific provision in 
dispute.
    26. This Consent Agreement and Order shall not be waived, changed, 
amended, modified, or otherwise altered, except in writing executed by 
the parties and approved by the CPSC.
    27. This Consent Agreement and Order contain the entire agreement, 
understanding, representation, and interpretation of the parties 
herein, and nothing else may be used to vary or contradict its terms.
    28. Eoff's obligations under this Consent Agreement and Order shall 
terminate when Eoff makes the final payment required under Paragraphs 4 
and 5 of the Order.
    29. Eoff makes the monetary payments described in Paragraphs 4 and 
5 of the Order solely as restitution to find the Cadet Corrective 
Action Plan and thereby to settle claims arising out of its alleged 
distribution of the Heaters. No payment made pursuant to or referred to 
in this Consent Agreement and Order is a fine or other penalty paid 
with respect to any violation of any law or regulation. Payment 
hereunder does not constitute, nor shall it be construed or treated as, 
payment in lieu of a fine or other penalty, punitive recovery, or 
forfeiture.
    30. Eoff and the staff consent to the entry of the Order attached 
hereto.
    31. Upon provisional acceptance of this Consent Agreement and Order 
by the CPSC, this Consent 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. 
Sec. 1115.20(b)(4). If the CPSC does not receive any written request 
not to accept this Consent Agreement and Order within fifteen (15) 
calendar days, this Consent Agreement and Order shall be deemed finally 
accepted on the twentieth (20th) calendar day after the date it is 
published in the Federal Register, in accordance with 16 C.F.R. 
Sec. 1115.20(b)(5).
    32. Upon final acceptance by the CPSC of this Consent Agreement and 
Order, the CPSC shall issue the incorporated Order. This Consent 
Agreement and Order shall become effective upon service of the signed 
Order upon Eoff.
    33. The parties have executed two (2) identical copies of this 
Consent Agreement and the two copies shall be treated as one and the 
same executed Consent Agreement.


[[Page 71740]]


    Dated: November 12, 1999.
Howard N. Tarnoff,
Trial Attorney.
Margaret H. Plank,
Trial Attorney.
Eric L. Stone,
Director, Legal Division.
Alan H. Schoem,
Assistant Executive Director, Office of Compliance, U.S. Consumer 
Product Safety Commission.
    Dated: November 12, 1999.
Victor L. Bartlett,
CEO, Eoff Electric Company.

Order

    Upon consideration of the Consent Agreement entered into between 
Respondent Eoff Electric Company (``Eoff'') and the staff of the 
Consumer Product Safety Commission (``the staff'') (collectively ``the 
parties''); and
    The Consumer Product Safety Commission (``the CPSC'' or ``the 
Commission'') having jurisdiction over the subject matter and Eoff;
    It is hereby ordered that:
    1. The Consent Agreement between Eoff and the staff is incorporated 
herein by reference and accepted, and Eoff shall comply with all 
obligations of the Consent Agreement and this Order.
    2. Based on the Consent Agreement, the CPSC finds that the Consent 
Agreement and this Order are necessary to protect the public from the 
alleged hazard presented by Cadet's series FW, FX, LX, TK, ZA, and Z 
in-wall electric heaters, and the functionally identical heaters 
manufactured and distributed by Cadet under the Encore brand name, 
including series RX, RLX, RK, RA, and ZC. These heaters shall 
hereinafter be collectively referred to as ``the Heaters.''
    3. Eoff shall immediately cease and desist offering for sale and/or 
distributing in commerce any of the Heaters, whether by itself or 
through its subsidiaries, affiliates, Eoff-owned distribution centers, 
or any other persons or entities over whom Eoff has control.
    4. Eoff shall pay into a staff-designated, interest-bearing escrow 
account (``the Escrow Account''), the sum of TWO HUNDRED AND FIVE 
THOUSAND DOLLARS ($205,000), according to the following schedule:
    a. FIFTY ONE THOUSAND TWO HUNDRED AND FIFTY DOLLARS ($51,250) on or 
before the later of December 15, 1999, or upon the CPSC's final 
acceptance of this Order.
    b. FIFTY ONE THOUSAND AND TWO HUNDRED AND FIFTY DOLLARS ($51,250) 
on or before June 15, 2000.
    c. FIFTY ONE THOUSAND AND TWO HUNDRED AND FIFTY DOLLARS ($51,250) 
on or before December 15, 2000.
    d. FIFTY ONE THOUSAND AND TWO HUNDRED AND FIFTY DOLLARS ($51,250) 
on or before June 15, 2001.
    5. Eoff shall pay into the Escrow Account contingent 
contribution(s) of an additional EIGHTY-TWO CENTS ($0.82) for every 
heater in excess of two hundred and fifty thousand (250,000) heaters 
ordered by consumers under the Cadet Consent Agreement and Order, which 
was approved by the CPSC on July 30, 1999 (``the Cadet Order''); 
provided that the sum total of all of Eoff's contingent contribution(s) 
shall be capped at ONE HUNDRED AND SIXTY-FOUR THOUSAND DOLLARS 
($164,000), and in no event shall Eoff be required to make more than 
two contingent contribution payments. Eoff shall pay a contingent 
contribution within fifteen (15) days of Eoff's receipt of written 
notice from the staff: (a) that consumers have ordered at least 350,000 
total replacement heaters under the Cadet Order; or (b) specifying the 
number of replacement heaters in excess of 250,000 ordered by consumers 
within twenty-four (24) months after the Effective Date of the Cadet 
Order.
    6. The CPSC may authorize the distribution of the monetary payments 
referred to in Paragraphs 4 and 5 above: (a) to offset expenses 
directly related to Cadet's CPSC-approved Corrective Action Plan; and/
or (b) to otherwise remedy the alleged hazard posed by the Heaters.
    7. In addition to any penalty it may incur pursuant to Paragraph 14 
of the Consent Agreement, if Eoff fails to make timely contributions to 
the Escrow Account, as required by Paragraphs 4 and 5 of this Order, 
Eoff shall be liable for additional contributions to the Escrow 
Account. Such additional contributions shall include the following:
    a. Interest at the percentage rate established by the Department of 
the Treasury pursuant to 31 U.S.C. Sec. 3717, for any period after the 
due date; and
    b. A five percent (5%) per month penalty charge if the deposit is 
not made within thirty (30) days after the due date.

    Provisionally accepted and Provisional Order issued on the 16th 
day of December, 1999.

    By Order of the Commission.
Sadye E. Dunn,
Secretary, Consumer Product Safety Commission.
[FR Doc. 99-33103 Filed 12-21-99; 8:45 am]
BILLING CODE 6355-01-M