[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