[Federal Register Volume 65, Number 46 (Wednesday, March 8, 2000)]
[Notices]
[Pages 12216-12219]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-5671]



[[Page 12216]]

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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 00-C0006]


Platt Electric Supply, Inc., 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 Platt Electric Supply, Inc., containing monetary 
payments totaling between $1,000,000.00 and $1,500,000.00.

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 March 23, 2000.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to ``Comment 00-C0006'', Office of the 
Secretary, U.S. Consumer Product Safety Commission, Washington, DC 
20207.

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

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

    Dated: March 3, 2000.
Sadye E. Dunn,
Secretary.

Consent Agreement

    This Consent Agreement is made by and between the staff of the 
Consumer Product Safety Commission (under authority delegated to the 
staff by the Commission) and Platt Electric Supply, Inc. (``Platt''), a 
domestic corporation, to settle allegations that Platt 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. 2053, as amended.
    2. Respondent Platt is a domestic corporation organized and 
existing under the laws of the State of Oregon, with its principal 
place of business located at 10605 SW Allen Boulevard, Beaverton, OR 
97005. Platt 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 of 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- (including models RLX-302, RLX-402, and RLX-482) 
manufactured between 1985 and 1994; series RK (including RK-101 and RK-
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 1985, Platt 
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 product hazard within the meaning of 
Section 15(a)(2) of the CPSA, 15 U.S.C. 2064(a)(2), and public notice 
and a recall of certain of the Heaters pursuant to Sections 15(c) and 
(d) of the CPSA, 15 U.S.C. 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. 
2064(a)(2), because their design and/or manufacture causes them to 
overheat, fail, and catch fire; and/or allows 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. CPSC has made no findings of fact or 
conclusions of law regarding these allegations. 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 Platt (and each of Platt's predecessors, successors, 
assigns, parents, subsidiaries, affiliated entities,

[[Page 12217]]

agents, representatives, attorneys, employees, officers, directors, 
stockholders, and principals) (collectively ``the Platt Releasees'') 
under Sections 15(c) and (d) of the CPSA, 15 U.S.C. 2064(c) and (d), to 
give public notice of any 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 Platt 
Releasees to the Commission for all other claims and causes of action 
relating to alleged defects in the Heaters, as described in paragraph 4 
above. However, Platt is not released from any claims or causes of 
action based upon information knowingly withheld from or misrepresented 
to the CPSC staff by Platt. Nothing in this Paragraph 6 is intended to 
limit the CPSC's rights under Paragraph 21 of this Consent Agreement.
    7. The staff believes that this Consent Agreement and Order is an 
equitable resolution of consumer claims against Platt for replacement 
heaters. The staff has concluded that the Cadet Corrective Action Plan, 
and Platt'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 the public.
    8. This Consent Agreement and Order shall not be deemed or 
construed as an admission by Platt or as evidence: (a) Of any violation 
of law or regulation by Platt; (b) of other wrongdoing by Platt; (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 Platt or with respect to the Heaters or the Cadet 
Corrective Action Plan. Platt does not admit the factual allegations or 
other statements, or any conclusions of law, as alleged or otherwise 
stated in the Complaint or this Consent Agreement and Order which 
relate to the heaters.
    9. Platt agrees not to contest in connection with this Consent 
Agreement and Order the staff's allegation that the Heaters are 
``consumer products'' within the meaning of Section 3(a)(1) of the 
CPSA, 15 U.S.C. 2052(a)(1).
    10. Platt agrees not to contest in connection with this Consent 
Agreement and Order the staff's allegation that Platt 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. 2052(a)(1), (5), and (11).
    11. Platt agrees not to contest in connection with this Consent 
Agreement and Order the staff's allegation that the CPSC has 
jurisdiction over Platt and the Heaters under Section 3(a)(1), (5), and 
(11) and Section 15 of the CPSA, 15 U.S.C. 2052(a)(1), (5), and (11) 
and Sec. 2064.
    12. For purposes of this settlement only, Platt agrees not to 
contest the staff's allegation 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. 2064(a).
    13. Upon final acceptance by the CPSC of this Consent Agreement and 
Order, Platt and CPSC knowingly, voluntarily, and completely waive and 
relinquish any past, present, and/or future right or rights in this 
matter: (a) To the issuance of a proposed complaint in accordance with 
16 CFR Sec. 1115.20(b); 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; (c) to seek judicial review or otherwise 
challenge or contest the validity of this Consent Agreement and Order 
as issued and entered; (d) 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, 22 and 25 of this Consent 
Agreement; 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. 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 Platt to civil and/or 
criminal penalties under Sections 20 and 21 of the CPSA, 15 U.S.C. 2069 
and 2070.
    15. The parties agree 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.
    17. Platt acknowledges that any interested person may bring an 
action pursuant to Section 24 of the CPSA, 15 U.S.C. 2073, in any 
United States District Court in which Platt is found or transacts 
business, to enforce the Order and to obtain appropriate injunctive 
relief.
    18. For the length of its term, 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, Platt merges with any other business entity or sells, assigns, 
or otherwise transfers substantially all of its assets, Platt shall 
provide reasonable prior notice to the surviving corporation or to the 
purchaser, assignee, or transferee of substantially all of Platt's 
assets, of this Consent Agreement and Order, and of its binding effect 
upon said surviving corporation, purchaser, assignee, or transferee. 
The existence of this Consent Agreement and Order and its binding 
effect shall be noted in any agreement between Platt 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 Platt's assets, Platt 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 Platt may disclose terms of this 
Consent Agreement and Order to the public.
    20. The staff is entering into this Consent Agreement and Order 
upon reliance that Platt and Cadet have executed a settlement agreement 
dated January 31, 2000 that resolves issues surrounding the June 22, 
1999 DIP Loan and Security Agreement between Cadet, Platt, and 
Consolidated Electrical Distributors, Inc. (``DIP Loan and Security 
Agreement'').
    21. The CPSC, upon reasonable notice to the staff and Platt, may 
void, suspend, or rescind all, or any part, of this Consent Agreement 
and Order if it reasonably concludes that: (a) Platt has made knowing 
and material misrepresentations regarding its financial condition as of 
the date of this Consent Agreement and Order; (b) in Platt's submission 
to the staff dated March 19, 1999, Platt knowingly and materially 
misrepresented the quantity of Heaters it sold; or (c) Platt and Cadet

[[Page 12218]]

have not executed the Platt/Cadet settlement agreement referred to in 
Paragraph 20 of this Consent Agreement. The CPSC may exercise its 
rights under this Paragraph 21 within, and not later than, 30 months 
from the Effective Date of the Cadet Order or the termination of this 
Consent Agreement and Order pursuant to paragraph 33, whichever occurs 
first. Any CPSC determination under this paragraph shall be subject to 
the dispute resolution procedures set forth in Paragraph 25.
    22. 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 reasonably determines, after providing Platt 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.
    23. This Consent Agreement and Order have been negotiated by the 
parties. Platt is not relying on the advice of the staff, nor anyone 
associated with the staff, except as otherwise set forth in this 
Consent Agreement and Order or in the letter from CPSC staff to Andrew 
S. Krulwich, Esq. dated February 8, 2000.
    24. The provisions of this Consent Agreement and Order shall not be 
interpreted or construed against any person or entity because that 
person or any of its attorneys or representatives drafted or 
participated in drafting this Consent Agreement and Order.
    25. 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 alleged claims by 
the CPSC against Platt 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 dispute to non-binding 
arbitration by a panel of three arbitrators, according to the rules of 
the American Arbitration Association then in effect. The CPSC and Platt 
shall each have the right to select one arbitrator, and shall jointly 
select the third arbitrator. If the CPSC and Platt are unable to agree 
on the selection of the third arbitrator, that arbitrator shall be 
selected by the American Arbitration Association. Either party may 
institute an action, following the non-binding decision rendered by the 
arbitration panel, in the United States District Court for the District 
of Columbia. Notwithstanding the foregoing, neither the arbitrators nor 
the CPSC shall have the authority to resolve disputes arising under the 
Platt/Cadet Settlement Agreement, nor may any rights or obligations 
arising out of the Platt/Cadet Settlement Agreement be enforced through 
this Consent Agreement and Order.
    26. The existence of a dispute between the staff and Platt over any 
provision of this Consent Agreement and Order shall not excuse, toll, 
or suspend any obligation or deadline imposed upon Platt under this 
Consent Agreement and Order, other than the specific provision in 
dispute.
    27. 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.
    28. 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.
    29. Platt makes the monetary payments described in Paragraphs 4 and 
5 of the Order solely to fund 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. Platt 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 CFR 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 CFR 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 Platt.
    33. Platt's Obligations under this Consent Agreement and Order 
shall terminate when Platt makes the final payment required under 
Paragraphs 4 and 5 of the Order.
    34. 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.

    Dated: February 9, 2000.
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, 4330 East West Highway, Bethesda, MD 20814; 
Telephone: (301) 504-0626, Facsimile: (301) 504-0359.

Harvey J. Platt,
Chairman & CEO, Platt Electric Supply, Inc., 10605 SW Allen Boulevard, 
Beaverton, OR 97005-4896; Telephone: (503) 526-2332, Facsimile: (503) 
350-5579.

Order

    Upon consideration of the Consent Agreement entered into between 
Respondent Platt Electric Supply, Inc. (``Platt'') 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 Platt;
    It is hereby ordered that:
    1. The Consent Agreement between Platt and the staff is 
incorporated herein by reference and accepted, and Platt 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 Manufacturing Company's (``Cadet's'') 
series FW, FX, LX, TK, ZA and Z in-wall electric heaters, and the 
functionally identical heaters manufactured and distributed by Cadet

[[Page 12219]]

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. Platt shall immediately cease and despite offering for sale and/
or distributing in commerce any of the Heaters, whether by itself or 
through its subsidiaries, affiliates, Platt-owned distribution centers, 
or any other persons or entities over whom Platt has control.
    4. Platt shall pay into an escrow account (Chase Manhattan Trust 
Company, National Association, Account #76609060682) established by the 
staff and Cadet for the purpose of remediating the Heaters (``the 
Escrow Account''), the sum of ONE MILLION DOLLARS ($1,000,000) upon the 
CPSC's final acceptance of this Order.
    5. Platt shall pay into the Escrow Account contingent contributions 
of an additional TWO-DOLLARS AND FIFTY CENTS ($2.50) 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 Platt's contingent contributions shall be capped 
at FIVE HUNDRED THOUSAND DOLLARS ($500,000). Platt shall pay contingent 
contributions within thirty (30) days of Platt's receipt of quarterly 
written notice from the staff 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 issued by CPSC 
on July 30, 1999.
    6. The CPSC may authorize the distribution of the monetary payments 
referred to in Paragraphs 4 and 5 above to offset any expenses directly 
related to Cadet's CPSC-approved Corrective Action Plan. Should Cadet 
fail in its obligations under the Corrective Action Plan, CPSC may 
authorize the distribution of the monetary payments in paragraphs 4 and 
5 above to otherwise remedy the alleged hazard posed by the Heaters; 
however, no such failure on the part of Cadet shall change the amount 
or schedule of payments due under this Order or change the rights and 
duties of Platt under the Consent Agreement.
    7. In addition to any penalty it may incur pursuant to Paragraph 14 
of the Consent Agreement, if Platt fails to make timely contributions 
to the Escrow Account, as required by Paragraphs 4 and 5 of this Order, 
Platt shall be liable for additional contributions to the Escrow 
Account consisting of the following:
    a. Interest at the percentage rate established by the Department of 
the Treasury pursuant to 31 U.S.C. 3717, for any period after the due 
date; and
    b. A five percent (5%) per month penalty charge if the contribution 
is not made within thirty (30) days after the due date.

    Provisionally accepted and Provisional Order issued on the 3rd 
day of March, 2000.
    By Order of the Commission:
Sadye E. Dunn,
Secretary, Consumer Product Safety Commission.
[FR Doc. 00-5671 Filed 3-7-00; 8:45 am]
BILLING CODE 6355-01-M