[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