[Federal Register Volume 65, Number 183 (Wednesday, September 20, 2000)]
[Notices]
[Pages 56870-56872]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-24076]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 00-C0013]


AZ3, Inc., d/b/a/ BCBG Max Azria, 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 C.F.R. 
1118.20(e). Published below is a provisionally-accepted Settlement 
Agreement with AZ3, Inc., d/b/a BCBG Max Azria, containing a civil 
penalty of $75,000.

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 October 5, 2000.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 00-C0013, Office of the 
Secretary, Consumer Product Safety Commission, Washington, DC 20207.

FOR FURTHER INFORMATION CONTACT: Seth B. Popkin, Trial Attorney, Office 
of Compliance and Enforcement, Consumer Product Safety Commission, 
Washington, DC 20207; telephone (301) 504-0626, 1358.

SUPPLEMENTAL INFORMATION: The test of the agreement and order appears 
below.

    Dated: September 14, 2000.
Sadye E. Dunn,
Secretary.

Consumer Product Safety Commission

[CPSC Docket No. 00-C0013]

    In the Matter of AZ3, Inc., d/b/a BCBG Max Azria; Settlement 
Agreement and Order

    1. This Settlement Agreement and Order entered into between AZ3, 
Inc., d/b/a BCBG Max Azria (``BCBG''), and the staff (``Staff'') of the 
United States Consumer Product Safety Commission (``Commission''), in 
accordance with 16 CFR 1118.20.

I. The Parties

    2. The Commission is an independent federal regulatory agency 
established pursuant to, and responsible for the enforcement of, the 
Consumer Product Safety ACt, 15 U.S.C. 2051-2084 (``CPSA'').
    3. BCBG is a corporation organized and existing under the laws of 
the state of California. Its principal offices are located at 2761 
Fruitland Avenue, Vernon, California. BCBG is a clothing manufacturer 
and retailer.

II. Staff Allegations

A. 1996 Violations of the Clothing Standard and the FFA
    4. From August through December 1996, BCBG imported 3,198 two-
textured chenille sweaters, and distributed, sold, and offered for sale 
in the United Sates 3,089 of those imported sweaters (collectively 
``Sweaters``).
    5. The Sweaters were subject to the Standard for the Flammability 
of Clothing Textiles, 16 CFR 1610 (``Clothing Standard'') issued under 
the Flammable Fabrics Act, 15 U.S.C. 1191-1204 (``FFA''), and, 
specifically, under section 4 of the FFA, 15 U.S.C. 1193.
    6. In 1996, the Staff tested the Sweaters and found that the 
Sweaters were classified as ``Class 3'' under the Clothing Standard. 
These test results established that the sweaters were dangerously 
flammable and unsuitable for clothing because of their rapid and 
intense burning. See 16 CFR 1610.3(a)(3).
    7. In 1996, the staff requested that BCBG take corrective action. 
BCBG agreed to a voluntary recall of the Sweaters, and, on December 18, 
1996, the Staff announced a recall of the Sweaters.
    8. BCBG knowingly violated section 3(a) of the FFA, 15 U.S.C. 
1192(a), and the Clothing Standard, by importing, distributing, 
selling, and offering for sale in commerce the Sweaters, as the term 
``knowingly'' is defined in section 5(e)(4) of the FFA, 15 U.S.C. 
1194(e)(4). See also 16 CFR 1610.32(a). Pursuant to section 5(e)(1) of 
the FFA, 15 U.S.C. 1194(e)(1), these violations subjected BCBG to a 
civil penalty.
B. 1999 Violations of the Clothing Standard and the FFA
    9. After the recall, from 1997 to 1999, the Staff contacted BCBG on 
a regular basis to encourage BCBG to destroy, export, or recondition 
BCBG's inventory of the Sweaters so that the Sweaters would not enter 
United States commerce. The Staff warned BCBG of the dangers posed by 
the BCBG's continued retention of the Sweaters.
    10. BCBG declined to destroy the Sweaters and told the Staff that 
BCBG was seeking foreign buyers for the Sweaters.
    11. From approximately July 1999 through September 9, 1999, BCBG 
sold 185 of the Sweaters, and offered for sale a greater number, in the 
BCBG employee sales store. The persons shopping at this store included 
BCBG employees and their families, friends, and guests, middlemen and 
buyers who may resell their purchases at another store, and other 
members of the public.
    12. By offering these violative Sweaters for sale in United States 
commerce, and by selling them, BCBG knowingly violated section 3(a) of 
the FFA, 15 U.S.C. 1192(a), and the Clothing Standard, as the term 
``knowingly'' is defined in section 5(e)(4) of the FFA, 15 U.S.C. 
1194(e)(4). See also 16 CFR 1610.32(a). Pursuant to section 5(e)(1) of 
the FFA, 15 U.S.C. 1194(e)(1), these violations subjected BCBG to a 
civil penalty.
C. 1999 CPSA Violations
    13. Each of the Sweaters is a ``consumer product,'' and BCBG is a 
``manufacturer'' and ``retailer'' of a

[[Page 56871]]

consumer product, as those terms are defined in sections 3(a)(1), (4), 
and (6) of the CPSA, 15 U.S.C. 2052(a)(1), (4), and (6).
    14. BCBG is subject to section 15(b) of the CPSA, 15 U.S.C. 
2064(b), which requires every manufacturer and retailer of a consumer 
product distributed in commerce, who obtains information which 
reasonably supports the conclusion that such product creates an 
unreasonable risk of serious injury or death, to immediately inform the 
Commission of such risk.
    15. BCBG employees had knowledge of the 1999 Sweaters sales and 
offers of sale as they were occurring, i.e., from approximately July 
1999 through September 9, 1999. Pursuant to 16 C.F.R. 1115.14(b), the 
employees' knowledge may be imputed to BCBG.
    16. BCBG's management acquired actual knowledge of the 1999 
Sweaters sales and offers of sale no later than September 9, 1999. This 
knowledge, including the fact that the Sweaters were classified as 
``Class 3'' under the Clothing Standard, reasonably supported the 
conclusion that the 1999 Sweaters sales created an unreasonable risk of 
serious injury or death. Under the circumstances, BCBG was required to 
inform the Commission of such risk within 24 hours, i.e., by September 
10, 1999. See CPSA 15(b), 15 U.S.C. 2064(b); 16 CFR 1115.14 (d), (e).
    17. BCBG failed to inform the Staff of the 1999 Sweaters sales and 
the associated risks until October 19, 1999. This failure violated the 
CPSA. See CPSA Sec. 19(a)(4), 15 U.S.C. 2068(a)(4).
    18. BCBG knowingly failed to inform the Staff of the 1999 Sweaters 
sales in a timely manner, as the term ``knowingly'' is defined in 
section 20(d) of the CPSA, 15 U.S.C. 2069(d). Pursuant to section 
20(a)(1) of the CPSA, 15 U.S.C. 2069(a)(1), this failure subjected BCBG 
to a civil penalty.

III. Response of BCBG

    19. BCBG denies the Staff's allegations that BCBG knowingly or 
otherwise violated the Clothing Standard, the FFA, or the CPSA, and the 
content found in paragraphs 4-18.
    20. In January 1999, BCBG sold and shipped 509 Sweaters, of the 
approximately 979 Sweaters in its possession, to buyers in Japan and 
Israel, and BCBG did so properly pursuant to Commission procedures.
    21. From September 9, 1999, and continuing through the date of this 
Settlement Agreement and Order, BCBG conducted a voluntary recall 
effort concerning the 1999 Sweaters sales.

IV. Agreement of the Parties

    22. The Commission has jurisdiction over this matter under the 
CPSA, the FFA, and the Federal Trade Commission Act, 15 U.S.C. 41 et 
seq.
    23. This Settlement Agreement and Order is in settlement of the 
Staff's allegations and does not constitute an admission by BCBG that 
the law has been violated or of anything contained in paragraphs 4-18.
    24. In settlement of this matter, BCBG shall pay to the Commission 
a civil penalty in the amount of seventy-five thousand dollars 
($75,000.00). BCBG shall pay this sum in two (2) payments as follows: 
(a) BCBG shall deliver to the Commission forty thousand dollars 
($40,000.00) within twenty (20) calendar days of service of the 
Commission's Order accepting this Agreement; and (b) BCBG shall deliver 
to the Commission thirty-five thousand dollars ($35,000.00) within 
fifty (50) calendar days of service of the Commission's Order accepting 
this Agreement. Each payment shall be by check payable to the order of 
the United States Treasury.
    25. BCBG knowingly, voluntarily, and completely waives any rights 
it may have in this matter (1) to the issuance of a Complaint, (2) to 
an administrative or judicial hearing, (3) to judicial review or other 
challenge or contest of the validity of the Commission's Order, (4) to 
a determination by the Commission as to whether or not BCBG failed to 
comply with the FFA or CPSA, as alleged, (5) to a statement of findings 
of fact and conclusions of law, and (6) to any claims under the Equal 
Access to Justice Act.
    26. Upon provisional acceptance of this Settlement Agreement and 
Order by the Commission, this Settlement Agreement and Order shall be 
placed on the public record and shall be published in the Federal 
Register in accordance with the procedures set forth in 16 CFR 
1118.20(e). In accordance with 16 CFR 1118.20(f), if the Commission 
does not receive any written request not to accept the Settlement 
Agreement and Order within fifteen (15) days, the Settlement Agreement 
and Order shall be deemed finally accepted on the sixteenth (16th) day 
after the date it is published in the Federal Register.
    27. This Settlement Agreement and Order becomes effective upon its 
final acceptance by the Commission and service upon BCBG.
    28. The Commission may publicize the terms of the Settlement 
Agreement and Order.
    29. This Settlement Agreement and Order shall apply to, and be 
binding upon, BCBG and its successors, assigns, agents, 
representatives, and employees, directly or through any corporation, 
subsidiary, division, or other business entity, or through any agency, 
device, or instrumentality.
    30. This Settlement Agreement may be used in interpreting the 
Order. Agreements, understandings, representations, or interpretations 
made outside of this Settlement Agreement and Order may not be used to 
vary or contradict its terms.
    31. BCBG agrees to entry of the attached Order, which is 
incorporated herein by reference, and agrees to be bound by its terms.

    Dated: August 14, 2000.

    By: Max Azria, President and CEO, AZ3, Inc., d/b/a BCBG Max 
Azria.

The Consumer Product Safety Commission.

Alan H. Schoem,
Assistance Executive Director, Office of Compliance.

Eric L. Stone,
Director, Legal Division, Office of Compliance.

Dated: August 17, 2000.
    By: Seth B. Popkin, Trial Attorney, Legal Division, Office of 
Compliance.

Consumer Product Safety Commission

[CPSC Docket No. 00-C0013]

    In the Matter of AZ3, Inc., d/b/a BCBG Max Azria; Order

    Upon consideration of the Settlement Agreement entered into between 
AZ3, Inc., d/b/a BCBG Max Azria (``BCBG''), and the United States 
Consumer Product Safety Commission (``Commission'') staff, and the 
Commission having jurisdiction over the subject matter and over BCBG, 
and it appearing that the Settlement Agreement and Order is in the 
public interest, it is
    Ordered, that the Settlement Agreement be, and hereby is, accepted; 
and it is
    Further Ordered, that BCBG shall pay to the Commission a civil 
penalty in the amount of seventy-five thousand dollars ($75,000.00), 
and that BCBG shall pay this sum in two (2) payments as follows: (a) 
BCBG shall deliver to the Commission forty thousand dollars 
($40,000.00) within twenty (20) calendar days of service of this final 
Order upon BCBG; and (b) BCBG shall deliver to the Commission thirty-
five thousand dollars ($35,000.00) within fifth (50) calendar days of 
service of this final Order upon BCBG. Each payment shall be by check 
payable to the order of the United States Treasury.

    Provisionally accepted and Provisional Order issued on the 14th 
day of September, 2000.

[[Page 56872]]

By Order of the Commission:
Sadye E. Dunn,
Secretary, Consumer Product Safety Commission.
[FR Doc. 00-24076 Filed 9-19-00; 8:45 am]
BILLING CODE 6355-01-M