[Federal Register Volume 65, Number 183 (Wednesday, September 20, 2000)]
[Notices]
[Pages 56872-56873]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-24188]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 00-C0014]


Galoob Toys, Inc., a Corporation, 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 1118.20. 
Published below is a provisionally-accepted Settlement Agreement with 
Galoob Toys, Inc., a corporation, containing a civil penalty of 
$400,000.

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-C0014, Office of the 
Secretary, Consumer Product Safety Commission, Washington, DC 20207.

FOR FURTHER INFORMATION CONTACT: William J. Moore, Trial Attorney, 
Office of Compliance and Enforcement, Consumer Product Safety 
Commission, Washington, DC 20207; telephone (301) 504-0626, 1348.

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

    Dated: September 15, 2000.
Sadye E. Dunn,
Secretary.

Settlement Agreement and Order

    1. This Settlement Agreement, made by and between the staff (``the 
staff'') of the U.S. Consumer Product Safety Commission (``the 
Commission'') and Galoob Toys, Inc., (``Galoob''), a corporation, in 
accordance with 16 CFR 1118.20 of the Commission's Procedures for 
Investigations, Inspections, and Inquiries under the Consumer Product 
Safety Act (``CPSA''), is a settlement of the staff allegations set 
forth below.

I. The Parties

    2. The Commission is an independent federal regulatory agency 
responsible for the enforcement of the Consumer Product Safety Act, 15 
U.S.C. 2051-2084.
    3. Galoob is a corporation organized and existing under the laws of 
the State of Delaware. Its principal offices are located at 5 Thomas 
Mellon Circle, Suite 304, San Francisco, California. Galoob is a wholly 
owned subsidiary of Hasbro, Inc., (``Hasbro'') Before ti was acquired 
by Hasbro, Galoob Toys, Inc. was an independent corporation doing 
business as Lewis Galoob Toys, Inc.

II. Staff Allegations

    4. From on or before November 1994 through approximately August 
1998, Galoob, a corporation and toy manufacturer, made, sold and 
distributed into United States commerce over 8 million ``flying'' toys 
known as the ``Sky Dancers''. Galoob is, therefore, a manufacturer and 
distributor of a consumer product in U.S. commerce pursuant to 15 
U.S.C. 2052 (a)(1), (4), (5) an (6).
    5. On November 2, 1998 Hasbro purchased Galoob's stock and Galoob 
became one of Hasbro's wholly owned subsidiaries. Galoob remained and 
remains a corporation and a separate legal entity.
    6. Galoob experienced several toy manufacturing/production problems 
resulting in unsafe performance of the Sky Dancers shortly after 
production began. In late 1994 and early 1995, production defects 
included: use of wings of uneven weight on the same Sky Dancer, 
improper methods for centering and affixing wings to the body of the 
toy; and producing wings with padding that was susceptible of coming 
off the wing.
    7. In 1995 Galoob made several prospective changes in the design 
and production of the Sky Dancers intended to reduce performance 
problems and make the Sky Dancer safer to use. After Galoob distributed 
approximately 100,000 Sky Dancers into U.S. commerce, Galoob reworked a 
large number of Sky Dancers in inventory to attempt to eliminate safety 
defects. The approximately 100,000 Sky Dancers sold were not recalled 
or reworked.
    8. Even as designed and produced as intended, the Sky Dancers are 
susceptible of causing injury. The Sky Dancer uses a pull cord to 
launch the hard plastic toy; to send it spinning up and away from its 
base at a high rate of speed. Once launched the Sky Dancer uses two 
propeller-like blades or ``wings'' (attached to the toy) spinning 
rapidly to make it ``fly,'' often in unpredictable directions and 
angles, allowing it to forcefully strike the user or nearby playmates, 
usually in the face or head.
    9. Before formal ratification and signing the necessary documents 
to acquire Galoob, Hasbro examined Galoob's records reflecting its 
assets, liabilities and other documents including the history of the 
``Sky Dancers.''
    10. Between January 1995 and November 1998, Galoob received 165 
injury complaints, including damage to the eyes, face and teeth. Hasbro 
learned of the problem with the product before acquiring Galoob.
    11. On November 2, 1998, Hasbro acquired Galoob. Following the 
acquisition, on November 18, 1998 Hasbro/Galoob made a telephone report 
and, on November 23, 1998, sent a preliminary report letter to the CPSC 
staff under Section 15(b) of the CPSA. 15 U.S.C. 2064(b). By letter 
dated December 15, 1998, the CPSA staff requested full report 
information from the reporting firm pursuant to the CPSA. Id.
    12. On January 14, 1999 Hasbro/Galoob filed a limited report with 
the Commission and filed its full report on April 8, 1999. Galoob 
undertook a voluntary recall of the Sky Dancers in June 2000.
    13. Galoob, during 1994 testing and early production, and 
subsequently, as it received injury reports through 1998, obtained 
information which reasonably supported the conclusion that the Sky 
Dancers contained defects which could create a substantial product 
hazard but failed to report to the Commission in a timely manner as 
required by section 15(b) of the CPSA, 15 U.S.C. 2064(b). Hasbro 
obtained such information before it formally acquired the stock of 
Galoob on November 2, 1998.
    14. By failing to furnish information as required by section 15(b) 
of the CPSA, Galoob committed a prohibited act under section 19(a)(4) 
of the CPSA, 15 U.S.C. 2068(a)(4).
    15. The staff alleges this violation was committed ``knowlingly'' 
as the term in defined in section 20(d) of the CPSC, 15 U.S.C. 2069(d).

III. Response of Galoob

    16. Galoob denies the staff allegations numbered six through ten 
and 13 through 15 above. It denies the Galoob Sky Dancer contains a 
defect or that it creates a substantial product hazard pursuant to 
section 15(a) of the CPSA, 15 U.S.C. 2064(a) or that it creates an 
unreasonable risk of serious injury or death pursuant to section 15(b) 
of the

[[Page 56873]]

CPSA. Galoob denies that Sky Dancers or Galoob has caused any injuries. 
Galoob further denies that it or Hasbro violated the reporting 
requirements of section 15(b) of the CPSA, 15 U.S.C. 2064(b) or 16 
C.F.R. Part 1115.
    17. Galoob asserts that Sky Dancers were properly designed, tested 
and manufactured and contained adequate warnings and labeling.
    18. Galoob enters this Settlement Agreements and Order for 
settlement purposes only, to avoid incurring legal costs and expenses.

IV. Agreement of the Parties

    19. The Commission has jurisdiction over this matter and over 
Galoob under the Consumer Product Safety (CPSA), 15 U.S.C. 2051 et seq.
    20. Galoob knowingly, voluntarily and completely waives any rights 
it may have in the above captioned case (1) to the issuance of a 
Compliant in this matter; (2) to an administrative or judicial hearing 
with respect to the staff allegations cited herein (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 a violation of section 15(b) of the CPSA, 15 U.S.C. 2064(b), 
has occurred, and (5) to a statement of findings of fact and 
conclusions of law with regard to the staff allegations.
    21. 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 by published in the Federal 
Register in accordance with 16 CFR 1118.20.
    22. The Settlement Agreement and Order becomes effective upon final 
acceptance by the Commission. Galoob shall pay a civil penalty in the 
amount of four hundred thousand and no/dollars ($400,000.00) within 10 
calender days of receiving service of such final Settlement Agreement 
and Order.
    23. This Settlement Agreement and Order is not deemed or construed 
as an admission by Galoob (a) of any liability or wrongdoing by Galoob 
or, (b) that Galoob violated any law or regulation. Nothing contained 
in this Settlement Agreement and Order precludes Galoob from raising 
any defenses in any future litigation not arising out of the terms of 
this Settlement Agreement and Order.
    24. Upon final acceptance of this Settlement Agreement by the 
Commission, the issuance of the implementing Order, and the full and 
timely payment by Galoob to the United States Treasury of a civil 
penalty in the amount of four hundred thousand dollars ($400,000.00), 
the Commission specifically waives its right to initiate, either by 
referral to the Department of Justice, or bringing in its own name, any 
action for civil penalties relating to any of the events that gave rise 
to the staff allegations in paragraphs four through 15, supra, against 
(a) Galoob; (b) any of Galoob's current or former parents, 
subsidiaries, affiliates, divisions or related entities; (c) any 
shareholder, director, officer, employee, agent or attorney of any 
entity referenced in (a) or (b), and (d) any successor, heir, or assign 
of the persons described in (a) or (b) above.
    25. Upon final acceptance by the Commission, the parties agree that 
the Commission may publicize the terms of the Settlement Agreement and 
Order.
    26. Galoob agrees to the entry of the attached Order, which is 
incorporated herein by reference, and agrees to be bound by its terms.
    27. The Commission's Order in this matter is issued under the 
provisions of the CPSA, 15 U.S.C. 2051 et seq., and a violation of this 
Order may subject Galoob to appropriate legal action.
    28. This Settlement Agreement and Order is binding upon and shall 
inure to the benefit of Galoob, its parent and each of their assigns or 
successors.
    29. Agreements, understandings, representations, or interpretations 
made outside this Settlement Agreement and Order may not be used to 
vary or to contradict its terms.
    30. If, after the effective date hereof, any provision of this 
Settlement Agreement and Order is held to be illegal, invalid, or 
unenforceable under present or future laws effective during the terms 
of the Settlement and Order, such provision shall be fully severable. 
The rest of the Settlement Agreement and Order shall remain in full 
effect, unless the Commission determines that severing the provision 
materially impacts the purpose of the Settlement Agreement and Order.
    31. This Settlement Agreement and Order shall not be waived, 
changed, amended, modified, or otherwise altered, except in writing 
executed by the party against whom such amendment, modification, 
alteration, or waiver is sought to be enforced, and approved by the 
Commission.

    Galoob Toys, Inc.
Dated: August 17, 2000.
Alfred J. Vurmhra,
Executive Vice President--Global Operations, Chief Financial 
Officer.
    The U.S. Consumer Product Safety Commission.
Alan H. Schoem,
Assistant Executive Director, Office of Compliance.
Eric L. Stone,
Director, Legal Division, Office of Compliance.
Dated: August 9, 2000.
William J. Moore, Jr.,
Trial Attorney, Legal Division, Office of Compliance.

Order

    Upon consideration of the Settlement Agreement entered into between 
Galoob Toys, Inc., a corporation, and the staff of the U.S. Consumer 
Product Safety Commission; and the Commission having jurisdiction over 
the subject matter and Galoob Toys, Inc., 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, upon final acceptance of the Settlement 
Agreement and Order, Galoob Toys, Inc. shall pay the Commission a civil 
penalty in the amount of FOUR HUNDRED THOUSAND AND no/100 dollars, 
($400,000.00) within ten (10) calendar days after service of this Final 
Order upon Galoob Toys, Inc.

    Provisionally accepted and Provisional Order issued on the 15th 
day of September, 2000.
    By Order of the Commission.
Sadye E. Dunn,
Secretary, U.S. Consumer Product Safety Commission.
[FR Doc. 00-24188 Filed 9-19-00; 8:45 am]
BILLING CODE 6355-01-M