[Federal Register Volume 65, Number 214 (Friday, November 3, 2000)]
[Notices]
[Pages 66237-66239]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-28203]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 01-C0002]


Tropitone Furniture Co., 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(e). 
Published below is a provisionally-accepted Settlement Agreement with 
Tropitone Furniture Co., Inc., a corporation, containing a civil 
penalty of $750,000.

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 November 20, 2000.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 01-C0002, Office of the 
Secretary, Consumer Product Safety Commission, Washington, DC 20207.

FOR FURTHER INFORMATION CONTACT: Deborah S. Orlove, Trial Attorney, 
Office of Compliance and Enforcement, Consumer Product Safety 
Commission, Washington, DC 20207; telephone (301) 504-0626, 1347.

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

    Dated: October 30, 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 Tropitone Furniture Co., Inc. (``Tropitone''), 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. Tropitone is a corporation organized and existing under the laws 
of the State of Florida. Its principal offices are located at 5 
Marconi, Irvine, California 92618.

II. Staff Allegations

    4. The following models of chaise lounge chairs manufactured by 
Tropitone are the subject of this Settlement Agreement:

[[Page 66238]]



----------------------------------------------------------------------------------------------------------------
                                                                                          Dimensions  (width  x
              Model name                      Model No.            Dates manufactured       length  x  height)
----------------------------------------------------------------------------------------------------------------
TropiKai.............................  935....................  1985-1991..............  24"  x  77.5"  x
                                       935HYA.................  1991-April 1992........   41.5".
Verrazano............................  4332...................  1987-1992..............  27.5"  x  78.5"  x
                                                                                          39.75".
Cotillion............................  4032...................  1986-1987..............  29"  x  81.75"  x  42".
Cayman...............................  5932...................  1989-April 1992........  27.5"  x  80"  x  44".
Colony...............................  4932...................  1987-1991..............  29.75"  x  80"  x  42".
Seychelle............................  4432...................  1986-April 1992........  25"  x  79"  x  40".
----------------------------------------------------------------------------------------------------------------

    5. Beginning in 1985, Tropitone manufactured, distributed and/or 
sold into United States commerce more than 123,000 chaise lounge 
chairs, described in paragraph 4 above. Tropitone is, therefore, a 
manufacturer, distributor and/or retailer of a consumer product 
distributed in U.S. commerce, pursuant to 15 U.S.C. 2052(a)(1), (4), 
(5) and (6).
    6. The chaise lounge chairs, described in paragraph 4 above, 
contained a nylon ratchet system that controlled the height of the 
headrest on the chaise lounge. The nylon ratchets were prone to break, 
causing the headrest to collapse and injure consumers. Consumers who 
reached behind the headrest to adjust its height by placing their 
fingers between the headrest frame and the chaise bed suffered injuries 
when the nylon ratchet failure caused the headrest to forcefully 
collapse and ``scissor'' their fingers.
    7. By mid 1988, Tropitone had begun receiving injury claims and 
complaints regarding the nylon ratchet failure of the chaise lounges 
described in paragraph 4. Injuries included finger amputations 
(multiple, full or partial), finger fractures, crushed fingers, pinched 
fingers, severe finger lacerations, back injury, skull fracture, and 
facial injuries. CPSC's records indicate that Tropitone learned of at 
least 170 incidents of nylon ratchet failure that occurred on the 
chaise lounge chairs described in paragraph 4 between approximately 
January 1987 and January 1999.
    8. Tropitone obtained information which reasonably supported the 
conclusion that the chaise lounge chairs described in paragraph 4 
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)(2) of the CPSA, 15 U.S.C. 2064(b)(2). Tropitone also 
obtained information which reasonably supported the conclusion that the 
chaise lounge chairs described in paragraph 4 created an unreasonable 
risk of serious injury or death, but failed to report to the Commission 
in a timely manner as required by Section 15(b)(3) of the CPSA, 15 
U.S.C. 2064(b)(3).
    9. Over a period of several years, Tropitone also failed to report 
to the Commission information about approximately 30 settlements and 
plaintiff's judgments in lawsuits concerning the chaise lounge chairs 
described in paragraph 4. Tropitone failed to report those lawsuit 
settlements and judgments in a timely manner as required by section 37 
of the CPSA, 15 U.S.C. 2084.
    10. By failing to furnish information as required by section 15(b) 
of the CPSA, 15 U.S.C. 2064(b), and section 37 of the CPSA, 15 U.S.C. 
2084. Tropitone committed prohibited acts under section 19(a)(4) and 
(11) of the CPSA, 15 U.S.C. 2068(a)(4) and (11).
    11. The staff alleges these violations were committed ``knowingly'' 
as that term is defined in section 20(d) of the CPSA, 15 U.S.C. 
2069(d).

III. Response of Tropitone

    12. Tropitone denies each and every staff allegation set forth in 
paragraphs 6-11 above. Tropitone further denies that the lounge chairs 
described in paragraph 4 above contain any defect which could create a 
substantial product hazard described in section 15(a) of the CPSA, 15 
U.S.C. 2064(a), and that these lounge chairs create an unreasonable 
risk of serious injury or death. Tropitone further denies that it 
violated the reporting requirements of section 15(b) of the CPSA, 15 
U.S.C. 2064(b), section 37 of the CPSA, 15 U.S.C. 2084, or 16 CFR part 
1115.
    13. In 1977 Tropitone, of its own initiative, reported to the CPSC 
concerning breakage of nylon ratchets associated with the lounge chairs 
described in paragraph 4. In addition, beginning in 1991, and in 
subsequent years including after Tropitone's 1997 report to the CPSC, 
Tropitone conducted recalls of these lounge chairs. Since its 1997 
report to the CPSC, Tropitone has worked cooperatively with the CPSC 
staff to conduct recall activities and to resolve this matter.
    14. Tropitone enters this Settlement Agreement and Order for 
settlement purposes only, to avoid incurring additional legal costs and 
expenses.

IV. Agreement of the Parties

    15. The Commission has jurisdiction over this matter and over 
Tropitone under the consumer Product Safety Act (CPSA), 15 U.S.C. 2051 
et seq.
    16. Upon final acceptance by the CPSC of this Settlement Agreement 
and Order, Tropitone knowingly, voluntarily and completely waives any 
rights it may have in the above captioned matter (1) to the issuance of 
a Complaint in this matter; (2) to an administrative or judicial 
hearing with respect to the staff allegations cited herein; (3) to 
judicial review, or any other challenge or contest, of the validity of 
this Settlement Agreement and Order as issued and entered; (4) to a 
determination by the commission as to whether Tropitone violated 
section 15(b) of the CPSA, 15 U.S.C. 2064(b), and section 37 of the 
CPSA, 15 U.S.C. 2084; and (5) to a statement of findings of fact and 
conclusions of law with regard to the staff allegations.
    17. 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 16 CFR 1118.20(e).
    18. This Settlement Agreement and Order shall become effective upon 
final acceptance by the Commission and its service upon Tropitone. 
Tropitone shall pay a civil penalty in the amount of seven hundred and 
fifty thousand and no/dollars ($750,000.00) to the United States 
Treasury. Tropitone shall pay two hundred thousand dollars 
($200,000.00) within 10 calendar days of receiving service of the final 
Settlement Agreement and Order, and shall pay the remaining five 
hundred fifty thousand dollars ($550,000.00) on or before June 15, 
2001.
    19. In the event of default in any of the payments as set forth in 
paragraph 18 above, which default continues for ten (10) calendar days 
beyond the due date of payment, Tropitone shall pay the United States 
Treasury the entire amount of civil penalty due and owing as well as 
interest on the amount owing at a rate computed pursuant to 28 U.S.C. 
1961(a), as well as a penalty in the amount of five hundred dollars 
($500.00) per day until full payment is made, calculated beginning on 
the first

[[Page 66239]]

day after payment is due; provided, in its sole discretion the CPSC may 
waive Tropitone's obligation to pay some or all of any interest and 
penalty due and owing under this paragraph 19. In addition, in the 
event of default, Tropitone shall raise no defense or objection to any 
collection action the Commission deems appropriate, and Tropitone shall 
pay all the costs incurred in such action.
    20. This Settlement Agreement and Order is not deemed or construed 
as an admission by Tropitone (a) of any liability or wrongdoing by 
Tropitone; (b) that Tropitone violated any law or regulation; (c) that 
the lounge chairs described in paragraph 4 are defective or create a 
substantial product hazard, or are unreasonably dangerous; (d) that the 
lounge chairs described in paragraph 4 have caused any injuries; (e) of 
the truth of any claims or other matters stated in this Settlement 
Agreement and Order (except as set forth in paragraph 15), or alleged 
or otherwise stated by the commission or any other person either 
against Tropitone or with respect to the lounge chairs described in 
paragraph 4. Nothing contained in this Settlement Agreement and Order 
precludes Tropitone from raising any defenses in any future litigation 
not arising out of the terms of this Settlement Agreement and Order.
    21. Upon final acceptance of this Settlement Agreement by the 
Commission, the issuance of the Order, and the full and timely payment 
by Tropitone to the United States Treasury of a civil penalty in the 
amount of seven hundred fifty thousand dollars ($750,000.00), 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 CPSC staff's allegations in paragraphs four through eleven, 
against (a) Tropitone; (b) any of Tropitone's current or former 
subsidiaries, affiliates, divisions or related entities; (c) any 
shareholder, director, officer, employee, agent or attorney of any 
entity referenced in (a) or (b) above; and (d) any successor, heir, or 
assign of any entity referenced in (a), (b) or (c) above.
    22. Upon final acceptance by the Commission, the parties agree that 
the Commission may publicize the terms of this Settlement Agreement and 
Order.
    23. Tropitone agrees to the entry of the attached Order, which is 
incorporated herein by reference, and agrees to be bound by its terms. 
This Settlement Agreement and Order is binding upon, and shall inure to 
the benefit of, Tropitone and the assigns and successors of Tropitone.
    24. Agreements, understandings, representations, or interpretations 
made outside this Settlement Agreement and Order may not be used to 
vary or contradict its terms.
    25. This Settlement Agreement and Order have been negotiated by the 
parties at arms' length. Tropitone is not relying on the advice of the 
CPSC staff, nor anyone associated with the CPSC staff, as to legal, tax 
or other consequences of any kind arising out of this Settlement 
Agreement and Order, and Tropitone specifically assumes the risk of all 
such legal, tax and other consequences.
    26. For all purposes, this Settlement and Order shall constitute an 
enforceable judgment obtained in an action or proceeding by a 
governmental unit to enforce its police or regulatory power. This 
settlement Agreement and Order are pursuant to the Commission's police 
or regulatory power to remedy the alleged risk created by, and protect 
the public from, a substantial product hazard which the Commission 
believes is presented by the lounge chairs described in paragraph 4 
above, and this Settlement Agreement and Order are not subject to an 
automatic stay if Tropitone becomes the subject of a bankruptcy 
proceeding.
    27. If any provision of this Settlement Agreement and Order is held 
to be illegal, invalid or unenforceable under present or future laws 
effective during the term of this Settlement Agreement and Order, such 
provision shall be fully severable. In such event, there shall be added 
as part of this Settlement Agreement and Order a provision as similar 
in terms to such illegal, invalid or unenforceable provision as may be 
possible and may 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 this 
Settlement Agreement and Order shall remain in full effect, unless the 
CPSC determines, after providing Tropitone with notice and a reasonable 
opportunity to comment, that severing the provision materially impacts 
the payment of civil penalties as set forth in this Settlement 
Agreement and Order. 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.
    28. This Settlement Agreement and Order shall not be waived, 
changed, amended, modified, or otherwise altered, except in writing 
signed by both parties.
    29. Tropitone's obligations under this Settlement Agreement and 
Order shall terminate when Tropitone makes the final payment required 
under the Order.

Tropitone Furniture Co., Inc.
    Dated: September 25, 2000.
Michael L. Echolds,
President.
    The Consumer Product Safety Commission.
Alan H. Schoem,
Assistant Executive Director, Office of Compliance.
Eric L. Stone,
Director, Legal Division, Office of Compliance.
    Dated: October 10, 2000.
Deborah S. Orlove,
Attorney, Legal Division, Office of Compliance.

Order

    Upon consideration of the Settlement Agreement entered into between 
Tropitone Furniture Co., Inc. and the staff of the U.S. Consumer 
Product Safety Commission; and the Commission having jurisdiction over 
the subject matter and Tropitone Furniture Co., 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, Tropitone Furniture Co., Inc., shall pay to the 
U.S. Treasury a civil penalty under the Consumer Product Safety Act in 
the amount of SEVEN HUNDRED FIFTY THOUSAND AND no/100 dollars, 
($750,000.00). Tropitone shall pay two hundred thousand dollars 
($200,000.00) within 10 calendar days of receiving service to this 
final Settlement Agreement and Order, and the remaining five hundred 
and fifty thousand and dollars ($550,000.00) on or before June 15, 
2001.

    Provisionally accepted and Provisional Order issued on the 30th 
day of October, 2000.

    By Order of the Commission.
Sadye E. Dunn,
Secretary, U.S. Consumer Product Safety Commission.
[FR Doc. 00-28203 Filed 11-2-00; 8:45 am]
BILLING CODE 6355-01-M