[Federal Register Volume 66, Number 28 (Friday, February 9, 2001)]
[Notices]
[Pages 9694-9696]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-3408]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 01-C0004]


Hanro, USA, 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(f). 
Published below is a provisionally-accepted Settlement Agreement with 
Hanro, USA, Inc., a corporation, containing a civil penalty of 
$150,000.

[[Page 9695]]


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 February 26, 2001.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 01-C0004, Office of the 
Secretary, Consumer Product Safety Commission, Washington, DC 20207.

FOR FURTHER INFORMATION CONTACT: Dennis C. Kacoyanis, Trial Attorney, 
Office of Compliance and Enforcement, Consumer Product Safety 
Commission, Washington, D.C. 20207; telephone (301) 504-0626, 1346.

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

    Dated: February 6, 2001.
Sadye E. Dunn,
Secretary.

Settlement Agreement and Order

    1. This Settlement Agreement and Order, entered into between HANRO 
USA, INC. (hereinafter, ``HANRO USA'' or ``Respondent''), a 
corporation, and the staff of the Consumer Product Safety Commission 
(hereinafter, ``staff''), pursuant to the procedures set forth in 16 
C.F.R. 1118.20, is a compromise resolution of the matter described 
herein, without a hearing or determination of issues of law and fact.

I. The Parties

    2. The ``staff'' is the staff of the Consumer Product Safety 
Commission (hereinafter, ``Commission''), and independent federal 
regulatory commission of the United States government established 
pursuant to section 4 of the Consumer Product Safety Act (CPSA), as 
amended, 15 U.S.C. 2053.
    3. Respondent HANRO USA, INC. is a wholly owned subsidiary of HANRO 
A.G. (hereinafter, ``HANRO of Switzerland''), a Swiss corporation 
located in Liestal, Switzerland. HANRO USA is located at 40 East 34th 
Street, Suite 207, New York, NY 10016. HANRO USA is an importer and 
wholesaler of women's and men's underwear and robes.

II. Allegations of the Staff

A. Violations of the Flammable Fabrics Act

    4. In 1998, HANRO of Switzerland manufactured Ladies' Fleece Robes, 
style number 6812, 6813, and 6814, 90% cotton/10% polyester fleece 
fabric.
    5. In September and October of 1998, Respondent imported into the 
United States 1,261 of these fleece robes.
    6. These fleece robes were subject to the Standard for the 
Flammability of Clothing Textiles (hereinafter, ``Clothing Standard''), 
16 CFR part 1610, issued under section 4 of the Flammable Fabrics Act 
(FFA).
    7. Neither before importation, nor before sale of these fleece 
robes, did Respondent verify whether they complied with the 
requirements of the Clothing Standard.
    8. Respondent sold these fleece robes to its retail customers from 
September 1998 through December 1998.
    9. In 1999, HANRO of Switzerland manufactured Ladies' Fleece Robes, 
style numbers 6314 and 6315 made from essentially the same fleece 
fabric as the fleece robes identified in paragraph 4 above.
    10. On or about September 15, 1999, Respondent received 
flammability test results for the fleece robes identified in paragraph 
9 above. The test results showed that these fleece robes were 
dangerously flammable and unsuitable for clothing because of their 
rapid and intense burning and, therefore, violated the Clothing 
Standard.
    11. Between October 22, 1999 and November 3, 1999, Respondent 
imported into the United States 870 of the fleece robes identified in 
paragraph 9 and 10 above.
    12. Between October 28, 1999 and November 13, 1999, Respondent sold 
the fleece robes identified in paragraphs 9 and 11 above to its retail 
customers.
    13. On December 5, 1999, Respondent received an incident report 
involving an accidental ignition of one of these fleece robes. 
According to the report, the victim wore the rob while making tea, the 
sleeve caught fire, and the victim received burns to her hair and 
wrenched her back while removing the flaming robe.
    14. On December 7, 1999, Respondent reported the incident to the 
Commission.
    15. After reporting the incident to the Commission, Respondent 
admitted its 1998 importation and sale of the fleece robes identified 
in paragraph 4 above.
    16. In January 2000, Respondent conducted flammability testing for 
the first time on the fleece robes imported in 1998. The test results 
showed that those fleece robes were dangerously flammable and 
unsuitable for clothing because of their rapid and intense burning and, 
therefore, violated the Clothing Standard.
    17. Respondent knowingly imported into the United States and sold 
in commerce the fleece robes identified in paragraphs 4 and 9 above 
that violated the Clothing Standard, as the term ``knowingly'' is 
defined in section 5(e)(4) of the FFA, 15 U.S.C. 1194(e)(4), in 
violation of section 3 of the FFA, 15 U.S.C. 1192. A knowing violation 
of this provision subjects Respondent to civil penalties under section 
5(e)(1) of the FFA, 15 U.S.C. 1194(e)(1).

B. Violations of the Consumer Product Safety Act

    18. The allegations contained in paragraphs 4 through 17 above are 
realleged.
    19. Respondent's fleece robes are ``consumer products'' and 
Respondent is an ``importer'' and therefore, a ``manufacturer'' of 
``consumer products'' which are ``distributed in commerce'' as those 
terms are defined in sections 3(a)(1), (4), and (11) of the CPSA, 15 
U.S.C. 2052(a)(1), (4), and (11).
    20. Section 15(b) of the CPSA, 15 U.S.C. 2064(b) requires every 
manufacturer of a consumer product distributed in commerce, who obtains 
information which reasonably supports the conclusion that such product 
contains a defect which could create a substantial product hazard or 
creates an unreasonable risk of serious injury or death to immediately 
inform the Commission of such defect, or of such risk.
    21. Respondent knew or should have known that the fleece robes 
identified in paragraphs 4 and 9 above contained a defect which could 
create a substantial product hazard or created an unreasonable risk of 
serious injury or death. These fleece robes were highly flammable and 
were likely to cause severe burn injuries or death and, therefore, 
violated the Clothing Standard. Respondent did not immediately notify 
the Commission of the risk presented by these fleece robes.
    22. Only after receiving a report of a fire incident caused by one 
of these fleece robes, did Respondent notify the Commission pursuant to 
section 15(b) of the CPSA, id.
    23. Respondent knowingly failed to file a timely report under 
section 15(b) of the CPSA, id, as the term ``knowingly'' is defined in 
section 20(d) of the CPSA, 15 U.S.C. 2069(d), in violation of section 
19(a)(4) of the CPSA, 15 U.S.C. 2068(a)(4). A knowing violation of this 
provision subjects Respondent to civil penalties under section 20 of 
the CPSA, 15 U.S.C. 2069.

III. Response of Respondent

    24. Respondent denies the staff's allegations set forth in 
paragraphs 4 through 23 above.

[[Page 9696]]

    25. Respondent denies that it knowingly violated either the 
Flammable Fabrics Act or the Consumer Product Safety Act.
    26. On its own initiative, Respondent reported the incident that is 
the basis of these proceedings, and, beginning on December 8, 1999, 
voluntarily undertook a recall of Ladies' Fleece Robes, style numbers 
6314 and 6315. Beginning on January 7, 2000, Respondent voluntarily 
initiated a recall of Ladies' Fleece Robes, style numbers 6812, 6813, 
and 6814. Respondent voluntarily offered a substantial gift certificate 
to consumers to encourage returns, voluntarily undertook a second round 
of retailer notices when the initial term of the recalls expired, 
voluntarily extended the term of its recalls and consumer incentives 
through December 31, 2000, and voluntarily destroyed or identified for 
destruction virtually all the robes returned under the recall.

IV. Agreement of the Parties

    27. The Commission has jurisdiction over Respondent and the subject 
matter of this Settlement Agreement and Order under the Consumer 
Product Safety Act (CPSA), 15 U.S.C. 2051 et seq.; the Flammable 
Fabrics Act (FFA), 15 U.S.C. 1191 et seq.; and the Federal Trade 
Commission Act (FTCA), 15 U.S.C. 41 et seq.
    28. This Agreement is entered into for settlement purposes only and 
does not constitute an admission by Respondent or a determination by 
the Commission that Respondent knowingly violated the FFA's Clothing 
Standard and/or the CPSA's Reporting Requirement.
    29. 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(f). If the Commission does not receive any written request not 
to accept the Settlement Agreement and Order within 15 days, the 
Settlement Agreement and Order will be deemed to be finally accepted on 
the 16th day after the date it is published in the Federal Register.
    30. Upon final acceptance of this Settlement Agreement by the 
Commission and issuance of the Final Order, Respondent knowingly, 
voluntarily, and completely waives any rights it may have in this 
matter (1) to an administrative or judicial hearing, (2) to judicial 
review or other challenges or contest of the validity of the 
Commission's actions, (3) to a determination by the Commission as to 
whether Respondent failed to comply with the FFA, as alleged, or the 
CPSA, as alleged, (4) to a statement of findings of facts and 
conclusions of law, and (5) to any claims under the Equal Access to 
Justice Act.
    31. In settlement of the staff's allegations, Respondent agrees to 
pay a $150,000.00 civil penalty as set forth in the attached Order 
incorporated herein by reference.
    32. The Commission may publicize the terms of this Settlement 
Agreement and Order.
    33. Upon final acceptance by the Commission of this Settlement 
Agreement and Order, the Commission shall issue the attached Order.
    34. A violation of the attached Order shall subject Respondent to 
appropriate legal action.
    35. Agreements, understandings, representations, or interpretations 
made outside this Settlement Agreement and Order may not be used to 
vary or contradict its terms.
    36. The provisions of this Settlement Agreement and Order shall 
apply to, and be binding upon, Respondent and each of its shareholders, 
officers, directors, employees, agents, successors, assigns, and 
representatives, directly or through any corporation, subsidiary, 
division, or other business entity, or through any agency, device, or 
instrumentality.

Respondent Hanro USA, Inc.

    Dated: December 26, 2000.

Niki Sachs,
President and Chief Executive Officer, Hanro USA, Inc., 40 East 34th 
Street, New York, NY 10016.

Commission Staff

Alan H. Schoem,
Assistant Executive Director, Consumer Product Safety Commission, 
Office of Compliance, Washington, DC 20207-0001.
Eric L. Stone,
Director, Legal Division, Office of Compliance.

    Dated: January 3, 2001.

Dennis C. Kacoyanis,
Trial Attorney, Legal Division, Office of Compliance.

Order

    Upon consideration of the Settlement Agreement entered into between 
Respondent Hanro USA, Inc. (hereinafter, ``Respondent''), a 
corporation, and the staff of the Consumer Product Safety Commission 
(``Commission''); and the Commission having jurisdiction over the 
subject matter and Respondent; 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, Respondent Hanro USA, Inc. shall pay to the United 
States Treasury a civil penalty in the amount of ONE HUNDRED FIFTY 
THOUSAND AND 00/100 DOLLARS ($150,000.00) in three (3) payments of 
FIFTY THOUSAND AND 00/100 DOLLARS ($50,000.00) each. The first payment 
of FIFTY THOUSAND AND 00/100 DOLLARS ($50,000.00) shall be paid within 
twenty (20) days after service of the Final Order of the Commission 
(hereinafter, ``the anniversary date''). The second payment of FIFTY 
THOUSAND AND 00/100 DOLLARS ($50,000.00) shall be paid within nine (9) 
months of the anniversary date. The third payment shall be paid within 
eighteen (18) months of the anniversary date. Upon the failure of 
Respondent Hanro USA, Inc. to make a payment or upon the making of a 
late payment by Respondent Hanro USA, Inc. (a) the entire amount of the 
civil penalty shall be due and payable, and (b) interest on the 
outstanding balance shall accrue and be paid at the federal legal rate 
of interest under the provisions of 28 U.S.C. Secs. 1961(a) and (b).
    Provisionally accepted and provisional Order issued on the 6th day 
of February, 2001.
    By Order of the Commission.

Sadye E. Dunn,
Secretary, Consumer Product Safety Commission.
[FR Doc. 01-3408 Filed 2-8-01; 8:45 am]
BILLING CODE 6355-01-M