[Federal Register Volume 66, Number 132 (Tuesday, July 10, 2001)]
[Notices]
[Pages 35943-35944]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-17112]



[[Page 35943]]

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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 01-C0009]


The Lane Company 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 
The Lane Company, Inc., a corporation containing a civil penalty of 
$900,000.

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 July 25, 2001.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 01-C0009, Office of the 
Secretary, Consumer Product Safety Commission, Washington, DC 20207.

FOR FURTHER INFORMATION CONTACT: Leonard H. Goldstein, Trial Attorney, 
Office of the General Counsel, Consumer Product Safety Commission, 
Washington, D.C. 20207; telephone (301) 504-0980, 2202.

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

    Dated: July 2, 2001.
Todd A. Stevenson,
Acting Secretary.

Settlement Agreement

    1. The Lane Company, Inc. (``Lane''), a corporation, enters into 
this Settlement Agreement with the Consumer Product Safety 
Commission staff (``staff''), and agrees to entry of the Order 
incorporated herein, in accordance with 16 CFR 1118.20 of the 
procedures for Investigations, Inspections, and Inquiries under the 
Consumer Product Safety Act (``CPSA''), 15 U.S.C. 2051, et seq.

I. The Parties

    2. The staff is the staff of the Consumer Product Safety 
Commission (``Commission''), an independent federal regulatory 
agency established by Congress pursuant to section 4 of the CPSA, 15 
U.S.C. 2053.
    3. Lane is a corporation organized and existing under the laws 
of the Commonwealth of Virginia. Its principal offices are located 
at 701 Fifth St., Altavista, Virginia.

II. The Product

    4. Lane manufacturers various sizes and styles of cedar chests 
for sale to, and the personal use, consumption or enjoyment of, a 
consumer in or around a permanent or temporary household or 
residence. The cedar chests are, therefore, ``consumer products'' 
within the meaning of section 3(a)(1) of the CPSA, 15 U.S.C. 
2052(a)(1).
    5. When the lid of the cedar chest is closed, the cedar chest 
provides airtight protection of stored household and personal items 
that may otherwise be susceptible to moth damage. Lane cedar chests 
are sold in furniture stores throughout the United States under the 
brand name ``Lane'' and previously, at times, under the brand name 
``Virginia Maid.''
    6. The cedar chests that are the subject of this Settlement 
Agreement were manufactured by Lane between 1912 and 1986. Lane 
manufactured approximately 12 million of the cedar chests during 
that period.

III. Staff Allegations

    7. The design of the Lane cedar chests described in paragraph 6 
of this Settlement Agreement incorporated a latching mechanism that 
caused the lid of the cedar chest to automatically latch when 
closed. Once latched, the lid could only be opened by depressing a 
release button on the outside of the cedar chest.
    8. During the mid- to late 1970's, Lane discussed with 
representatives of The National Lock Company (``National'') the 
development of a new lock (the ``childproof lock'') for use on Lane 
cedar chests. National delivered a prototype of the childproof lock 
to Lane in 1979. The childproof lock required a manual activation of 
the latching mechanism from outside the cedar chest in order to 
latch the lid. The childproof lock was incorporated in all Lane 
cedar chests by 1987.
    9. An intra-company memorandum on June 8, 1988 from A.J. 
Ottinger, Lane's Vice President of Manufacturing, states that 
``National and Slaymaker were given the opportunity to design a 
`childproof' lock because of liability concerns.''
    10. The airtight design of the pre-1987 cedar chests coupled 
with the automatic latching feature of the lock used in such cedar 
chests created a risk of asphyxiation in the event that a child at 
play became entrapped in one of these cedar chests. This risk of 
asphyxiation was recognized in the patent documents (Patent No. 
4,306,431) filed with the U.S. Patent Office on December 22, 1981 by 
the inventor of the childproof lock. In describing the ``current'' 
lock and the need for the childproof lock, the patent documents 
state that, ``A problem may result, however, in the event that a 
small child enters the chest and lowers the lid. The latch mechanism 
may catch thereby preventing egress from the chest.''
    11. Between April 1991 and February 1996, Lane received reports 
of suffocation deaths of 5 young children in 4 separate incidents 
involving a Lane cedar chest.
    12. The staff sent Lane a case opening letter on March 26, 1996 
stating that the staff had initiated an investigation regarding 
Lane's cedar chests and requesting information specified in the 
Commissions regulations on ``Substantial Product Hazards,'' 16 CFR 
1115.13(d). The company timely responded to the staff's letter with 
the requested information on April 12, 1996. Lane subsequently 
conducted a nationwide campaign to replace old style locks on its 
cedar chests with a childproof lock.
    13. Lane cedar chests described in paragraph 6 of this Agreement 
presented the same type of risk of death or injury that prompted the 
1956 enactment of the Refrigerator Safety Act (``RSA''), 15 U.S.C. 
1211, et seq., which makes it unlawful to manufacture refrigerators 
unless the doors can be opened easily from the inside. The impetus 
from the RSA was the suffocation deaths of young children in 
abandoned refrigerators.
    14. Lane cedar chests described in paragraph 6 of this Agreement 
contain a defect which could create a substantial product hazard, as 
described in 15 U.S.C. 2064(a)(2), and create an unreasonable risk 
of serious injury or death. Lane's failure to immediately report 
such defect and unreasonable risk to the Commission, as required by 
15 U.S.C. 2064(b), constituted a prohibited act under 15 U.S.C. 
2068(a)(4). Lane ``knowingly'' failed to report and is, therefore, 
subject to civil penalties under 15 U.S.C. 2069.

IV. Lane's Response

    15. Lane denies each and every allegation set forth in paragraph 
7 through 14 of this Settlement Agreement, including allegations 
that Lane cedar chests described in paragraph 6 of this Settlement 
Agreement contained a defect that created a substantial product 
hazard or an unreasonable risk of serious injury or death, that Lane 
violated the reporting requirements of 15 U.S.C. 2064(b), and that 
it committed a prohibited act under 15 U.S.C. 2068(4).
    16. Lane asserts that the cedar chests were properly designed 
and manufactured and contained adequate warnings and labeling.
    17. In April 1996, Lane filed a report under section 15(b) of 
the CPSA and proposed a voluntary lock replacement program for its 
cedar chests. In addition, since 1996, Lane has worked cooperatively 
with the Commission staff in advertising and implementing its 
voluntary lock replacement program and has committed in excess of $1 
million to the program to resolve this matter.
    18. Prior to April 1996, Lane did not have reason to believe 
that the cedar chests posed a substantial product hazard or an 
unreasonable risk of serious injury of death. Lane believes the 
information available to it did not reasonably support the 
conclusion that the cedar chests were defective or created an 
unreasonable risk within the meaning of the CPSA, and, therefore, no 
report was required under section 15(b) of the Act. For these 
reasons, Lane was not required to, and did not, report to the 
Commission prior to April 1996. Furthermore, Lane believes that the 
information currently available to it does not reasonably support 
the conclusion that the cedar chests are defective, pose a 
substantial product hazard or create an unreasonable risk of serious 
injury or death.

[[Page 35944]]

    19. By entering into this Settlement Agreement and Order, Lane 
does not admit any liability or wrongdoing, nor does Lane admit that 
its cedar chests contain a defect which could create a substantial 
product hazard or that its cedar chests create an unreasonable risk 
of serious injury or death. This Settlement Agreement and Order is 
agreed to by Lane for settlement purposes only, to avoid incurring 
additional legal costs and does not constitute, and is not evidence 
of, an admission of any liability or wrongdoing by Lane.

V. Agreement of the Parties

    20. The Commission has jurisdiction over this matter under the 
CPSA.
    21. Upon final acceptance by the Commission of this Settlement 
Agreement and issuance of the Final Order, Lane knowingly, 
voluntarily and completely waives any rights it may have to:
    a. the issuance of a complaint in this matter;
    b. an administrative or judicial hearing with respect to the 
staff allegations discussed in paragraphs 7 through 14 above;
    c. judicial review or other challenge or contest of the validity 
of the Commission's Order;
    d. a determination by the Commission as to whether a violation 
of 15 U.S.C. 2064(b) has occurred;
    e. a statement of findings of fact and conclusions of law with 
regard to the staff allegations; and
    f. any claims under The Equal Access to Justice Act.
    22. Upon provisional acceptance of this Settlement Agreement and 
Order by the Commission, the 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). 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 shall be deemed finally accepted on the 16th day after the 
date it is published in the Federal Register, in accordance with 16 
CFR 1118.20(f).
    23. The Settlement Agreement and Order becomes effective upon 
final acceptance of the Settlement Agreement by the Commission and 
service of the Final Order upon Lane.
    24. Lane agrees to pay to the United States Treasury a civil 
penalty in the amount of Nine Hundred Thousand Dollars ($900,000) 
within thirty (30) calendar days after receipt of service of the 
Final Order in this matter. Upon payment of such civil penalty, all 
reporting claims under 15 U.S.C. 2064(b) against Lane, its current 
and former officers, directors, employees, agents, attorneys, 
parents and affiliates relating to the cedar chests that are 
described in paragraph 6 of this Settlement Agreement will be 
considered to be released.
    25. Lane agrees to entry of the attached Order, which is 
incorporated herein by reference, and to be bound by its terms.
    26. This Settlement Agreement and Order are entered into for 
settlement purposes only and shall not constitute a determination or 
admission of any fault, liability or statutory or regulatory 
violation. Nothing contained in this Settlement Agreement and Order 
precludes Lane from raising any defenses in any future litigation 
not arising out of the terms of this Settlement Agreement and Order.
    27. The Commission's Order in this matter is issued under the 
provisions of the CPSA and 16 CFR 1118.20, and a violation of this 
Order may subject Lane to appropriate legal action.
    28. This Settlement Agreement and Order is binding upon and 
shall inure to the benefit of Lane, its current and former officers, 
directors, employees, agents, attorneys, parents and affiliates.
    29. Agreements, understandings, representations, or 
interpretations made outside of this Settlement Agreement and Order 
may not be used to vary or to contradict its terms.
    30. For the purposes of section 6(b) of the CPSA, 15 U.S.C. 
2055(b), this matter shall be treated as if a complaint had been 
issued, and upon provisional acceptance of this Settlement 
Agreement, the Commission may publicize the terms of the Settlement 
Agreement and Order.

The Lane Company, Inc.
Jerry Ruff,
Vice President
Dated: June 5, 2001.

Consumer Product Safety Commission Staff
Michael S. Solender,
General Counsel.

Alan C. Shakin,
Assistant General Counsel.
Dated: June 19, 2001.
Leonard H. Goldstein,
Attorney, Office of the General Counsel.

Order

    Upon consideration of the Settlement Agreement entered into 
between The Lane Company, Inc. and the staff of the U.S. Consumer 
Product Safety Commission; and the Commission having jurisdiction 
over the subject matter and The Lane Company, 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, 
provisionally accepted, and
    It Is Further Ordered, that upon final acceptance of the 
Settlement Agreement and issuance of the Final Order, The Lane 
Company, Inc. shall pay the United States Treasury a civil penalty 
in the amount of Nine Hundred Thousand Dollars ($900,000) within 30 
calendar days after service upon The Lane Company, Inc. of a copy of 
the Final Order.
    By direction of the Commission, this Settlement Agreement is 
provisionally accepted pursuant to 16 CFR 1118.20(d) and shall be 
placed on the public record, and the Commission shall announce the 
provisional acceptance of the Settlement Agreement in the 
Commission's Public Calendar and in the Federal Register.
    So Ordered by the Commission, this 2nd day of July, 2001.

Todd A. Stevenson,
Acting Secretary, Consumer Product Safety Commission.

[FR Doc. 01-17112 Filed 7-9-01; 8:45 am]
BILLING CODE 6355-01-M