[Federal Register Volume 66, Number 202 (Thursday, October 18, 2001)]
[Notices]
[Pages 52894-52896]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-26287]


=======================================================================
-----------------------------------------------------------------------

CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 02-1]


Chemetron Corporation, Chemetron Investments, Inc., Sunbeam 
Corporation, Sprinkler Corporation of Milwaukee, Inc., and Grucon 
Corporation; Complaint

AGENCY: Consumer Product Safety Commission.

ACTION: Publication of a complaint under the Consumer Product Safety 
Act.

-----------------------------------------------------------------------

SUMMARY: Under provisions of its Rules of Practice for Adjudicative 
Proceeding (16 CFR part 1025), the Consumer Product Safety Commission 
must publish in the Federal Register Complaints which it issues. 
Published below is a Complaint in the matter of Chemetron Corporation, 
Chemetron Investments, Inc., Sunbeam Corporation, Sprinkler Corporation 
of Milwaukee, Inc., and Grucon Corporation.

SUPPLEMENTARY INFORMATION: The text of the complaint appears below.

    Dated: October 15, 2001.
Todd A. Stevenson,
Acting Secretary.

Consumer Product Safety Commission

[CPSC Docket No.: 02-1]

    In the matter of Chemetron Corporation, 
f/k/a Chemetron Investments, Inc. and Chemetron Investments, Inc., 
f/k/a Chemetron Corporation and Sunbeam Corporation and Sprinkler 
Corporation of Milwaukee, Inc., f/k/a Star Sprinkler Corporation, f/
k/a Grunau Sprinkler Manufacturing Company, Inc. and Grucon 
Corporation; Complaint

Nature of Proceedings

    1. This is an administrative proceeding pursuant to section 15 of 
the Consumer Product Safety Act (``CPSA''), 15 U.S.C. 2064, for public 
notification and remedial action to protect the public from a 
substantial product hazard presented by failure of the Star ME-1 fire 
sprinkler manufactured from 1977 to 1995. This proceeding is governed 
by the Rules of Practice for Adjudicative Proceedings before the United 
States Consumer Product Safety Commission, 16 CFR part 1025.

Jurisdiction

    2. This proceeding is instituted pursuant to the authority 
contained in section 15(c), (d), and (f) of the CPSA, 15 U.S.C. 
2064(c), (d), and (f).

Parties

    3. Complaint Counsel is the staff of the Legal Division of the 
Office of Compliance of the United States Consumer Product Safety 
Commission (``Commission''), and independent regulatory commission 
established by section 4 of the CPSA, 15 U.S.C. 2053.
    4. Respondent Chemetron Corporation (``CC''), formerly and also 
known as ``Chemetron Investments, Inc.'' and formerly doing business as 
``Star Sprinkler,'' is a Delaware corporation, with its principal place 
of business at 2381 Executive Center Drive, Boca

[[Page 52895]]

Raton, Florida 33431. CC manufactured the Star ME-1 from in or about 
1976 to in or about 1982.
    5. Respondent Chemetron Investments, Inc. (``CI''), formerly and 
also known as ``Chemetron Corporation,'' is a Delaware corporation, 
with its principal place of business at 2381 Executive Center Drive, 
Boca Raton, Florida 33431.
    6. Respondent Sunbeam Corporation (``Sunbeam'') is a Delaware 
corporation, with its principal place of business at 2381 Executive 
Center Drive, Boca Raton, Florida 33431. Under an Asset Purchase 
Agreement dated September 28, 1990, Sunbeam acquired the stock and 
assets of CC and CI. CC and CI have been and are Sunbeam subsidiaries. 
By virtue of the Asset Purchase Agreement and Sunbeam's stock and 
assets acquisition of CC and CI, Sunbeam assumed CC's and CI's 
liabilities for the Star ME-I relief sought herein.
    7. Respondent Sprinkler Corporation of Milwaukee, Inc., formerly 
known as ``Star Sprinkler Corporation'' and ``Grunau Sprinkler 
Manufacturing Company, Inc.'' (``SCM''), is a Wisconsin corporation 
with its last known principal place of business at 307 West Layton 
Avenue, Milwaukee, Wisconsin 53207. SCM manufactured the Star ME-1 from 
in or about 1983 through in or about early 1996.
    8. Respondent Grucon Corporation (``Grucon'') is Delaware 
corporation with its principal place of business at 1100 West Anderson 
Court, Oak Creek, Wisconsin 53154. From 1983 to the present, Grucon 
owned and operated SCM under a variety of names. Grucon and SCM have 
engaged in actions disregarding corporate form and identities, and/or 
they have failed to take actions to property maintain corporate form 
and identities. These actions, failures, and related effects include, 
but are not limited to, the following: common business interests, 
common control and management, SCM's dependence on Grucon, SCM's 
absence of assets or employees, SCM's undercapitalization, SCM's board 
of directors resolution to temporarily pay down the credit lines and 
debt obligations of Grucon and other Grucon subsidies with proceeds to 
SCM's assets sale, SCM's board of directors resolution to pay to Grucon 
proceeds to SCM 's assets sale, SCM's failure to make corporate 
filings, and/or Grucon's guarantees on behalf of SCM.
    9. There was and/or is such unity of interest and ownership between 
SCM and Grucon that the purported separate personalities of the 
corporations did not and/or do not exist. Given the compelling public 
interest at stake in effectuating the relief sought herein, and SCM's 
reported lack of assets with which to fund such relief, adherence to 
the fiction of the separate corporate existences of SCM and Grucon 
would promote injustice and/or inequitable consequences.
    10. Each of the Respondents was and/or is a ``manufacturer'' and/or 
a ``distributor'' as those terms are defined in section 3(a)(4) and (5) 
of the CPSA, 15 U.S.C. 2052(a)(4) and (5).

Consumer Product

    11. The Star ME-1 fire sprinkler is a dry fire sprinkler 
manufactured under the ``Star'' brand name that was labeled and sold as 
model ``ME-1'' in various sizes, temperature ratings, finishes, and 
installation positions (``Star ME-1''). The Star ME-1 is intended to 
suppress and/or extinguish fire.
    12. The Star ME-1 is an article produced and distributed for the 
personal use, consumption, and/or enjoyment of a consumer in or around 
a household or residence, in recreation, or otherwise. The Star ME-1 is 
used in, among other places, day care centers, nursing homes, and 
health care facilities. The Star ME-1 is a ``consumer product'' that 
was ``distributed in commerce,'' as those terms are defined in section 
3(a)(1) and (11) of the CPSA, 15 U.S.C. 2052(a)(1), (11).

Defect

    13. The Star ME-1 is intended to operate in accordance with 
applicable industry standards and building code requirements. The Star 
ME-1 is intended to operate when the temperature to which it is exposed 
reaches a particular level, at which point a thermal sensing element at 
the exposed end of the sprinkler should melt, and water would flow 
through and discharge from the sprinkler.
    14. As a result of inadequate design and/or manufacturing, the Star 
ME-1 has failed and is likely to fail to operate as intended in fires.
    15. The inadequate design and/or manufacturing of the Star ME-1 
constitutes a ``defect'' as that term is used in section 15(a)(2) of 
the CPSA, 15 U.S.C. 2064(a)(2).

Substantial Risk of Injury and Substantial Product Hazard

    16. From 1977 through 1995, Respondents manufactured and/or 
distributed approximately 700,000 Star ME-1's.
    17. Star ME-1's are likely to fail to operate as intended in a 
fire. Failure of the Star ME-1 to operate as intended in a fire creates 
a likelihood the fire will grow and spread, exposing consumers to the 
risk of serious injury and death.
    18. The defect in the Star ME-1 manufactured from 1977 through 1995 
creates a ``substantial risk of injury to the public'' within the 
meaning of section 15(a)(2) of the CPSA, 15 U.S.C. 2064(a)(2).
    19. The Star ME-1 manufactured from 1977 through 1995 constitutes a 
``substantial product hazard'' as that term is defined and used in 
section 15(a)(2), (c), and (d) of the CPSA, 15 U.S.C. 2064(a)(2), (c), 
and (d).

Relief Sought

    Wherefore, in the public interest, Complaint Counsel requests that 
the Commission:
    A. Determine that the Star ME-1 manufactured from 1977 through 1995 
was distributed in commerce and presents a ``substantial product 
hazard'' within the meaning of section 15(a)(2) of the CPSA, 15 U.S.C. 
2064(a)(2).
    B. Determine under section 15(c) of the CPSA, 15 U.S.C. 2064(c), 
that public notification is required to protect the public adequately 
from the substantial product hazard presented by the Star ME-1 
manufactured from 1977 through 1995, and order that the respondents:
    1. Give prompt public notice of the defect in the Star ME-1 
manufactured from 1977 through 1995, the risk of injury and the hazard 
to the public, and the remedies available to remove the risk of injury 
and hazard;
    2. Mail such notice to each person who is or has been a 
manufacturer, distributor, or retailer of the Star ME-1;
    3. Mail such notice to each person to whom the Respondents know the 
Star ME-1 manufactured from 1977 through 1995 was delivered or sold; 
and
    4. Include in such notice a complete description of the risk and 
hazard presented, a warning that the Star ME-1 manufactured from 1977 
through 1995 must be replaced immediately, clear instructions informing 
consumers of the means by which to avail themselves of any and all 
remedies ordered by the Commission, and such other information as the 
Commission may order.
    C. Determine that action under section 15(d) of the CPSA, 15 U.S.C. 
2064(d), is in the public interest and order Respondents:
    1. To elect to repair the defect in all the Star ME-1's 
manufactured from 1977 through 1995 so they will operate as intended 
and required and not present a risk of injury and hazard to the public; 
to replace all the Star ME-1's manufactured from 1977 through 1995 with 
a like or equivalent product that does not contain the defect, operates 
as

[[Page 52896]]

intended and required, and will not present a risk of injury and hazard 
to the public; or to refund to consumers the purchase price of the Star 
ME-1's manufactured from 1977 through 1995;
    2. To make no charge to consumers and to reimburse them for any 
foreseeable expenses incurred in availing themselves of any remedy 
provided under any Commission Order issued in this matter;
    3. To reimburse distributors, dealers, contractors, and installers 
for expenses in connection with carrying out any Commission Order 
issued in this matter;
    4. To submit a plan satisfactory to the Commission for taking 
action under C(1) through (3) above;
    5. To submit monthly reports documenting progress of the corrective 
action program;
    6. For a period of five (5) years after entry of a Final Order in 
this matter, to keep records of all actions taken to comply with C(1) 
through (5) above, and to supply those records to the Commission, upon 
request, for the purpose of monitoring compliance with the Final Order;
    7. To notify the Commission at least 60 days prior to any change in 
the Respondents' business (such as incorporation, dissolution, 
assignment, sale, or petition for bankruptcy) that results in, or is 
intended to result in, the emergence of successor ownership, the 
creation or dissolution of subsidiaries, going out of business, or any 
other change that might affect compliance with any Order issued by the 
Commission in this matter; and
    8. To take such other and further actions as the Commission deems 
necessary to protect the public health and safety and to comply with 
the CPSA.

    Issued by Order of the Commission.
Alan H. Schoem,

Assistant Executive Director, Office of Compliance, U.S. Consumer 
Product Safety Commission, (301) 504-0621.
Eric L. Stone,

Director, Legal Division, Office of Compliance.

Seth B. Popkin,

Complaint Counsel, Office of Compliance, 4330 East West Highway, 
Room 613, Bethesda, Maryland 20814, (301) 504-0626, ext. 1358.

[FR Doc. 01-26287 Filed 10-17-01; 8:45 am]
BILLING CODE 6350-01-M