[Federal Register Volume 67, Number 39 (Wednesday, February 27, 2002)]
[Notices]
[Pages 8942-8944]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-4677]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 02-C0003]


Regent International Corporation, 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 Flammable Fabrics Act in the 
Federal Register in accordance with the terms of 16 CFR 1610.05(d). 
Published below is a provisionally-accepted Settlement Agreement with 
Regent International Corporation, Inc., a corporation containing a 
civil penalty of $75,000.

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 March 14, 2002.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 02-C0003, Office of the 
Secretary, Consumer Product Safety Commission, Washington, DC 20207.

FOR FURTHER INFORMATION CONTACT: Dennis C. Kacoyanis, Trial Attorney, 
Office of the General Counsel, Consumer Product Safety Commission, 
Washington, DC 20207; telephone (301) 504-0980, 1346.

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

    Dated: February 21, 2002.
Todd A. Stevenson,
Secretary.

Settlement Agreement and Order

    1. This Settlement Agreement and Order, entered into between Regent 
International Corporation, Inc. (hereinafter, ``Regent'' or 
``Respondent''), and the staff of the consumer Product Safety 
Commission (hereinafter, ``staff''), pursuant to the procedures set 
forth in 16 CFR 1605.13, 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''), an 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 Regent International Corporation, Inc. is a 
Subchapter ``S'' corporation organized and existing under the laws of 
the State of New York. Regent is located at 1411 Broadway, New York, NY 
10018. Regent is a manufacturer and importer of clothing.

II. Allegations of the Staff

    4. On March 9, 1996, Regent filed a continuing guaranty with the 
Commission. The guaranty covered all men's, women's, and children's 
apparel, excluding sleepwear, for a period of three years. In the 
guaranty filed by Regent on March 9, 1996, Regent represented that it 
had performed reasonable and representative testing of its product 
lines and that its products conformed to the applicable flammability 
regulations.
    5. Throughout October 1996, Regent imported approximately 165,000 
of the ``Jason Maxwell'' sherpa fleece garments, Style Numbers 12142, 
12143, 12144, 12145, 12146, 12147,22049, 22050, 22051, 22052, 22053, 
22054, 32035, 32036, 32037, 32038, 32039, 32040, 52010, 52011, 52012, 
and 52013, made from 80% cotton, 20% polyester (hereinafter, ``sherpa 
garments''), for sale to retail customers in the United States.
    6. These sherpa garments were subject to the Standard for the 
Flammability of Clothing Textiles (hereinafter, ``Clothing Standard''), 
16 CFR part 1610, issued under section 4 of the FFA, 15 U.S.C. 1193.
    7. Because Regent had filed a continuing guaranty with the 
Commission on March 9, 1996, Regent was required to conduct reasonable 
and representative testing on the sherpa garments and to maintain the 
requisite records for three years to support the guaranty under section 
8(a) of the FFA, 15 U.S.C. 1197(a) and 16 CFR 1610.37 and .38.
    8. Before selling its sherpa garments to its customers, Regent 
failed to conduct reasonable and representative testing or to verify 
whether the foreign manufacturer, The Motiff Factory, had conducted 
reasonable and representative testing on the sherpa garments to support 
the guaranty under section 8(a) of the FFA, 15 U.S.C. 1197(a) and 16 
CFR 1610.37.
    9. Regent did not maintain the requisite records to support the 
guaranty under section 8(a) of the FFA, 15 U.S.C. 1197(a) and 16 CFR 
1610.38.
    10. On December 30, 1996, J.C. Penney, Regent's largest customer, 
notified Regent that one of its customers had reported an incident when 
one of

[[Page 8943]]

these sherpa garments ignited when exposed to a flame from a candle. 
The consumer was not injured.
    11. During the first week of January 1997, Regent conducted 
flammability testing on the sherpa garments. The test results showed 
that the green and peach checked garments and the green striped and 
solid pattern garments were dangerously flammable and unsuitable for 
clothing because of their rapid and intense burning and, therefore, 
violated the Clothing Standard.
    12. On January 3, 1997, Regent agreed to allow J.C. Penney to 
authorize returns and to remove certain lot numbers of the sherpa 
garments from the selling floor.
    13. At the time Regent notified the Commission of flammability 
problems regarding the sherpa garments on January 9, 1997, it possessed 
approximately 8,936 sherpa garments.
    14. When requested by the staff in 1997 Regent failed to provide 
test reports to show that it or someone acting on its behalf had 
conducted reasonable and representative testing on the sherpa garments 
before sale to support the guaranty.
    15. Respondent knowingly sold, or offered for sale, in commerce, or 
caused to be transported, in commerce, or sold or delivered for after a 
sale or shipment in commerce, sherpa garments that it knew or should 
have known 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).
    16. By failing to conduct reasonable and representative testing or 
to verify that the foreign manufacturer, The Motiff Factory, had 
conducted reasonable and representative testing on the sherpa garments 
and by failing to maintain the requisite records, Respondent knowingly 
furnished a false guaranty, in violation of section 8(b) of the FFA, 15 
U.S.C. 1197(b). A knowing violation of this provision subjects 
Respondent to civil penalties under section 5(m)(1)(A) of the Federal 
Trade Commission Act (FTCA), 15 U.S.C. 45(m)(1)(A).

III. Response of Respondent

    17. Regent is a small, family-owned garment manufacturer in New 
York City with approximately thirty employees that has been in business 
for over thirty years. During these 30 years of business, prior to this 
one incident in 1996, Regent had never had any of its garments recalled 
and had never been accused by the Commission of violating any statute 
or regulation. Nor has Regent been subjected to any other recalls, or 
has it been accused of violating any statute or regulation since the 
1996 incident.
    18. Respondent denies the allegations of the staff set forth in 
paragraphs 4-16 above.
    19. Respondent adamantly denies that it knowingly violated the 
FFA's Clothing Standard and the Guaranty Provisions, and it is settling 
the matter to avoid the costs of litigation.
    20. Regent adamantly denies that the green and peach checked 
garments and the green striped and solid pattern garments were 
dangerously flammable and unsuitable for clothing because of their 
rapid and intense burning and, therefore, violated the Clothing 
Standard.
    21. In November 1995, Regent instructed its manufacturer, The Motif 
Factory (``Motif'' ), to begin testing fabrics for washing 
instructions, flammability, and color fading. In its instructions to 
Motif, Regent emphasized the importance of the testing being done. 
Accordingly, Regent further instructed Motif to secure a good testing 
facility, to ensure that all fabrics have been tested, to begin testing 
fabrics immediately, and to test fabrics each year. Motif confirmed 
that it would begin the testing as per Regent's instructions. At some 
time, Regent was informed that the fabric had passed the testing.
    22. On December 30, 1996, J.C. Penney notified Regent of a 
complaint by one customer about the flammability of one of its sherpa 
garments. No injury was reported, nor had one occurred. On January 3, 
1997, Regent authorized J.C. Penney to stop selling the garments and to 
accept any returns. On Tuesday, January 7, 1997, Regent informed the 
Commission of the single report by a consumer and on, January 10, 1997, 
Regent voluntarily recalled not only the garments that had failed the 
flammability tests, but also those that had passed the tests. Regent 
did the recall in this manner in order to minimize customer confusion 
and to make sure that all the garments were returned.
    23. In January 1997, Regent learned for the first time that sherpa 
is an unusual fabric in that its color impacts flammability. 
Consequently, reasonable and representative testing, as defined by the 
Commission, would not indicate that some sherpa garments did not comply 
with the flammability requirements set forth in the Clothing Standard.
    24. Because Regent had responded so effectively and expeditiously 
to the single report and expeditiously recalled the garments, Regent 
believed that it would not be subject to civil penalties.
    25. Regent adamantly denies that it knowingly furnished a false 
guaranty with respect to the sherpa garments. Regent specifically 
denies the allegations set forth in paragraphs 8, 9, 15, and 16, in 
which the staff claims that Regent failed to conduct reasonable and 
representative testing on the sherpa garments and to maintain the 
requisite records to support the continuing guaranty it had filed with 
the Commission under section 8(a) of the FAA, 15 U.S.C. 1197(a) and 16 
CFR 1610.37. As stated above, Regent instructed its manufacturer, The 
Motif Factory (``Motif''), to begin testing fabrics for washing 
instructions, flammability, and color fading. In its instructions to 
Motif, Regent emphasize the importance of the testing being done. 
Accordingly, Regent further instructed Motif to secure a good testing 
facility, to ensure that all fabrics have been tested, to begin testing 
fabrics immediately, and to test fabrics each year. Motif confirmed 
that it would begin the testing as per Regent's instructions. At some 
time, Regent was informed that the fabric had passed the testing.

IV. Agreement of the Parties

    26. 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 (FFA), 15 U.S.C. 41 et seq.
    27. 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 Guaranty Requirements.
    28. 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 
1610.05(d). 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 finally accepted on the 
20th day after the date it is published in the Federal Register.
    29. Upon final acceptance of this Settlement Agreement by the 
Commission and issuance of the Final

[[Page 8944]]

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 challenge 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, (4) to a statement of findings of fact and conclusions of law, 
and (5) to any claims under the Equal Access to Justice Act.
    30. In settlement of the staff's allegations, Respondent agrees to 
pay a $75,000.00 civil penalty as set forth in the attached Order 
incorporated herein by reference.
    31. The Commission may publicize the terms of this Settlement 
Agreement and Order.
    32. Upon final acceptance by the Commission of this Settlement 
Agreement and Order, the Commission shall issue the attached Order.
    33. A violation of the attached Order shall subject Respondent to 
appropriate legal action.
    34. 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 Regent International Corporation, Inc.

    Dated: February 7, 2002.
Michael Shweky,
Vice President, Regent International Corporation, Inc., 1411 Broadway, 
New York, NY 10018.

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: February 6, 2002.
Dennis C. Kacoyanis,
Trial Attorney, Legal Division, Office of Compliance.
In the Matter of Regent International Corporation, Inc., a corporation.

[CPSC Docket No. 02-C0003]

Order

    Upon consideration of the Settlement Agreement entered into between 
Respondent Regent International Corporation, 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 Regent International Corporation, Inc. 
shall pay to the United States Treasury a civil penalty in the amount 
of Seventy-five thousand and 00/100 Dollars ($75,000.00) in three (3) 
installments each. The first payment of Twenty-five thousand and 00/100 
dollars ($25,000.00) shall be paid within twenty (20) days after 
service of the Final Order of the Commission (hereinafter, 
``anniversary date''). The second payment of twenty-five thousand and 
00/100 dollars ($25,000.00) shall be paid within one (1) year of the 
anniversary date. The third payment of twenty-five thousand and 00/100 
dollars shall be paid within two (2) years of the anniversary date. 
Upon the failure of Respondent Regent International Corporation, Inc. 
to make a payment or upon the making of a late payment by Respondent 
Regent International Corporation, 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. 1961(a) and (b).
    Provisionally accepted and provisional Order issued on the 21st day 
of February, 2002.

    By Order of the Commission.

Todd A. Stevenson,
Consumer Product Safety Commission.
[FR Doc. 02-4677 Filed 2-26-02; 8:45 am]
BILLING CODE 6355-01-M