[Federal Register Volume 69, Number 125 (Wednesday, June 30, 2004)]
[Notices]
[Pages 39436-39438]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-14681]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 04-C0004]


GROUPE SEB USA f/k/a Krups North America, Inc., 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 11118.20. 
Published below is a provisionally-accepted Settlement Agreement with 
GROUPE SEB USA f/k/a Krups North America, Inc., containing a civil 
penalty of $500,000.

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 15, 2004.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 04-C0004, Office of the 
Secretary, Consumer Product Safety Commission, Washington, DC 20207.

[[Page 39437]]


FOR FURTHER INFORMATION CONTACT: Belinda V. Bell, Trial Attorney, 
Office of Compliance, Consumer Product Safety Commission, Washington, 
DC 20207; telephone (301) 504-7592.

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

    Dated: June 23, 2004.
Todd A. Stevenson,
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 Groupe SEB USA, formerly known as Krups North 
America, Inc., (``Krups'' or ``Respondent''), a corporation, in 
accordance with 16 CFR 118.20 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.

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. From 1976 to March 2002, Krups North America, Inc. (``Krups'') 
was a wholly owned subsidiary of Moulinex SA, a European corporation. 
Krups was an entity organized and existing under the laws of the State 
of Delaware, with its principal office located at 7 Reuten Drive, 
Cloister, New Jersey. In September 2001, Moulinex filed bankruptcy. 
During the bankruptcy proceedings certain assets, including Krups North 
America, were purchased by Groupe SEB, another European corporation. Up 
until December 2003, Krups maintained its operations in New Jersey. On 
December 15, 2003, it changed its corporate name to Groupe SEB USA and 
moved to 196 Boston Avenue, Medford, Massachusetts. Groupe SEB USA 
continues to sell Krups brand products.

Staff Allegations

    4. Section 15(b) of the CPSA, 15 U.S.C. 2064(b), requires a 
manufacturer of a consumer product distributed in commerce, inter alia 
who obtains information that reasonably supports the conclusion that 
the 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 the defect or risk.
    5. Between 1996 and 2000, Krups manufactured and distributed 
nationwide approximately 218,000 electric drip coffeemakers, sold under 
the Krups brand name, model numbers 398 and 405 (the ``coffeemakers'' 
or the ``product(s)'').
    6. The coffee makers are ``consumer products'' and Krups is a 
``manufacturer'' of ``consumer products'', which were ``distributed in 
commerce'' as those terms are defined in sections 3(a)(1)(4), (11) and 
(12) of the CPSA, 15 U.S.C. 2052(a)(1), (4), (11), and (12).
    7. The coffeemakers are defective because loose electrical 
components can overheat and ignite the adjacent plastic filer carriage, 
creating a risk of fire, serious injury and death.
    8. Between July 1997 and June 2001, Krups received approximately 48 
reports of the coffeemakers' electrical components overheating and 
igniting, causing incidents of smoking, melting or fires. Some of the 
fires caused extensive property damage.
    9. Not until May 2001, after receiving notice that a consumer's 
home was destroyed as a result of a defective Krups coffeemaker, did 
Respondent submit an initial report to the Commission reporting the 
defective coffeemakers.
    10. Although Krups had obtained sufficient information to 
reasonably support the conclusion that these coffeemakers contained 
defects which could create a substantial product hazard, or created an 
unreasonable risk of serious injury or death long before May 2001, it 
failed to timely report such information to the Commission as required 
by section 15(b) of the CPSA.
    11. Respondent's failure to report to the Commission, as required 
by section 15(b) of the CPSA, was committed ``knowingly'', as that term 
is defined in section 20(d) of the CPSA, 15 U.S.C. 2069(d), and Krups 
is subject to civil penalties under section 20 of the CPSA.

Response of Krups

    12. Respondent denies the staff allegations in paragraphs 4 through 
11, above. Respondent denies that it violated the CPSA.
    13. At the time of the alleged notices of incidents and failure to 
report, Krups had no engineers on its staff and relied on its parent, 
Moulinex, for technical analysis and advice concerning the causes and 
consequences of the coffeemaker incidents. Moulinex advised Krups that 
the coffeemakers presented no danger of fire outside the coffeemaker.
    14. Krups reasonably relied on the advice from Moulinex in 
concluding that a section 15(b) report was not required until agents of 
Krups investigated a fire involving one of the coffeemakers. Based on 
the advice of these agents, Krups decided that the problems with the 
coffemakers should be reported.
    15. Although the current parent, Groupe SEB, was not involved in 
any of the decisions that led to the alleged reporting violation, it 
has agreed to enter into this Settlement Agreement to resolve these 
issues.

Agreement of the Parties

    16. The Consumer Product Safety Commission has jurisdiction over 
Respondent and the subject matter of this Settlement Agreement and 
Order under the CPSA, 15 U.S.C. 2051 et seq.
    17. Respondent agrees to pay a civil penalty in the amount of five 
hundred thousand and no/dollars ($500,000.00), payable to the ``U.S. 
Treasury'' within twenty (20) calendar days of receiving service of the 
final Settlement Agreement and Order.
    18. Respondent knowingly, voluntarily and completely waives any 
rights it may have in the above-captioned case (i) to the issuance of a 
Complaint in this matter; (ii) to a judicial hearing with respect to 
the staff allegations cited herein; (iii) to judicial review or other 
challenge or contest of the validity of the Settlement Agreement or the 
Commission's Order; (iv) to a determination as to whether a violation 
of section 15(b) of the CPSA, 15 U.S.C. 2064(b), has occurred, and (v) 
to a statement of findings of fact and conclusions of law with regard 
to the staff allegations; and (vi) to any claims under the Equal Access 
to Justice Act.
    19. Upon provisional acceptance of this Settlement Agreement and 
Order by the Commission, this Settlement Agreement and Order shall be 
placed in the public record and shall be published in the Federal 
Register in accordance with 16 CFR 1118.20. If the Commission does not 
receive any written requests 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).
    20. The Settlement Agreement and Order shall become effective upon 
its final acceptance by the Commission and service of the final Order 
upon Respondent.
    21. Upon provisional acceptance by the Commission, the Commission 
may publicize the terms of the Settlement Agreement and Order.

[[Page 39438]]

    22. Respondent agrees to the entry of the attached Order, which is 
incorporated herein by reference, and agrees to be bound by its terms.
    23. If, after the effective date hereof, any provision of this 
Settlement Agreement and Order is held to be illegal, invalid, or 
unenforceable under present or future laws effective during the terms 
of the Settlement Agreement and Order, such provisions shall be fully 
severable. The rest of the Settlement Agreement and Order shall remain 
in full effect, unless the Commission and Respondent determine that 
severing the provision materially affects the purpose of the Settlement 
Agreement and Order.
    24. This Settlement Agreement and Order shall not be waived, 
changed, amended, modified, or otherwise altered, except in writing 
executed by the party against whom such amendment, modification, 
alteration, or waiver is sought to be enforced and approved by the 
Commission.
    25. This Settlement Agreement and Order is binding upon Respondent, 
its parent and each of its assigns or successors.
    26. The Commission's Order in this matter is issued under the 
provisions of the CPSA, 15 U.S.C. 2051 et seq., and a violation of this 
Order may subject Respondent to appropriate legal action.
    27. This Settlement Agreement may be used in interpreting the 
Order. Agreements, understandings, representations, or interpretations 
made outside of this Settlement Agreement and Order may not be used to 
vary or contradict its terms.

    Dated: May 19, 2004.

GROUP SEB USA

By: Paul Pofcher,
Executive Vice President.

Michael A. Brown, Esquire,
Respondent's Attorney.

The U.S. Consumer Product Safety Commission

Alan H. Schoem,
Director, Office of Compliance.

Eric L. Stone,
Director, Legal Division, Office of Compliance.

By Belinda V. Bell,
Trial Attorney, Legal Division, Office of Compliance.

Order

    Upon consideration of the Settlement Agreement between Groupe SEB 
USA, a corporation, and the staff of the Consumer Product Safety 
Commission, and the Commission having jurisdiction over the subject 
matter and over Groupe SEB, and it appearing that the Settlement 
Agreement is in the public interest, it is
    Ordered that the Settlement Agreement be, and hereby is, accepted 
and it is
    Further Ordered that Groupe SEB USA shall pay the United States 
Treasury a civil penalty in the amount of five hundred thousand and 00/
100 dollars, ($500,000.00), payable within twenty (20) days of the 
service of the Final Order upon Groupe SEB USA. Upon the failure by 
Groupe SEB to deliver any payment in full to the Commission in 
accordance with the terms of the subject Settlement Agreement and 
Order, interest on the outstanding balance shall accure and be paid by 
Groupe SEB 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 18th 
day of June, 2004.

    By Order of the Commission.

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

[FR Doc. 04-14681 Filed 6-29-04; 8:45 am]
BILLING CODE 6355-01-M