[Federal Register Volume 69, Number 159 (Friday, October 8, 2004)]
[Notices]
[Pages 60364-60366]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-22719]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 05-C0001]


Johnson Health Tech Co., Ltd. and Horizon Fitness, 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. 
Published below is a provisionally-accepted Settlement Agreement with 
Johnson Health Tech Co., Ltd. and Horizon Fitness, Inc., containing a 
civil penalty of $500,00.

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 October 25, 2004.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 05-C0001, Office of the 
Secretary, Consumer Product Safety Commission, Washington, DC 20207.

FOR FURTHER INFORMATION CONTACT: Michelle F. Gillice, Trial Attorney, 
Office of Compliance, Consumer Product Safety Commission, Washington, 
DC 20207; telephone (301) 504-7667.

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

    Dated: October 4, 2004.
Todd A. Stevenson,
Secretary.

In the Matter of Johnson Health Tech Co., Ltd. and Horizon Fitness, 
Inc.; Settlement Agreement and Order

[CPSC Docket No. 05-C001]

    1. Johnson Health Tech Co., Ltd. and Horizon Fitness, Inc. and 
(hereinafter,

[[Page 60365]]

``Johnson'', ``Horizon'' or collectively ``Respondents'') enter into 
this Settlement Agreement and Order (hereinafter ``Settlement 
Agreement'' or ``Agreement'') with the staff of the Consumer Product 
Safety Commission (hereinafter ``Commission''), and agree to the 
entry of the attached Order incorporated by reference herein. The 
Settlement Agreement resolves the Commission staff's allegations set 
forth regarding reporting violations of the Respondents with respect 
to all Johnson treadmills manufactured with the Asia Star motor 
control board.

I. The Parties

    2. The Commission is an independent Federal regulatory 
commission responsible for the enforcement of the Consumer Product 
Safety Commission Act (``CPSA''), 15 U.S.C. 2051-2084.
    3. Johnson is the manufacturer of treadmills and other fitness 
equipment with its principal office located at 26, Ching Chuan Road, 
Taya Hsiang, Taichung Hsien, 42844, Taiwan, R.O.C.
    4. Horizon was incorporated on August 1, 1999. It is organized 
and existing under the laws of Wisconsin with its principal office 
located at 800 Burton Boulevard, DeForest, Wisconsin 53532. Horizon 
imports and sells treadmills and other fitness equipment 
manufactured by Johnson. Horizon is 87% owned by Johnson 
International Holding Corp., Ltd. which is a subsidiary of Johnson.

II. Staff Allegations

    5. Section 15(b) of the CPSA, 15 U.S.C. 2064(b) requires that 
every manufacturer, importer, distributor and retailer who obtains 
information that reasonably supports the conclusion that a consumer 
product (1) contains a defect which could create a substantial 
product hazard, or (2) creates an unreasonable risk of serious 
injury or death, immediately inform the Commission of the defect or 
risk.
    6. Between August 2000 and June 2001, Johnson manufactured 
treadmills with a motor control board (``MCB'') manufactured by 
subcontractor, Asia Star.
    7. Between September 2000 and December 2001, Horizon imported 
and distributed nationwide approximately 10,644 Johnson Treadmills 
with the Asia Star MCB under the model names, ``Paragon'', 
``Quantum'' and ``Omega'' (hereinafter ``treadmills'').
    8. The treadmills are ``consumer products'' which were 
``distributed in commerce'' as those terms are defined in section 
3(a)(1), (11) and (12) of the CPSA, 15 U.S.C. 2052(a)(1), (11) and 
(12).
    9. Johnson and Horizon are ``manufacturers'' of the treadmills 
as that term is defined in section 3(a)(4) of the CPSA, 15 U.S.C. 
2052(4).
    10. The treadmills are defective because a component in the MCB 
can overheat causing (1) a sudden acceleration of the walking belt 
between 12.9 and 16.5 miles per hour (also known as a ``runaway'' 
situation) and (2) the safety stop key to fail. These defects could 
cause consumers to suffer serious injury.
    11. Between January 2001 and January 14, 2002 (date of 
Respondents' full report), Respondents learned of 180 incidents of 
``runaway'' treadmills and safety stop key failures. Fifteen of 
these reports alleged injury including sprains, strains, a torn 
rotator cuff, bruises and serious friction burns.
    12. In response to consumer complaints, between January 2001 and 
January 14, 2002, Respondents made three modifications to the 
treadmill, first in February 2001, then in March 2001, and finally 
in May 2001, in an attempt to correct the defects. At none of these 
points, did Respondents provide the Commission with a full report.
    13. On January 11, 2002, the Commission staff contacted Horizon 
to schedule an establishment inspection. Three days later, on 
January 14, 2002, Respondents submitted a full report.
    14. Although Respondents had obtained sufficient information to 
reasonably support the conclusion that these treadmills (1) 
contained defects which could create a substantial product hazard or 
(2) created an unreasonable risk of serious injury or death, they 
failed to timely report such information to the Commission, as 
required by section 15(b) of the CPSA, 15 U.S.C. 2064(b).
    15. By failing to timely report to the Commission pursuant to 
section 15(b) of the CPSA, Respondents violated section 19(a)(4) of 
the CPSA, 2068(a)(4).
    16. Respondents committed this failure to report to the 
Commission ``knowingly'' as that term is defined in section 20(d) of 
the CPSA, 15 U.S.C. 2069(d), thus subjecting Respondents to civil 
penalties under section 20 of the CPSA, 15 U.S.C. 2069.

III. Response of Johnson and Horizon

    17. Respondents deny the staff allegations in paragraphs 5 
through 16.
    18. Respondents deny that the treadmills contained defects which 
could create a substantial product hazard within the meaning of 
sections 15(a) and 15(b) of the CPSA, 15 U.S.C. 2064(a) and 2064(b).
    19. Respondents deny that they treadmills created an 
unreasonable risk of serious injury or death pursuant to section 
15(b) of the CPSC, 15 U.S.C. 2064(b) and deny the allegations of 
injury in paragraph 10 above.
    20. Respondents deny that they knowingly violated the reporting 
requirements of section 15(b) of the CPSA, 15 U.S.C. 2064(b). They 
deny that the information available to them reasonably supported the 
conclusion that the treadmills contained a defect which could create 
a substantial product hazard or that the treadmills created an 
unreasonable risk of serious injury or death. They deny that a 
report was required under section 15(b) of the CPSA, 15 U.S.C. 
2064(b).
    21. Although Respondents do not believe the treadmills had a 
reportable defect or risk, they diligently investigated and 
addressed the circumstances relating to the consumer complaints 
about the treadmills and fully responded to all consumer complaints 
and, by May of 2001, they had designed a corrective measure that 
fully addressed any of the alleged defects.
    22. The Respondents had already decided to file a full report 
with the CPSC and to implement a recall of the treadmills prior to 
being contacted by the CPSC on January 11, 2002. Respondents' full 
report to the CPSC and voluntary recall did not result from the CPSC 
investigation, but instead was part of their ongoing effort to fully 
address and respond to customer complaints regarding the treadmills.
    23. Respondents agree to this Settlement Agreement and Order 
solely to avoid incurring additional legal costs and expenses. They 
do not admit to any fault, any liability, any violation of any law 
or any wrongdoing with respect to the treadmills. Their willingness 
to enter into this Settlement Agreement and Order does not 
constitute, nor is it evidence of, an admission by them of any 
fault, any liability, any violation of any law or any wrongdoing.

IV. Agreement of the Parties

    24. The Commission has jurisdiction over Respondents and the 
subject matter of this Settlement Agreement and Order under the 
CPSA, 15 U.S.C. 2051-2084.
    25. Respondents agree to be bound by, and comply with, this 
Settlement Agreement and Order.
    26. This Agreement is entered into for settlement purposes only 
and does not constitute an admission by Respondents, or a 
determination by the Commission, that Respondents knowingly violated 
the CPSA's reporting requirement.
    27. In settlement of the staff's allegations, Respondents agree 
to pay a civil penalty of five hundred thousand 00/100 dollars 
($500,000) in full settlement of this matter. The penalty shall be 
paid in four installments. The first payment of $125,000.00 shall be 
paid within twenty (20) calendar days of service of the final 
Settlement Agreement and Order. The second payment of $125,000.00 
shall be paid within 110 days of such service. The third payment of 
$125,000.00 shall be paid within 200 days of such service. The 
fourth and final payment of $125,000.00 shall be paid within 290 
days of such service.
    28. Upon provisional acceptance of this Agreement by the 
Commission, this Agreement shall be placed on the public on the 
public record and shall be published in the Federal Register in 
accordance with the procedures set forth in 16 CFR 1118.20(e). If 
the Commission does not receive any written objections within 15 
days, the Agreement will be deemed finally accepted on the 16th day 
after the date it is published in the Federal Register.
    29. Upon final acceptance of this Agreement by the Commission, 
and issuance of the Final Order, Respondents knowingly, voluntarily, 
and completely waive any rights they may have in this matter (1) to 
an administrative 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 Respondents failed to 
comply with CPSA and the underlying regulations, (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. The Commission may publicize the terms of the Settlement 
Agreement and Order.
    31. The Commission's Order in this matter is issued under the 
provisions of CPSA, 15

[[Page 60366]]

U.S.C. 2051-2084. Violation of this Order may subject Respondents to 
appropriate legal action.
    32. This Settlement Agreement may be used in interpreting the 
Order. Agreements, understandings, representations, or 
interpretations apart from those contained in this Settlement 
Agreement and Order may not be used to vary or contradict its terms.
    33. 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 provision shall be 
fully severable. The rest of the Settlement Agreement and Order 
shall remain in full effect, unless the Commission and Respondents 
determine that severing the provision materially affects the purpose 
of the Settlement Agreement and Order.
    34. 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.
    35. The provisions of this Settlement Agreement and Order shall 
apply to Respondents and each of their successors and assigns.

Dated: September 6, 2004.
Johnson Health Tech Co., Ltd.
Jason Lo,
Chief Executive Officer.

Dated: August 25, 2004.

Horizon Fitness, Inc.
Robert Whip,
President.

Thomas L. Skalmoski, Esquire,
Attorney for Respondents Horizon and Johnson.

The U.S. Consumer Product Safety Commission.
Alan H. Schoem,
Director Office of Compliance.

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

Dated: September 10, 2004.

By: Michelle Faust Gillice,
Trial Attorney

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

    In the Matter of Johnson Health Tech Co., Ltd. and Horizon Fitness, 
Inc.; Order. [CPSC Docket No. 05-C0001]
    Upon consideration of the Settlement Agreement between Respondents 
Johnson Health Tech Co., Ltd (``Johnson'') and Horizon Fitness, Inc. 
(``Horizon'') and the staff of the Consumer Product Safety Commission, 
and the Commission having jurisdiction over the subject matter and over 
Johnson and Horizon, 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 Johnson and Horizon shall pay the United 
States Treasury a civil penalty of five hundred thousand 00/100 dollars 
($500,000) in four installments. The first payment of $125,000.00 shall 
be paid within twenty (20) calendar days of service of the final 
Settlement Agreement and Order. The second payment of $125,000.00 shall 
be paid within 110 days of such service. The third payment of 
$125,000.00 shall be paid within 200 days of such service. The fourth 
and final payment of $125,000.00 shall be paid within 290 days of such 
service. Upon failure of Respondents Johnson and Horizon to make a 
payment or upon the making of a late payment by Respondents Johnson and 
Horizon (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 4th 
day of October, 2004.

    By Order of the Commission:

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

[FR Doc. 04-22719 Filed 10-7-04; 8:45 am]
BILLING CODE 6355-01-M