[Federal Register Volume 70, Number 236 (Friday, December 9, 2005)]
[Notices]
[Pages 73208-73210]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-23875]


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

CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 06-C0001]


SMC Marketing Corp., a Corporation, Provisional Acceptance of a 
Settlement Agreement and Order

AGENCY: Consumer Product Safety Commission.

ACTION: Notice.

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

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 
SMC Marketing Corp., a corporation, containing a civil penalty of 
$500,000.00.

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 December 27, 2005.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 06-C0001, Office of the 
Secretary, Consumer Product Safety Commission, Washington, DC 20207.

FOR FURTHER INFORMATION CONTACT: Howard N. Tarnoff, Trial Attorney, 
Office of Compliance, Consumer Product Safety Commission, Washington, 
DC 20207; telephone (301) 504-7589.

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

    Dated: December 6, 2005.
Todd A. Stevenson,
Secretary.

Settlement Agreement and Order

    1. This Settlement Agreement is made by and between the staff (the 
``staff'') of the U.S. Consumer Product Safety Commission (the 
``Commission'') and SMC Marketing Corp. (``SMC''), a corporation, in 
accordance with 16 CFR 1118.20 of the Commission's procedures for 
Investigations, Inspections, and Inquiries under the Consumer Product 
Safety Act (``CPSA''). This Settlement Agreement and the incorporated 
attached Order settle the staff's 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. SMC is a corporation organized and existing under the laws of 
the State of Texas with its principal corporate office located in Grand 
Prairie, Texas. At all times relevant herein, SMC imported, sold, and 
marketed oscillating floor fans, ceiling fans, vacuum cleaners, and DVD 
players, among other consumer products. SMC is a wholly-owned 
subsidiary of Shell Electric Mfg. (Holdings) Co. Ltd. (``Shell Electric 
Holdings''), a foreign corporation.

Staff Allegations

    4. From April 1998 through April 2001, SMC imported into the United 
States and sold approximately 2,342 Model SR-18 Fans. From January 1997 
through October 2001, Shell Electric Mfg. (China) Co. Ltd., a foreign 
corporation and also a wholly-owned subsidiary of Shell Electric 
Holdings, exported to the United States approximately 2.2 million 18-
inch pedestal oscillating floor fans with model numbers SR-18 and SP-18 
bearing the SMC label (``the Fans'').

[[Page 73209]]

    5. The Fans are ``consumer products'' and, at the times relevant 
herein, SMC was a ``manufacturer'' or ``retailer'' or ``consumer 
products,'' which were ``distributed in commerce'' as those terms are 
defined in sections 3(a)(1), (4), (6), (11), and (12) of the CPSA, 15 
U.S.C. 2052(a)(1), (4), (6), (11), and (12).
    6. The Fans are defective because the electric power cord can be 
damaged by the oscillation motion of the fan. The damage to the cord 
can result in a short circuit and possible ignition of the plastic 
case, posing a fire hazard.
    7. Between November 29, 1999 and January 7, 2004, SMC learned about 
at least 46 incidents of malfunction with the Fans which resulted in 
allegations of either fire or smoke damage to consumers' homes, and one 
alleged personal injury. SMC did not inform the Commission about the 
full extent of these incidents until June 6, 2004, when it submitted a 
Section 15 report, and December 14, 2004, when it submitted additional 
information.
    8. During a CPSC staff inspection of SMC on December 23, 2002, SMC 
provided a CPSC investigator with information about only 2 incidents 
with the Fans, despite the fact that SMC was aware of numerous 
incidents of malfunction with the Fans which allegedly caused fire or 
smoke damage to consumers' homes. When the CPSC staff conducted a 
second inspection of SMC on August 5, 2003, SMC did not provide the 
CPSC investigator with any additional incidents, despite the fact that 
it was aware of additional incidents involving the Fans that allegedly 
caused fire or smoke damage to homes.
    9. Although SMC had obtained sufficient information to reasonably 
support the conclusion that the Fans contained a defect which could 
create a substantial product hazard, or created an unreasonable risk of 
serious injury or death, long before June 6, 2004, it failed to 
immediately inform the Commission of such defect or risk as required by 
Sections 15(b)(2) and (3) of the CPSA, 15 U.S.C. 2064(b)(2) and (3). In 
failing to do so, SMC ``knowingly'' violated Section 19(a)(4) of the 
CPSA, 15 U.S.C. 2068(a)(4), as the term ``knowingly'' is defined in 
Section 20(d) of the CPSA, 15 U.S.C. 2069(d).
    10. Pursuant to Section 20 of the CPSA, 15 U.S.C. 2069, SMC is 
subject to civil penalties for its failure to make a timely report 
pursuant to Section 15(b) of the CPSA, 15 U.S.C. 2064(b).

Response of SMC

    11. SMC denies the allegations of the staff that the Fans contain a 
defect which could create a substantial product hazard, or create an 
unreasonable risk of serious injury or death, and denies that it 
violated the reporting requirements of Section 15(b) of the CPSA, 15 
U.S.C. 2064(b). SMC further did not ``knowingly'' violate any reporting 
requirements under the CPSA.
    12. At all times when the Commission staff conducted its 
inspections, SMC attempted to cooperate fully by providing samples of 
claims and samples of products, and believed it was both responsive to 
all inspectors' requests and voluntarily cooperative.
    13. Upon the request of the CPSC staff, SMC filed a report pursuant 
to Section 15(b) of the Consumer Product Safety Act 15, U.S.C. 2064(b), 
voluntarily met with the staff to discuss the potential problem with 
the Fans, and additionally cooperated fully with the Commission in 
voluntarily recalling the Fans beginning in June 2004.

Agreement of the Parties

    14. The Commission has jurisdiction over this matter and over SMC 
under the CPSA, 15 U.S.C. 2051-2084.
    15. In settlement of the staff's allegations, SMC agrees to pay a 
civil penalty of five hundred thousand dollars ($500,000) in three 
installments. The first installment of one hundred sixty-six thousand 
dollars ($166,000) shall be paid within thirty (30) calendar days of 
service of the Final Order of the Commission accepting this Settlement 
Agreement. The second installment of one hundred sixty-seven thousand 
dollars ($167,000) shall be paid within sixty (60) calendar days of 
service of the Final Order of the Commission accepting this Settlement 
Agreement. The third installment of one hundred sixty-seven thousand 
dollars ($167,000) shall be paid within ninety (90) calendar days of 
service of the Final Order of the Commission accepting this Settlement 
Agreement. These payments shall be made by check payable to the order 
of the United States Treasury.
    16. The parties enter into this Settlement Agreement for settlement 
purposes only. The Settlement Agreement does not constitute an 
admission by SMC or a determination by the Commission that SMC has 
violated the CPSA's reporting requirements.
    17. Upon provisional acceptance of this Settlement Agreement and 
Order by the Commission, the Commission shall place this Agreement and 
Order on the public record and shall publish it in the Federal Register 
in accordance with the procedure set forth in 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 Agreement and Order 
shall be deemed finally accepted on the 16th day after the date it is 
published in the Federal Register.
    18. Upon final acceptance of this Settlement Agreement by the 
Commission and issuance of the Final Order, SMC knowingly, voluntarily 
and completely waives any rights it may have in this matter to the 
following: (i) An administrative or judicial hearing; (ii) judicial 
review or other challenge or contest of the validity of the 
Commission's actions; (iii) a determination by the Commission as to 
whether SMC failed to comply with the CPSA and its underlying 
regulations; (iv) a statement of findings of fact and conclusions of 
law; and (v) any claims under the Equal Access to Justice Act.
    19. The Commission may publicize the terms of the Settlement 
Agreement and Order.
    20. This Settlement Agreement and Order shall apply to, and be 
binding upon, SMC and each of its successors and assigns.
    21. The Commission's Order in this matter is issued under the 
provisions of the CPSA, 15 U.S.C. 2051-2084, and a violation of the 
Order may subject SMC to appropriate legal action.
    22. 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.
    23. This Settlement Agreement and Order shall not be waived, 
changed, amended, modified, or otherwise altered without written 
agreement thereto executed by the party against whom such amendment, 
modification, alteration, or waiver is sought to be enforced and 
approval by the Commission.
    24. If, after the effective date hereof, any provision of this 
Settlement Agreement and Order is held to be illegal, invalid, or 
enforceable 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 SMC determine that severing 
the provision materially changes the purpose of the Settlement 
Agreement and Order.

SMC Marketing Corp.

    Dated: October 31, 2005.
David Leung,
Senior Vice President--Marketing & Sales, SMC Marketing Corp., 1931 
North Great Southwest Parkway, Grand Prairie, Texas 75050.

    Dated: October 31, 2005.

[[Page 73210]]

James E. Singer, Esq.,
Bovis, Kyle & Burch, LLC, 53 Perimeter Center East, Third Floor, 
Atlanta, GA 30346-2298, Counsel for SMC Marketing Corp.

U.S. Consumer Product Safety Commission.

John Gibson Mullan,
Director, Office of Compliance.

Ronald G. Yelenik,
Acting Director, Legal Division, Office of Compliance.

    Dated: November 7, 2005.
Howard N. Parnoff,
Trial Attorney, Legal Division, Office of Compliance.

Order

    Upon consideration of the Settlement Agreement entered into between 
SMC Marketing Corp. (``SMC'') and the staff of the U.S. Consumer 
Product Safety Commission (the ``Commission''), and the Commission 
having jurisdiction over the subject matter and over SMC, and it 
appearing that the Settlement Agreement is in the public interest, it 
is
    I. Ordered that the Settlement Agreement be, and hereby is, 
accepted; and it is
    II. Further Ordered that SMC shall pay a civil penalty of five 
hundred thousand dollars ($500,000) in three installments. The first 
installment of one hundred sixty-six thousand dollars ($166,000) shall 
be paid within thirty (30) calendar days of service of the Final Order 
of the Commission accepting the Settlement Agreement. The second 
installment of one hundred sixty-seven thousand dollars ($167,000) 
shall be paid within sixty (60) calendar days of service of the Final 
Order of the Commission accepting the Settlement Agreement. The third 
installment of one hundred sixty-seven thousand dollars ($167,000) 
shall be paid within ninety (90) calendar days of service of the Final 
Order of the Commission accepting the Settlement Agreement. These 
payments shall be made by check payable to the order of the United 
States Treasury. Upon the failure of SMC to make a payment or upon the 
making of a late payment, (i) the entire amount of the civil penalty 
shall become due and payable, and (ii) 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 6th 
day of December, 2005.

    By order of the Commission.
Todd A. Stevenson,
Secretary, Consumer Product Safety Commission.
[FR Doc. 05-23875 Filed 12-8-05; 8:45 am]
BILLING CODE 6355-01-M