[Federal Register Volume 73, Number 83 (Tuesday, April 29, 2008)]
[Notices]
[Pages 23205-23207]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-9270]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 08-C0005]


The Neiman Marcus Group, 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 1118.20(e). 
Published below is a provisionally accepted Settlement Agreement with 
The Neiman Marcus Group, Inc., containing a civil penalty of 
$50,000.00.

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 May 14, 2008.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 08-C0005, Office of the 
Secretary, Consumer Product Safety Commission, 4330 East West Highway, 
Room 502, Bethesda, Maryland 20814-4408.

[[Page 23206]]


FOR FURTHER INFORMATION CONTACT: Seth B. Popkin, Trial Attorney, Legal 
Division, Office of Compliance and Field Operations, Consumer Product 
Safety Commission, 4330 East West Highway, Bethesda, Maryland 20814-
4408; telephone (301) 504-7612.

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

    Dated: April 23, 2008.
Todd A. Stevenson,
Secretary.

United States of America

Consumer Product Safety Commission

In the Matter of the Neiman Marcus Group, Inc.; CPSC Docket No. 08-
C0005

Settlement Agreement

    1. In accordance with 16 CFR 1118.20, The Neiman Marcus Group, Inc. 
(``NMG'') and the staff (``Staff') of the United States Consumer 
Product Safety Commission (``Commission'') enter into this Settlement 
Agreement (``Agreement''). The Agreement and the incorporated attached 
Order (``Order'') settle the Staff's allegations set forth below.

Parties

    2. The Commission is an independent federal regulatory agency 
established pursuant to, and responsible for the enforcement of, the 
Consumer Product Safety Act, 15 U.S.C. 2051--2084 (``CPSA'').
    3. NMG is a corporation organized and existing under the laws of 
Delaware, with its principal offices located in Dallas, Texas. At all 
times relevant hereto, NMG sold apparel.

Staff Allegations

    4. From April 2006 to July 13, 2006, NMG sold 147 True Religion 
fleece hoodies with drawstrings through the hood and neck (``Drawstring 
Sweatshirts'').
    5. NMG sold the Drawstring Sweatshirts to consumers.
    6. The Drawstring Sweatshirts are ``consumer product[s],'' and, at 
all times relevant hereto, NMG was a ``retailer'' of those consumer 
products, which were ``distributed in commerce,'' as those terms are 
defined in CPSA sections 3(a)(1), (6), (11), and (12), 15 U.S.C. 
2052(a)(l), (6), (11), and (12).
    7. In February 1996, the Staff issued the Guidelines for 
Drawstrings on Children's Upper Outerwear (``Guidelines'') to help 
prevent children from strangling or entangling on neck and waist 
drawstrings. The Guidelines state that drawstrings can cause, and have 
caused, injuries and deaths when they catch on items such as playground 
equipment, bus doors, or cribs. In the Guidelines, the Staff recommends 
that there be no hood and neck drawstrings in children's upper 
outerwear sized 2T to 12.
    8. In June 1997, ASTM adopted a voluntary standard, ASTM F1816-97, 
that incorporated the Guidelines. The Guidelines state that firms 
should be aware of the hazards and should be sure garments they sell 
conform to the voluntary standard.
    9. On May 19, 2006, the Commission posted on its Web site a letter 
from the Commission's Director of the Office of Compliance to 
manufacturers, importers, and retailers of children's upper outerwear. 
The letter urges them to make certain that all children's upper 
outerwear sold in the United States complies with ASTM Fl 8 16-97. The 
letter states that the Staff considers children's upper outerwear with 
drawstrings at the hood or neck area to be defective and to present a 
substantial risk of injury to young children under Federal Hazardous 
Substances Act (``FHSA'') section 15(c), 15 U.S.C. 1274(c). The letter 
also notes the CPSA's section 15(b) reporting requirements.
    10. NMG reported to the Commission that there had been no incidents 
or injuries from the Drawstring Sweatshirts.
    11. NMG's distribution in commerce of the Drawstring Sweatshirts 
did not meet the Guidelines or ASTM F1816-97, failed to comport with 
the Staff's May 2006 defect notice, and posed a strangulation hazard to 
children.
    12. On September 14, 2006, the Commission, in cooperation with NMG 
and the manufacturer, announced a recall of the Drawstring Sweatshirts, 
informing consumers that they should immediately stop using the 
Drawstring Sweatshirts.
    13. NMG had presumed and actual knowledge that the Drawstring 
Sweatshirts distributed in commerce posed a strangulation hazard and 
presented a substantial risk of injury to children under FHSA section 
15(c)(1), 15 U.S.C. 1274(c)(1). NMG had obtained information that 
reasonably supported the conclusion that the Drawstring Sweatshirts 
contained a defect that could create a substantial product hazard or 
that they created an unreasonable risk of serious injury or death. CPSA 
sections 15(b)(2) and (3), 15 U.S.C. 2064(b)(2) and (3), required NMG 
to immediately inform the Commission of the defect and risk.
    14. NMG knowingly failed to immediately inform the Commission about 
the Drawstring Sweatshirts as required by CPSA sections 1 5(b)(2) and 
(3), 15 U.S.C. 2064(b)(2) and (3), and as the term ``knowingly'' is 
defined in CPSA section 20(d), 15 U.S.C. 2069(d). This failure violated 
CPSA section 19(a)(4), 15 U.S.C. 2068(a)(4). Pursuant to CPSA section 
20, 15 U.S.C. 2069, this failure subjected NMG to civil penalties.

NMG's Response

    15. NMG contests and denies the Staff's allegations.
    16. NMG specifically denies that the Drawstring Sweatshirts or NMG 
violated the FHSA and that the Drawstring Sweatshirts contained a 
defect that could create a substantial product hazard or created an 
unreasonable risk of serious injury or death. NMG sold only 147 units 
over a three-month period and received no reports of incidents or 
injury. NMG denies that it violated the reporting requirements of 15 
U.S.C. 2064(b), 2068(a)(4). Likewise, NMG denies that any alleged 
violation of the CPSA or FHSA occurred ``knowingly.''
    17. NMG has entered into the Agreement for settlement purposes 
only, to avoid incurring additional expenses and the distraction of 
litigation. The Agreement and Order do not constitute and are not 
evidence of any fault or wrongdoing on the part of NMG.

Agreement of the Parties

    18. Under the CPSA, the Commission has jurisdiction over this 
matter and over NMG.
    19. The parties enter into the Agreement for settlement purposes 
only. The Agreement does not constitute an admission by NMG, or a 
determination by the Commission, that NMG has knowingly violated the 
CPSA.
    20. In settlement of the Staff's allegations, NMG shall pay a civil 
penalty in the amount of fifty thousand dollars ($50,000.00) within 
twenty (20) calendar days of service of the Commission's final Order 
accepting the Agreement. The payment shall be by check payable to the 
order of the United States Treasury.
    21. Upon provisional acceptance of the Agreement, the Agreement 
shall be placed on the public record and published in the Federal 
Register in accordance with the procedures set forth in 16 CFR 
1118.20(e). In accordance with 16 CFR 1118.20(f), if the Commission 
does not receive any written request not to accept the Agreement within 
fifteen (15) calendar days, the Agreement shall be deemed finally 
accepted on the sixteenth (16th) calendar day after the date it is 
published in the Federal Register.
    22. Upon the Commission's final acceptance of the Agreement and

[[Page 23207]]

issuance of the final Order, NMG knowingly, voluntarily, and completely 
waives any rights it may have in this matter to the following: (1) An 
administrative or judicial hearing; (2) judicial review or other 
challenge or contest of the validity of the Order or of the 
Commission's actions; (3) a determination by the Commission of whether 
NMG failed to comply with the CPSA and its underlying regulations; (4) 
a statement of findings of fact and conclusions of law; and (5) any 
claims under the Equal Access to Justice Act.
    23. The Commission may publicize the terms of the Agreement and the 
Order.
    24. The Agreement and the Order shall apply to, and be binding 
upon, NMG and each of its successors and assigns.
    25. The Commission issues the Order under the provisions of the 
CPSA, and violation of the Order may subject NMG to appropriate legal 
action.
    26. The Agreement may be used in interpreting the Order. 
Understandings, agreements, representations, or interpretations apart 
from those contained in the Agreement and the Order may not be used to 
vary or contradict their terms. The Agreement shall not be waived, 
amended, modified, or otherwise altered without written agreement 
thereto executed by the party against whom such waiver, amendment, 
modification, or alteration is sought to be enforced.
    27. If any provision of the Agreement and the Order is held to be 
illegal, invalid, or unenforceable under present or future laws 
effective during the terms of the Agreement and the Order, such 
provision shall be fully severable. The balance of the Agreement and 
the Order shall remain in full force and effect, unless the Commission 
and NMG agree that severing the provision materially affects the 
purpose of the Agreement and the Order.
    28. Pursuant to section 6(d) of the Interim Delegation of Authority 
ordered by the Commission on February 1, 2008, the Commission delegated 
to the Assistant Executive Director for Compliance and Field Operations 
the authority to act, with the concurrence of the General Counsel, for 
the Commission under 16 CFR 1118.20 with respect to Staff allegations 
that any person or firm violated 15 U.S.C. 2068, where the total amount 
of the settlement involves no more than $100,000.

The Neiman Marcus Group, Inc.

    Dated: April 2, 2008.

By: Kim Yee,
Vice President and Assistant General Counsel, The Neiman Marcus 
Group, Inc., One Marcus Square, 1618 Main Street, Dallas, TX 75201.

    Dated: 4-3-08.

By: Christie Grymes, Esq.,
Kelley Drye & Warren LLP, 3050 K Street, NW., Suite 400, Washington, 
DC 20007, Counsel for The Neiman Marcus Group, Inc.

U.S. Consumer Product Safety Commission Staff.
J. Gibson Mullan,
Assistant Executive Director, Office of Compliance and Field 
Operations.

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

Dated: 4-16-08.

By: Seth B. Popkin,
Trial Attorney, Legal Division,
Office of Compliance and Field Operations.

United States of America

Consumer Product Safety Commission

In the Matter of the Neiman Marcus Group, Inc.; CPSC Docket No. 08-
C0005

Order

    Upon consideration of the Settlement Agreement entered into between 
The Neiman Marcus Group, Inc. (``NMG'') and the U.S. Consumer Product 
Safety Commission (``Commission'') staff, and the Commission having 
jurisdiction over the subject matter and over NMG, and pursuant to the 
authority delegated in section 6(d) of the Interim Delegation of 
Authority ordered by the Commission on February 1, 2008, and it 
appearing that the Settlement Agreement and the Order are in the public 
interest, it is Ordered, that the Settlement Agreement be, and hereby 
is, accepted; and it is Further ordered, that NMG shall pay a civil 
penalty in the amount of fifty thousand dollars ($50,000.00) within 
twenty (20) calendar days of service of the Commission's final Order 
accepting the Agreement. The payment shall be made by check payable to 
the order of the United States Treasury. Upon the failure of NMG to 
make the foregoing payment when due, interest on the unpaid amount 
shall accrue and be paid by NMG at the federal legal rate of interest 
set forth at 28 U.S.C. 1961(a) and (b).
    Provisionally accepted and provisional Order issued on 22nd day of 
April, 2008.

    By Order of the Commission.

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

 [FR Doc. E8-9270 Filed 4-28-08; 8:45 am]
BILLING CODE 6355-01-M