[Federal Register Volume 76, Number 135 (Thursday, July 14, 2011)]
[Notices]
[Pages 41487-41489]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-17746]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 11-C0006]


Macy's, 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 
Macy's, Inc., containing a civil penalty of $750,000.00.

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 July 29, 2011.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 11-C0006, Office of the 
Secretary, Consumer Product Safety Commission, 4330 East-West Highway, 
Room 820, Bethesda, Maryland 20814-4408.

FOR FURTHER INFORMATION CONTACT: Seth B. Popkin, Lead Trial Attorney, 
Division of Enforcement and Information, Office of the General Counsel, 
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.

    July 11, 2011.
Todd A. Stevenson,
Secretary.

Settlement Agreement

    1. In accordance with 16 CFR 1118.20, Macy's, Inc. (``Macy's'') and 
the U.S. Consumer Product Safety Commission (``Commission'') staff 
(``Staff'') enter into this Settlement Agreement (``Agreement''). The 
Agreement and the

[[Page 41488]]

incorporated attached Order (``Order'') settle Staff's allegations set 
forth below.

Parties

    2. Staff is the staff of the Commission, an independent Federal 
regulatory agency established pursuant to, and responsible for the 
enforcement of, the Consumer Product Safety Act, 15 U.S.C. 2051-2089 
(``CPSA'').
    3. Macy's is a corporation organized and existing under the laws of 
Delaware, with its principal offices located in Cincinnati, Ohio. At 
all relevant times, Macy's sold apparel and other products.

Staff Allegations

    4. During periods of time from April 2006 through October 2010, 
Macy's, through its subsidiaries, imported, sold, and/or held for sale 
various quantities of the following children's upper outerwear products 
with drawstrings at the neck: Quiksilver, Inc.--Hide & Seek hooded 
sweatshirts; Jerry Leigh of California, Inc.--Harajuku Lovers hooded 
jackets; La Jolla Sport USA, Inc.--O'Neill hooded sweatshirts; 
Dysfunctional Clothing, LLC--Lost hooded sweatshirts; Macy's 
Merchandising Group, Inc.--Epic Threads hooded sweatshirts; Macy's 
Merchandising Group, Inc.--Greendog sweaters; C-MRK, Inc.--Ocean 
Current hooded sweatshirts; NTD Apparel, Inc.--Hello Kitty hooded 
sweatshirts; S. Rothschild & Co., Inc.--wool coats; and VF Contemporary 
Brands, Inc.--Splendid hooded jackets and hooded vest sets. The 
products identified in this paragraph are collectively referred to 
herein as ``Garments.''
    5. Macy's sold the Garments, and/or held the Garments for sale, to 
consumers.
    6. The Garments are ``consumer product[s],'' and, at all relevant 
times, Macy's was a ``manufacturer'' and/or ``retailer'' of those 
consumer products, which were ``distributed in commerce,'' as those 
terms are defined in CPSA sections 3(a)(5), (8), (11), and (13), 15 
U.S.C. 2052(a)(5), (8), (11), and (13).
    7. In February 1996, 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, Staff recommends that no children's 
upper outerwear in sizes 2T to 12 be manufactured or sold to consumers 
with hood and neck drawstrings.
    8. In June 1997, ASTM adopted a voluntary standard (ASTM F1816-97) 
incorporating the Guidelines. The Guidelines state that firms should be 
aware of the hazards associated with drawstrings and should ensure that 
garments they sell conform to the voluntary standard.
    9. On May 19, 2006, the Commission posted on its website 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 F1816-97. The 
letter states that 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 references the CPSA's section 15(b) (15 U.S.C. 2064(b)) reporting 
requirements.
    10. Macy's informed the Commission that there had been no reported 
incidents or injuries associated with the Garments.
    11. Macy's distribution in commerce of the Garments did not meet 
either the Guidelines or ASTM F1816-97, failed to comport with Staff's 
May 2006 defect notice, and posed a strangulation hazard to children.
    12. The Commission, in cooperation with Macy's and/or other firms 
that were the Garments' manufacturers, importers, or distributors, 
announced recalls of the Garments.
    13. Based in part on information available through the sources set 
forth in paragraphs 7 through 9 herein, Macy's had presumed and actual 
knowledge that the Garments 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). Macy's 
obtained information that reasonably supported the conclusion that the 
Garments contained a defect that could create a substantial product 
hazard or that the Garments created an unreasonable risk of serious 
injury or death. Pursuant to CPSA sections 15(b)(3) and (4), 15 U.S.C. 
2064(b)(3) and (4), Macy's was required to immediately inform the 
Commission of the defect and risk.
    14. Macy's knowingly failed to immediately inform the Commission 
about the Garments as required by CPSA sections 15(b)(3) and (4), 15 
U.S.C. 2064(b)(3) and (4), 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 knowing failure subjected Macy's to civil penalties.
    15. On multiple occasions from March 2009 to January 2010, Macy's 
offered Garments for sale, sold Garments, and/or distributed Garments 
in commerce that were subject to voluntary corrective action taken by 
the Garments' manufacturers, in consultation with the Commission. The 
Commission notified the public of that action, or Macy's knew or should 
have known of that action.
    16. Macy's knowingly engaged in the acts alleged in paragraph 15 as 
the term ``knowingly'' is defined in CPSA section 20(d), 15 U.S.C. 
2069(d). These acts violated CPSA section 19(a)(2)(B), 15 U.S.C. 
2068(a)(2)(B). Pursuant to CPSA section 20, 15 U.S.C. 2069, these acts 
subjected Macy's to civil penalties.

Macy's Responsive Allegations

    17. Macy's denies Staff's allegations above, including, but not 
limited to, any claim that Macy's failed to timely report to the 
Commission the sale or distribution of any children's upper outerwear 
products with drawstrings pursuant to section 15(b) of the CPSA.
    18. Macy's promptly notified the Commission pursuant to section 
15(b) of the CPSA upon learning that certain children's upper outerwear 
products contained drawstrings.

Agreement of the Parties

    19. Under the CPSA, the Commission has jurisdiction over this 
matter and over Macy's.
    20. The parties enter into the Agreement for settlement purposes 
only. The Agreement does not constitute an admission by Macy's, or a 
determination by the Commission, that Macy's knowingly violated the 
CPSA.
    21. In settlement of Staff's allegations, Macy's shall pay a civil 
penalty in the amount of seven hundred fifty thousand dollars 
($750,000.00). The civil penalty shall be paid within twenty (20) 
calendar days of service of the Commission's final Order accepting the 
Agreement. The payment shall be made electronically to the Commission 
via http://www.pay.gov.
    22. Macy's agrees that it will not seek or accept, directly or 
indirectly, indemnification, reimbursement, insurance, or any other 
form of compensation or payment, including, but not limited to, cash, 
account credit, or set-off, from any vendor or supplier from which 
Macy's acquired the Garments, or from any other firm or person, for the 
civil penalty that Macy's

[[Page 41489]]

agrees and is ordered to pay pursuant to the Agreement and Order.
    23. 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.
    24. Macy's shall conduct annual training of all employees 
responsible for purchasing children's upper outerwear, including 
training regarding all drawstring prohibitions, restrictions, 
guidelines, rules, and laws, and shall include such training when first 
hiring or assigning employees responsible for purchasing children's 
upper outerwear.
    25. Within twenty (20) calendar days of service of the Commission's 
final Order accepting the Agreement, Macy's shall conduct a 
comprehensive review of its existing children's apparel inventory to 
identify any children's upper outerwear bearing drawstrings at the neck 
(``Drawstring Garments'').
    26. Within ten (10) calendar days of the completion of the review 
Macy's conducts pursuant to paragraph 25, Macy's shall submit to Staff 
an Inventory Review Completion Report, covering the review that Macy's 
conducted pursuant to paragraph 25. The report shall, at a minimum, 
include the following:
    a. A comprehensive list of all Drawstring Garments that Macy's has 
identified, including, but not limited to, the following: item 
description; style number(s); garment sizes in inventory; number of 
units of each size in inventory; date(s) of purchase; identity of the 
company/ies from which the garment was purchased; and (if applicable) 
the period of time during which Macy's sold and/or offered for sale the 
Drawstring Garment.
    b. One sample of each available size of each Drawstring Garment 
identified during the inventory review;
    c. A description of the step(s) that Macy's has taken to eliminate 
the strangulation hazards posed by each of the Drawstring Garments; and
    d. The following certification signed by an officer of Macy's:

    Pursuant to 28 U.S.C. 1746, I certify under penalty of perjury 
that I have examined and am familiar with the information submitted 
in this document and all attachments, and that the information is 
true and correct. I am aware that there are significant penalties 
for submitting false information to Federal officials, including the 
possibility of fines and imprisonment.

    The report shall be directed to the following Staff: Seth B. 
Popkin, Lead Trial Attorney, Office of the General Counsel, Division of 
Compliance, U.S. Consumer Product Safety Commission, 4330 East-West 
Highway, Bethesda, MD 20814.
    27. Upon the Commission's final acceptance of the Agreement and 
issuance of the final Order, Macy's 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 Macy's 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.
    28. The Commission may publicize the terms of the Agreement and the 
Order.
    29. The Agreement and the Order shall apply to, and be binding 
upon, Macy's and each of its successors and assigns.
    30. The Commission issues the Order under the provisions of the 
CPSA, and violation of the Order may subject Macy's and each of its 
successors and assigns to appropriate legal action.
    31. 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.
    32. 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 Macy's agree that severing the provision materially affects the 
purpose of the Agreement and the Order.

Macy's, Inc.

    Dated: 6/21/11.
By:--------------------------------------------------------------------

Dennis Broderick,

Executive Vice President, General Counsel, and Secretary, Seven West 
Seventh Street, Cincinnati, Ohio 45202.

    Dated: 6/22/11.
By:--------------------------------------------------------------------

Jeffrey B. Margulies, Esq., William L. Troutman, Esq.,

Fulbright & Jaworski L.L.P., 555 South Flower Street, 41st Floor, 
Los Angeles, CA 90071, Counsel for Macy's, Inc.

U.S. Consumer Product Safety Commission Staff.

Cheryl A. Falvey,

General Counsel.

Mary B. Murphy,

Assistant General Counsel, Office of the General Counsel.

    Dated: 6/28/11.
By:--------------------------------------------------------------------

Seth B. Popkin,

Lead Trial Attorney, Division of Compliance, Office of the General 
Counsel.

Order

    Upon consideration of the Settlement Agreement entered into between 
Macy's, Inc. (``Macy's'') and the U.S. Consumer Product Safety 
Commission (``Commission'') staff, and the Commission having 
jurisdiction over the subject matter and over Macy's, 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 Macy's shall pay a civil penalty in the 
amount of seven hundred fifty thousand dollars ($750,000.00) within 
twenty (20) calendar days of service of the Commission's final Order 
accepting the Agreement. The payment shall be made electronically to 
the Commission via http://www.pay.gov. Upon the failure of Macy's to 
make the foregoing payment when due, interest on the unpaid amount 
shall accrue and be paid by Macy's at the Federal legal rate of 
interest set forth at 28 U.S.C. 1961(a) and (b); and it is
    Further Ordered, that Macy's shall fully perform all of its 
obligations as set forth in the Settlement Agreement at paragraphs 24, 
25, and 26.

    Provisionally accepted and provisional Order issued on the 8th 
day of July, 2011.
    By Order of the Commission.
Todd A. Stevenson,
Secretary, U.S. Consumer Product Safety Commission.
[FR Doc. 2011-17746 Filed 7-13-11; 8:45 am]
BILLING CODE 6355-01-P