[Federal Register Volume 76, Number 199 (Friday, October 14, 2011)]
[Notices]
[Pages 63906-63908]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-26662]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 12-C0002]


Henry Gordy International, 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 
Henry Gordy International, Inc., containing a civil penalty of 
$1,100,000.00.

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 October 31, 2011.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 12-C0002, Office of the 
Secretary, Consumer Product Safety Commission, 4330 East West Highway, 
Room 820, Bethesda, Maryland 20814-4408.

FOR FURTHER INFORMATION CONTACT: Patricia Kennedy Vieira, Esquire, 
Division of Enforcement and Information, Office of the General Counsel, 
Consumer Product Safety Commission, 4330 East West Highway, Bethesda, 
Maryland 20814-4408; telephone (301) 504-7623.

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

    Dated: October 7, 2011,
Todd A. Stevenson,
Secretary.

Settlement Agreement

    1. In accordance with 16 CFR 1118.20, Henry Gordy International, 
Inc., its current and/or former corporate parent(s), affiliates, 
successors, and/or assigns, and any and/or all current and/or former 
directors, officers, agents and employees (collectively ``Henry 
Gordy'') and staff (``staff'') of the United States Consumer Product 
Safety Commission (``Commission'') hereby enter into this Settlement 
Agreement (``Agreement'') under the Consumer Product Safety Act 
(``CPSA''). The Agreement and the incorporated attached Order resolve 
staff's allegations and settle any and all

[[Page 63907]]

claims under the CPSA and the Child Safety Protection Act, Public Law 
103-267, 108 Stat. 722 (1994), which exist or arise from staff's 
allegations set forth below.

The Parties

    2. Staff is the staff of the Consumer Product Safety Commission, an 
independent federal regulatory agency established pursuant to, and 
responsible for, the enforcement of the CPSA, 15 U.S.C. 2051-2089, and 
the CSPA, Public Law 103-267, 108 Stat. 722.
    3. Henry Gordy is a corporation, organized and existing under the 
laws of the State of Delaware, with its principal corporate office 
located at P.O. Box 2769, 900 North Avenue, Plainfield, New Jersey 
07062-0769.

Staff Allegations

    4. Between September 2005 and February 2008, Henry Gordy imported 
approximately 1,806,048 units of the ``Auto Fire Target Set'' (``Target 
Set''). Each Target Set consisted of the following: A toy gun; soft, 
pliable, plastic toy darts; and a small target. The Target Sets were 
sold for $1.50 nationwide by Family Dollar Stores, Inc., exclusively 
during the period September 2005 through January 2009.
    5. The Target Sets are ``consumer products.'' At all relevant 
times, Henry Gordy, as importer of the Target Sets, is a 
``manufacturer'' of these consumer products, which were ``distributed 
in commerce,'' as those terms are defined or used in sections 3(a)(5), 
(8) and (11) of the CPSA, 15 U.S.C. 2052(a)(5), (8) and (11).
    6. The Target Sets are defective because if a child places the 
soft, pliable plastic toy dart in their mouth, the dart can be inhaled 
into the throat and it can prevent the child from breathing.
    7. Henry Gordy received its first report of a death involving a 
Target Set on or about May 1, 2006, after an 8-year-old boy choked on a 
dart and died on March 9, 2006.
    8. In response to the death reported on or about May 1, 2006, Henry 
Gordy implemented a design change, on or about August 3, 2006, to add a 
product warning to the Target Set's packaging, which stated: ``Parental 
Supervision Suggested.''
    9. On January 8, 2007, Henry Gordy was notified that a 10-year-old 
boy had died after he swallowed a dart and asphyxiated.
    10. On October 31, 2007, Henry Gordy was notified that a 9-year-old 
boy had died after he swallowed a dart and asphyxiated.
    11. Despite being aware of the information set forth in Paragraphs 
7 through 10, Henry Gordy did not report to the Commission until May 
29, 2009, after staff asked Henry Gordy to do so. By May 29, 2009, 
Henry Gordy was aware of three deaths involving the Target Sets.
    12. In its report to the Commission on May 29, 2009, Henry Gordy 
did not include the death on March 9, 2006, of the 8-year-old boy; nor 
did Henry Gordy notify the Commission of the packaging design change it 
made in response to that death.
    13. On June 30, 2009, staff informed Henry Gordy that the Target 
Sets should be recalled.
    14. On September 28, 2009, Henry Gordy notified staff that it would 
not agree to staff's request for a recall of the Target Sets.
    15. Ultimately, the Target Sets were recalled on May 17, 2010, by 
the exclusive retailer, Family Dollar Stores, Inc.
    16. On May 23, 2010, six days after the recall was announced, 
another 8-year-old boy died after he swallowed a dart and asphyxiated.
    17. Although Henry Gordy had obtained sufficient information to 
reasonably support the conclusion that the Target Sets contained a 
defect which could create a substantial product hazard, or created an 
unreasonable risk of serious injury or death, Henry Gordy failed to 
inform the Commission immediately of such defect or risk, as required 
by sections 15(b)(3) and (4) of the CPSA, 15 U.S.C. 2064(b)(3) and (4). 
In failing to report to the Commission, Henry Gordy 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).
    18. Henry Gordy also had obtained information to reasonably support 
the conclusion that a child had choked on a small part contained in a 
toy or game, and learned that the child had died as a result of that 
incident. Nevertheless, Henry Gordy did not report within 24 hours of 
obtaining that information, as it was required to do under section 
102(a) of the CSPA, Public Law 103-267, 108 Stat. 722; 16 CFR 1117.4. 
By failing to report within 24 hours of obtaining the information about 
a child who had choked on a small part contained in a toy or game, 
Henry Gordy knowingly violated section 19(a)(3) of the CPSA, 15 U.S.C. 
2068(a)(3), as the term ``knowingly'' is defined in section 20(d) of 
the CPSA, 15 U.S.C. 2069(d).
    19. Henry Gordy made a material misrepresentation to staff in the 
course of an investigation under section 15(b) of the CPSA, by failing 
to report the March 9, 2006, death of an 8-year-old boy and also by 
failing to report the packaging design change that it had made to the 
Target Sets. In failing to provide this information to the Commission 
in its report under section 15(b), Henry Gordy knowingly violated 
section 19(a)(13) of the CPSA, 15 U.S.C. 2068(a)(13), as the term 
``knowingly'' is defined in section 20(d) of the CPSA, 15 U.S.C. 
2069(d).
    20. Pursuant to section 20 of the CPSA, 15 U.S.C. 2069, Henry Gordy 
is subject to civil penalties for its knowing failure to report under 
section 15(b) of the CPSA, as required under section 19(a)(4) of the 
CPSA. Pursuant the CPSA, 15 U.S.C. 2069, Henry Gordy is also subject to 
civil penalties under section 19(a)(13) of the CPSA for knowingly 
making a material misrepresentation to staff in the course of its 
section 15(b) investigation.
    21. Pursuant to section 20 of the CPSA, 15 U.S.C. 2069, Henry Gordy 
is subject to civil penalties for its knowing failure to report under 
the automatic reporting provisions of section 102(a) of the CSPA, 
pertaining to small parts incident reporting, Public Law 103-267, 108 
Stat. 722.

Response of Henry Gordy

    22. Henry Gordy denies all of staff's allegations in this Agreement 
and Order.
    23. Henry Gordy specifically denies that the Target Sets contain a 
defect which could create a substantial product hazard or create an 
unreasonable risk of serious injury or death, and Henry Gordy denies 
that it knowingly violated the reporting requirements of Section 15(b) 
of the CPSA, 15 U.S.C. 2064(b).
    24. Henry Gordy specifically denies that it had sufficient 
information to reasonably support the conclusion that the Target Sets 
contain a defect which could create a substantial product hazard or 
create an unreasonable risk of serious injury or death.
    25. Henry Gordy specifically denies that it had information to 
reasonably support the conclusion that a child had choked on a small 
part contained in a toy or game that it imported and as a result of 
that incident had died, and further denies that it knowingly violated 
the reporting requirements of the CSPA, Public Law 103-267, 108 Stat. 
722; 16 CFR 1117.4.
    26. Henry Gordy specifically denies that any of the four deaths 
described in staff's allegations were caused by the Target Sets 
imported by Henry Gordy.
    27. Henry Gordy specifically denies that it made a material 
misrepresentation to staff in the course of staff's investigation.

[[Page 63908]]

    28. Henry Gordy is entering into this Agreement for settlement 
purposes only, and it has made a business decision to avoid additional 
expenses and distractions related to further administrative process and 
litigation.

Agreement of the Parties

    29. Under the CPSA, the Commission has jurisdiction over this 
matter and over Henry Gordy.
    30. In settlement of staff's allegations, Henry Gordy shall pay a 
civil penalty in the amount of one million, one hundred thousand 
dollars ($1,100,000.00) within twenty (20) calendar days of receiving 
service of the Commission's final Order accepting the Agreement. The 
payment shall be made electronically to the CPSC via: http://www.pay.gov.
    31. The parties enter into this Agreement for settlement purposes 
only. The Agreement does not constitute an admission by Henry Gordy or 
a determination by the Commission, that Henry Gordy knowingly violated 
the CPSA or the CSPA.
    32. Upon provisional acceptance of the Agreement by the Commission, 
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). If the Commission does not receive any written request(s) 
not to accept the Agreement within fifteen (15) calendar days, the 
Agreement shall be deemed finally accepted on the 16th calendar day 
after the date it is published in the Federal Register, in accordance 
with 16 CFR 1118.20(f).
    33. Upon the Commission's final acceptance of the Agreement and 
issuance of the final Order, Henry Gordy 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 Commission's actions; (iii) 
a determination by the Commission of whether Henry Gordy failed to 
comply with the CPSA and the underlying regulations; (iv) a 
determination by the Commission of whether Henry Gordy failed to comply 
with the CSPA and the underlying regulations; (v) a statement of 
findings of fact and conclusions of law; and (vi) any claims under the 
Equal Access to Justice Act.
    34. The Commission may publicize the terms of the Agreement and the 
Order.
    35. Henry Gordy shall comply with the provisions of the Agreement 
and Order.
    36. The Commission issues the Order under the provisions of the 
CPSA, and a violation of the Order may subject Henry Gordy to 
appropriate legal action.
    37. 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.
    38. If any provision of the Agreement or 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 Henry Gordy agree that severing the provision materially affects 
the purpose of the Agreement and the Order. The Agreement may be signed 
in counterparts.

Henry Gordy International, Inc.
Dated: September 23, 2011.
By:--------------------------------------------------------------------
David Segal,
President,
Henry Gordy International, Inc.,
P.O. Box 2769, 900 North Avenue,
Plainfield, New Jersey 07062-0769, and

Dated: September 26, 2011.
By:--------------------------------------------------------------------
Bridget E. Calhoun,
Esq.,
Crowell & Moring LLP,
1001 Pennsylvania Ave., NW.,
Washington, D.C. 20004.

Counsel for Henry Gordy International, Inc.,
U.S. Consumer Product Safety Commission Staff,
Cheryl A. Falvey,
General Counsel.
Melissa V. Hampshire,
Assistant General Counsel.
Dated: September 28, 2011.
By:--------------------------------------------------------------------
Patricia Kennedy Vieira, Esq.,
Division of Enforcement and Information,
Office of the General Counsel.
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Order

    Upon consideration of the Settlement Agreement entered into between 
Henry Gordy International, Inc., its current and/or former corporate 
parent(s), affiliates, successors, and/or assigns, and any and/or all 
current and/or former directors, officers, agents, and employees 
(collectively ``Henry Gordy'') and the U.S. Consumer Product Safety 
Commission (``Commission'') staff, and the Commission having 
jurisdiction over the subject matter and over Henry Gordy, and it 
appearing that the Settlement Agreement and the Order are in the public 
interest, it is:
    Ordered that the Settlement Agreement be, and is, hereby, accepted; 
and it is
    Further Ordered that Henry Gordy shall pay a civil penalty in the 
amount of one million one hundred thousand dollars ($1,100,000.00) 
within twenty (20) days of service of the Commission's final Order 
accepting the Settlement Agreement. The payment shall be made 
electronically to the CPSC via: http://www.pay.gov. Upon the failure of 
Henry Gordy to make the foregoing payment when due, interest on the 
unpaid amount shall accrue and be paid by Henry Gordy at the Federal 
legal rate of interest set forth at 28 U.S.C. 1961(a) and (b). 
(continued on next page)

    Provisionally accepted and provisional Order issued on the 7th 
day of October, 2011.

BY ORDER OF THE COMMISSION:
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Todd A. Stevenson,
Secretary,
U.S. Consumer Product Safety Commission.
[FR Doc. 2011-26662 Filed 10-13-11; 8:45 am]
BILLING CODE 6355-01-P