[Federal Register Volume 80, Number 159 (Tuesday, August 18, 2015)]
[Notices]
[Pages 49991-49994]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-20332]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 15-C0006]


Johnson Health Tech Co. Ltd. and Johnson Health Tech North 
America, 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 
Johnson Health Tech Co. Ltd. and Johnson Health Tech North America, 
Inc. containing a civil penalty in the amount of three million dollars 
($3,000,000), within thirty (30) days of service of the Commission's 
final Order accepting the Settlement Agreement.\1\
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    \1\ The Commission voted (3-2) to provisionally accept the 
Settlement Agreement and Order regarding Johnson Health Tech Co., 
Ltd. and Johnson Health Tech North America, Inc. Chairman Kaye, 
Commissioner Adler and Commissioner Robinson voted to provisionally 
accept the Settlement Agreement and Order. Commissioner Buerkle and 
Commissioner Mohorovic voted to reject the Settlement Agreement and 
Order.

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[[Page 49992]]


DATES: Any interested person may ask the Commission not to accept this 
agreement or otherwise comment on its contents by filing a written 
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request with the Office of the Secretary by September 2, 2015.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 15-C0006 Office of the 
Secretary, Consumer Product Safety Commission, 4330 East West Highway, 
Room 820, Bethesda, Maryland 20814-4408.

FOR FURTHER INFORMATION CONTACT: Gregory M. Reyes, Trial Attorney, 
Office of the General Counsel, Division of Compliance, Consumer Product 
Safety Commission, 4330 East West Highway, Bethesda, Maryland 20814-
4408; telephone (301) 504-7220.

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

    Dated: August 13, 2015.
Todd A. Stevenson,
Secretary.

United States Of America Consumer Product Safety Commission

In the Matter of: JOHNSON HEALTH TECH CO. LTD. and JOHNSON HEALTH 
TECH NORTH AMERICA, INC.
CPSC Docket No.: 15-C0006

Settlement Agreement

    1. In accordance with the Consumer Product Safety Act, 15 U.S.C. 
2051-2089 (``CPSA'') and 16 CFR 1118.20, Johnson Health Tech Co. Ltd. 
(``JHT'') and Johnson Health Tech North America, Inc. (``JHTNA'') 
(collectively, ``Johnson Health Tech''), and the United States Consumer 
Product Safety Commission (``Commission''), through its staff, hereby 
enter into this Settlement Agreement (``Agreement''). The Agreement, 
and the incorporated attached Order, resolve staff's charges set forth 
below.

The Parties

    2. The Commission is an independent federal regulatory agency, 
established pursuant to, and responsible for the enforcement of, the 
CPSA, 15 U.S.C. 2051-2089. By executing the Agreement, staff is acting 
on behalf of the Commission, pursuant to 16 CFR 1118.20(b). The 
Commission issues the Order under the provisions of the CPSA.
    3. JHT is a Taiwanese corporation with its principal office located 
at #999, Sec. 2, DongDa Rd., Ta-Ya Dist. Taichung City, 428, Taiwan.
    4. JHTNA is a corporation, organized and existing under the laws of 
the state of Wisconsin, with its principal place of business in Cottage 
Grove, Wisconsin.

Staff Charges

    5. Between September 2011 and December 2012, JHTNA imported and 
sold approximately 3,025 Matrix Fitness Ascent Trainers and Elliptical 
Trainers (``Trainers'') in the United States. JHT manufactured the 
Trainers.
    6. The Trainers are a ``consumer product,'' ``distributed in 
commerce,'' as those terms are defined or used in sections 3(a)(5) and 
(8) of the CPSA, 15 U.S.C. 2052(a)(5) and (8). Johnson Health Tech was 
a ``manufacturer'' and ``retailer'' of the Trainers, as such terms are 
defined in sections 3(a)(11) and (13) of the CPSA, 15 U.S.C. 
2052(a)(11) and (13).
    7. The Trainers contain a defect which could create a substantial 
product hazard and create an unreasonable risk of serious injury or 
death because moisture from perspiration or cleaning liquids can build 
up in the Trainers' power socket, causing a short circuit. This poses a 
fire hazard.
    8. Between March 2012 and October 2013, Johnson Health Tech 
received incident reports of smoking, sparking, fire, and melted power 
components involving the Trainers. No property damage or injuries were 
reported.
    9. In response to these incident reports, Johnson Health Tech 
implemented two design changes to remedy the defect and unreasonable 
risk of serious injury or death associated with the Trainers.
    10. Despite having obtained information that the Trainers contained 
a defect or created an unreasonable risk, Johnson Health Tech did not 
notify 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).
    11. In failing to inform the Commission immediately about the 
Trainers, Johnson Health Tech 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).
    12. Pursuant to section 20 of the CPSA, 15 U.S.C. 2069, Johnson 
Health Tech is subject to civil penalties for its knowing violation of 
section 19(a)(4) of the CPSA, 15 U.S.C. 2068(a)(4).

Response of Johnson Health Tech

    13. This agreement does not constitute an admission by Johnson 
Health Tech to the staff's charges set forth in paragraphs 5 through 12 
above, including, but not limited to, the charge that the Trainers 
contained a defect that could create a substantial product hazard or 
created an unreasonable risk of serious injury or death; that Johnson 
Health Tech failed to notify the Commission in a timely manner, in 
accordance with Section 15(b) of the CPSA, 15 U.S.C. 2064(b); and that 
there was any ``knowing'' violation of the CPSA as that term is defined 
in 15 U.S.C. 2069(d).
    14. Johnson Health Tech enters into this Agreement to settle this 
matter without the delay and expense of litigation. Johnson Health Tech 
enters into this Agreement and agrees to pay the amount referenced 
below in compromise of the staff's charges.
    15. JHTNA voluntarily notified the Commission in connection with 
the Trainers. JHTNA is not aware of any report of injury or property 
damage associated with the Trainers and reported issue but carried out 
a voluntary recall in cooperation with the Commission.
    16. At all relevant times, JHTNA had a product safety compliance 
program, including dedicated quality control/product safety personnel 
and appropriate product safety testing.

Agreement of the Parties

    17. Under the CPSA, the Commission has jurisdiction over the matter 
involving the Trainers and over JHTNA. JHT has agreed to a limited 
waiver of jurisdictional defenses solely for the purpose of entering 
into this Settlement Agreement.
    18. The parties enter into the Agreement for settlement purposes 
only. The Agreement does not constitute an admission by Johnson Health 
Tech or a determination by the Commission that Johnson Health Tech 
violated the CPSA's reporting requirements.
    19. In settlement of staff's charges, and to avoid the cost, 
distraction, delay, uncertainty, and inconvenience of protracted 
litigation or other proceedings, Johnson Health Tech shall pay a civil 
penalty in the amount of three million dollars ($3,000,000) within 
thirty (30) calendar days after receiving service of the Commission's 
final Order accepting the Agreement. All payments to be made under the 
Agreement shall constitute debts owing to the United States and shall 
be made by electronic wire transfer to the United States via: http://www.pay.gov for allocation to and credit against the payment 
obligations of Johnson Health Tech under this Agreement. Failure to 
make such payment by the date

[[Page 49993]]

specified in the Commission's final Order shall constitute Default.
    20. All unpaid amounts, if any, due and owing under the Agreement 
shall constitute a debt due and immediately owing by Johnson Health 
Tech to the United States, and interest shall accrue and be paid by 
Johnson Health Tech at the federal legal rate of interest set forth at 
28 U.S.C. 1961(a) and (b) from the date of Default until all amounts 
due have been paid in full (hereinafter ``Default Payment Amount'' and 
``Default Interest Balance''). Johnson Health Tech shall consent to a 
Consent Judgment in the amount of the Default Payment Amount and 
Default Interest Balance, and the United States, at its sole option, 
may collect the entire Default Payment Amount and Default Interest 
Balance or exercise any other rights granted by law or in equity, 
including but not limited to referring such matters for private 
collection, and Johnson Health Tech agrees not to contest, and hereby 
waives and discharges any defenses to, any collection action undertaken 
by the United States or its agents or contractors pursuant to this 
paragraph. Johnson Health Tech shall pay the United States all 
reasonable costs of collection and enforcement under this paragraph, 
respectively, including reasonable attorney's fees and expenses.
    21. After staff receives this Agreement executed on behalf of 
Johnson Health Tech, staff shall promptly submit the Agreement to the 
Commission for provisional acceptance. Promptly following 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 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 the 
Agreement is published in the Federal Register, in accordance with 16 
CFR 1118.20(f).
    22. This Agreement is conditioned upon, and subject to, the 
Commission's final acceptance, as set forth above, and it is subject to 
the provisions of 16 CFR 1118.20(h). Upon the later of: (i) 
Commission's final acceptance of this Agreement and service of the 
accepted Agreement upon Johnson Health Tech, and (ii) the date of 
issuance of the final Order, this Agreement shall be in full force and 
effect and shall be binding upon the parties.
    23. Effective upon the later of: (i) The Commission's final 
acceptance of the Agreement and service of the accepted Agreement upon 
Johnson Health Tech, and (ii) and the date of issuance of the final 
Order, for good and valuable consideration, Johnson Health Tech hereby 
expressly and irrevocably waives and agrees not to assert any past, 
present, or future rights to the following, in connection with the 
matter described in this Agreement: (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 Johnson Health Tech failed to comply with the CPSA and the 
underlying regulations; (iv) a statement of findings of fact and 
conclusions of law; and (v) any claims under the Equal Access to 
Justice Act.
    24. JHTNA has, and shall maintain, a program designed to ensure 
compliance with the CPSA with respect to any consumer product imported, 
manufactured, distributed, or sold by JHTNA. This program contains, or 
will be modified to include, the following elements:

    a. written standards and policies;
    b. written procedures that provide for the appropriate forwarding 
to compliance personnel and the product hazard incident review 
committee of all information that may relate to, or impact, CPSA 
compliance including all reports and complaints involving consumer 
products, whether an injury is referenced or not;
    c. a mechanism for confidential employee reporting of compliance-
related questions or concerns to either a compliance officer or to 
another senior manager with authority to act as necessary;
    d. effective communication of company compliance-related policies 
and procedures regarding the CPSA to all applicable employees through 
training programs or otherwise;
    e. JHTNA senior management responsibility for CPSA compliance and 
for violations of the statutes and regulations enforced by the 
Commission;
    f. board oversight of CPSA compliance; and
    g. retention of all CPSA compliance-related records for at least 
five (5) years, and availability of such records to staff upon 
reasonable request.

    25. JHTNA shall implement, maintain, and enforce a system of 
internal controls and procedures designed to ensure that, with respect 
to all consumer products imported, manufactured, distributed, or sold 
by JHTNA:

    a. information required to be disclosed by JHTNA to the Commission 
is recorded, processed, and reported in accordance with applicable law;
    b. all reporting made to the Commission is timely, truthful, 
complete, accurate, and in accordance with applicable law; and
    c. prompt disclosure is made to JHTNA's management of any 
significant deficiencies or material weaknesses in the design or 
operation of such internal controls that are reasonably likely to 
affect adversely, in any material respect, JHTNA's ability to record, 
process, and report to the Commission in accordance with applicable 
law.

    26. Upon reasonable request of staff, JHTNA shall provide written 
documentation of its internal controls and procedures, including, but 
not limited to, the effective dates of the procedures and improvements 
thereto. JHTNA shall cooperate fully and truthfully with staff and 
shall make available all non-privileged information and materials, and 
personnel deemed necessary by staff to evaluate JHTNA's compliance with 
the terms of the Agreement.
    27. The parties acknowledge and agree that the Commission may 
publicize the terms of the Agreement and the Order.
    28. Johnson Health Tech represents that the Agreement: (i) Is 
entered into freely and voluntarily, without any degree of duress or 
compulsion whatsoever; (ii) has been duly authorized; and (iii) 
constitutes the valid and binding obligation of Johnson Health Tech, 
enforceable against Johnson Health Tech in accordance with its terms. 
Johnson Health Tech will not directly or indirectly receive any 
reimbursement, indemnification, insurance-related payment, or other 
payment in connection with the civil penalty to be paid by Johnson 
Health Tech pursuant to the Agreement and Order. The individuals 
signing the Agreement on behalf of Johnson Health Tech represent and 
warrant that they are duly authorized by Johnson Health Tech to execute 
the Agreement.
    29. The signatories represent that they are authorized to execute 
this Agreement.
    30. The Agreement is governed by the laws of the United States.
    31. The Agreement and the Order shall apply to, and be binding 
upon, Johnson Health Tech and each of its

[[Page 49994]]

successors, transferees, and assigns, and a violation of the Agreement 
or Order may subject Johnson Health Tech, and each of its successors, 
transferees, and assigns, to appropriate legal action.
    32. The Agreement and the Order constitute the complete agreement 
between the parties on the subject matter contained therein.
    33. 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. For purposes of construction, the 
Agreement shall be deemed to have been drafted by both of the parties 
and shall not, therefore, be construed against any party for that 
reason in any subsequent dispute.
    34. The Agreement may not be waived, amended, modified, or 
otherwise altered, except as in accordance with the provisions of 16 
CFR 1118.20(h). The Agreement may be executed in counterparts.
    35. 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 Johnson Health Tech agree in writing that severing the provision 
materially affects the purpose of the Agreement and the Order.

Johnson Health Tech Co. LTD.

Dated: July 31, 2015
By:--------------------------------------------------------------------
Jason Lo
Chief Executive Officer
Johnson Health Tech Co. Ltd.
#999, Sec. 2, DongDa Rd., Ta-Ya Dist.
Taichung City, 428, Taiwan

Johnson Health Tech North America, Inc.

Dated: July 31, 2015
By:--------------------------------------------------------------------
Nathan Pyles
President
Johnson Health Tech North America, Inc.
1600 Landmark Drive
Cottage Grove, WI 53527

Dated: July 29, 2015
By:--------------------------------------------------------------------
Matthew R. Howsare
Counsel to Johnson Health Tech North America, Inc.
Mintz Levin
701 Pennsylvania Avenue NW, Suite 900
Washington, DC 20004

U.S. Consumer Product Safety Commission

Stephanie Tsacoumis
General Counsel

Mary T. Boyle
Deputy General Counsel

Mary B. Murphy
Assistant General Counsel

Dated: July 31, 2015
By:--------------------------------------------------------------------
Gregory M. Reyes
Trial Attorney
Division of Compliance
Office of the General Counsel

United States of America Consumer Product Safety Commission

In the Matter of: Johnson Health Tech Co. LTD. and Johnson Health 
Tech North America, Inc.

CPSC Docket No.: 15-C0006

Order

    Upon consideration of the Settlement Agreement entered into between 
Johnson Health Tech Co. Ltd. and Johnson Health Tech North America, 
Inc. (``Johnson Health Tech''), and the U.S. Consumer Product Safety 
Commission (``Commission''), and the Commission having jurisdiction 
over the subject matter and over Johnson Health Tech, 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 Johnson Health Tech shall comply with the 
terms of the Settlement Agreement and shall pay a civil penalty in the 
amount of three million dollars ($3,000,000) within thirty (30) days 
after service of the Commission's final Order accepting the Settlement 
Agreement. The payment shall be made by electronic wire transfer to the 
Commission via: http://www.pay.gov. Upon the failure of Johnson Health 
Tech to make the foregoing payment when due, interest on the unpaid 
amount shall accrue and be paid by Johnson Health Tech at the federal 
legal rate of interest set forth at 28 U.S.C. 1961(a) and (b). If 
Johnson Health Tech fails to make such payment or to comply in full 
with any other provision of the Settlement Agreement, such conduct will 
be considered a violation of the Settlement Agreement and Order.

Provisionally accepted and provisional Order issued on the 13th day 
of August, 2015.

By Order of the Commission:

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

[FR Doc. 2015-20332 Filed 8-17-15; 8:45 am]
BILLING CODE 6355-01-P