[Federal Register: October 19, 1998 (Volume 63, Number 201)] [Notices] [Page 55847-55849] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr19oc98-30] ======================================================================= ----------------------------------------------------------------------- CONSUMER PRODUCT SAFETY COMMISSION [CPSC Docket No. 99-C0002] The Neiman Marcus Group, Inc., 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 Flammable Fabrics 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., a corporation, containing a civil penalty of $112,500. 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 November 3, 1998. ADDRESSES: Persons wishing to comment on this Settlement Agreement should send written comments to the Comment 99-C0002, Office of the Secretary, Consumer Product Safety Commission, Washington, D.C. 20207. FOR FURTHER INFORMATION CONTACT: Ronald G. Yelenik, Trail Attorney, Office of Compliance and Enforcement, Consumer Product Safety Commission, Washington, D.C. 20207; telephone (301) 504-0626, 1351. SUPPLEMENTARY INFORMATION: The text of the Agreement and Order appears below. Dated: October 14, 1998. Sadye E. Dunn, Secretary. Settlement Agreement and Order 1. This Settlement Agreement and Order, entered into between The Neiman Marcus Group, Inc. (hereinafter, ``Neiman Marcus'' or ``Respondent''), a corporation, and the staff of the Consumer Product Safety Commission (hereinafter, ``staff''), pursuant to the procedures set forth in 16 CFR 1118.20, is a compromise resolution of the matter described herein, without a hearing or determination of issues of law and fact. I. The Parties 2. The ``staff'' is the staff of the Consumer Product Safety Commission (hereinafter, ``Commission''), an independent federal regulatory agency of the United States government established by Congress pursuant to section 4 of the Consumer Product [[Page 55848]] Safety Act (hereinafter, ``CPSA''), as amended, 15 U.S.C. Sec. 2053. 3. Respondent Neiman Marcus is a corporation organized and existing under the laws of the State of Delaware with its principal corporate offices located in Chestnut Hill, MA. Respondent is a retailer of women's and men's apparel and other products. II. Allegations of the Staff A. Violations of the FFA 4. Between December 1998 and February 1997, Respondent sold or offered for sale, in commerce, approximately 6,300 EGERIA cotton terry cloth bathrobes for men and women (hereinafter, the ``robes'' or ``robe''). 5. The robes identified in paragraph 4 above are subject to the Standard for the Flammability of Clothing Textiles (hereinafter, ``Clothing Standard''), 16 CFR 1610, issued under section 4 of the Flammable Fabrics Act (FFA), 15 U.S.C. Sec. 1193. 6. On or about February 19, 1997, Neiman Marcus, after receiving reports of several incident in which the robes identified in paragraph 4 above caught fire, tested samples of this robe model for compliance with the requirements of the Clothing Standard. See 16 CFR 1610.3, 1610.4. The test results showed that the robes did not comply with the requirements of the Clothing Standard and, therefore, were dangerously flammable and unsuitable for clothing because of their rapid and intense burning. 7. Respondent knowingly sold, or offered for sale, in commerce, the robes identified in paragraph 4 above, as the term ``knowingly'' is defined in section 5(e)(4) of the FFA, 15 U.S.C. 1194(e)(4), in violation of section 3 of the FFA, 15 U.S.C. Sec. 1192, for which a civil penalty may be imposed pursuant to section 5(e)(1) of the FFA, 15 U.S.C. Sec. 1194(e)(1). B. Violations of the CPSA 8. The allegations contained in paragraphs 4 through 7 above are repeated and realleged, as applicable. 9. Respondent is subject to section 15(b) of the CPSA, 15 U.S.C. Sec. 2064(b), which requires a retailer of a consumer product who, inter alia, obtains information that reasonably supports the conclusion that the product contains a defect which would create a substantial product hazard, or creates an unreasonable risk of serious injury or death, to immediately inform the Commission of the defect or risk. 10. Between December 1988 and February 1997, Respondent sold certain robes through its retail stores nationwide. The robe is a ``consumer product'' and Neiman Marcus is a ``retailer'' of a ``consumer product'' which is ``distributed in commerce'' as those terms are defined in sections 3(a)(1), (6), (11) of the CPSA, 15 U.S.C. Secs. 2052(a)(1), (6), (11). 11. The robes are flammable in nature as evidenced by the failing test results under the Clothing Standard and the incidents described in paragraph 12 below. If a robe were to ignite, it could cause serious burn injuries or death. 12. Between June 1996 and February 1997. Neiman Marcus received reports of five incidents in which the robes caught fire, including two incidents which resulted in minor burn injuries. 13. On March 5, 1997, when Neiman Marcus received the test results referenced in paragraph 6 above, it voluntarily filed a ``Full Report'' with the Commission pursuant to section 15(b) of the CPSA and 15 CFR 1115.13, which stated that the robes may present a flammability risk. 14. Although Neiman Marcus had obtained sufficient information to reasonably support the conclusion that the robes contained a defect which could create a substantial product hazard, or created an unreasonable risk of serious injury or death, it failed to immediately report such information to the Commission in a timely manner, as required by section 15(b) of the CPSA. This is a violation of section 19(a)(4) of the CPSA. 15. Neiman Marcus' failure to report to the Commission, as required by section 15(b) of the CPSA, was committed ``knowingly,'' as that term is defined in section 20(d) of the CPSA, and Respondent is subject to civil penalties under section 20 of the CPSA. III. Response of Neiman Marcus 16. Neiman Marcus specifically denies that it knowingly sold or offered for sale the robes described in paragraph 4 above in violation of the requirements of the Clothing Standard or reporting requirements of the Consumer Product Safety Act. 17. Neiman Marcus purchased the robes identified in paragraph 4 above subject to a provision contained on the back of the merchandise purchase order form which provides that such robes comply with all applicable government regulations including the Flammable Fabrics Act and the Consumer Product Safety Act. 18. Prior to the time of the first reported incident, Neiman Marcus sold the robes described in paragraph 4 above, supplied by the same vendor, or over 10 years without any flammability problem. 19. Immediately upon receipt of what Neiman Marcus perceived to be the first confirmed report of an unexplained flammability incident, Neiman Marcus tested the product for compliance with the Clothing Standard. 20. Immediately upon receipt of test results indicating that the robes described in paragraph 4 above did not meet the requirements of the Clothing Standard, Neiman Marcus suspended all sales of the garment, promptly filed a written report to the CPSC, and implemented a voluntary recall of the garments. 21. Neiman Marcus promptly and diligently assisted the Commission staff in its efforts to implement the voluntary recall or the robes described in paragraph 4 above. 22. Neiman Marcus has received no reports of serious consumer injury resulting from the use of any robes described in paragraph 4 above. The only injuries reported to Neiman Marcus involving these robes were two minor burns. IV. Agreement of the Parties 23. The Commission has jurisdiction over this matter under the CPSA, 15 U.S.C. Secs. 2051 et seq., the FFA, 15 U.S.C. Secs. 1191 et seq., and the Federal Trade Commission Act (FTCA), 15 U.S.C. Secs. 41 et seq. 24. Neiman Marcus agrees to pay to the Commission a civil penalty in the amount of one hundred twelve thousand five hundred dollars ($112,500), in settlement of this matter, payable within twenty (20) days after service of the Final Order of the Commission accepting this Settlement Agreement. 25. Respondent knowingly, voluntarily, and completely waives any rights it may have in this matter (1) to an administrative or judicial hearing, (2) to judicial review or other challenge or contest of the validity of the Commission's Order, (3) to a determination by the Commission as to whether Respondent failed to comply with the FFA, as alleged, or the CPSA, as alleged, (4) to a settlement of findings of fact and conclusions of law, and (5) to any claims under the Equal Access to Justice Act. 26. Upon provisional acceptance of this Settlement Agreement and Order by the Commission, this Settlement Agreement and Order shall be placed on the public record and shall be 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 [[Page 55849]] the Settlement Agreement and order within 15 days, the Settlement Agreement and Order shall be deemed finally accepted on the 16th day after the date it is published in the Federal Register in accordance with 16 CFR 1118.20(f). 27. This Settlement Agreement and Order becomes effective upon its final acceptance by the Commission and service upon Respondent. 28. For purposes of section 6(b) of the CPSA, 15 U.S.C. Sec. 2055(b), this matter shall be treated as if a complaint had issued, and the Commission may publicise the terms of the Settlement and Order. (29) The provisions of this Settlement Agreements and Order shall apply to Respondent, its successors and assigns, agents, representatives, and employees, directly or through any corporation, subsidiary, division, or other business entity, or through any agency, device or instrumentality. 30. Neiman Marcus agrees to immediately inform the Commission if it learns of any additional incidents or flammability information about the robes. 31. 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. Dated: August 19, 1998. Eric P. Geller, Senior Vice President and General Counsel, The Neiman Marcus Group, Inc., Chestnut Hill, MA. The Consumer Product Safety Commission. Alan H. Schoem, Assistant Executive Director, Office of Compliance. Eric L. Stone, Director, Legal Division, Office of Compliance. Dated: September 18, 1998. Ronald G. Yelenik, Trial Attorney, Legal Division, Office of Compliance. Order Upon consideration of the Settlement Agreement between Respondent The Neiman Marcus Group, Inc., a corporation, and the staff of the Consumer Product Safety Commission, and the Commission having jurisdiction over the subject matter and over The Neiman Marcus Group, Inc., and it appearing the Settlement Agreement is in the public interest, it is Ordered, that the Settlement Agreement be and hereby is accepted, and it is Ordered, that within 20 days of the service of the Final Order upon Respondent. The Neiman Marcus Group, Inc. shall pay to the order of the U.S. Treasury a civil penalty in the amount of one hundred and twelve thousand five hundred dollars ($112,500). Further ordered, The Neiman Marcus Group, Inc. shall immediately inform the Commission if it learns of any additional incidents or flammability information about the products identified in the Settlement Agreement herein. Provisionally accepted and Provisional Order issued on the 14th day of October, 1998. By Order of the Commission. Sadye E. Dunn, Secretary, Consumer Product Safety Commission. [FR Doc. 98-27990 Filed 10-16-98; 8:45 am] BILLING CODE 6355-01-M