[Federal Register: February 26, 2001 (Volume 66, Number 38)]
[Notices]               
[Page 11565-11566]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26fe01-31]                         

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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 01-C0005]

 
The West Bend Company, a Subsidiary of Illinois Tool Works, 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. 
Published below is a provisionally-accepted Settlement Agreement with 
The West Bend Company, A Subsidiary of Illinois Tool Works, Inc., 
containing a civil penalty of $225,000.

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 March 13, 2001.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 01-C0005, Office of the 
Secretary, Consumer Product Safety Commission, Washington, D.C. 20207.

FOR FURTHER INFORMATION CONTACT: Jimmie L. Williams, Trial Attorney, 
Office of Compliance and Enforcement, Consumer Product Safety 
Commission, Washington, D.C. 20207; telephone (301) 504-0626, 1376.

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

    Dated: February 20, 2001.
Sadye E. Dunn,
Secretary.

Settlement Agreement and Order

    1. The West Bend Company (``West Bend''), a Subsidiary of Illinois 
Tool Works, Inc. enters into this Settlement Agreement and Order with 
the staff (``the staff'') of the U.S. Consumer Product Safety 
Commission (``the Commission'') in accordance with 16 CFR Part 1118, 
section 20 of the Commission's Procedures for Investigations, 
Inspections, and Inquiries under the Consumer Product Safety Act 
(``CPSA'').

I. The Parties

    2. The Commission is an independent federal regulatory agency 
responsible for the enforcement of the Consumer Product Safety Act, 15 
U.S.C. 2051-2084.
    3. West Bend is a subsidiary of Illinois Tool Works, a corporation 
organized and existing under the laws of the State of Delaware. West 
Bend's principal offices are located at 400 Washington Street, West 
Bend, Wisconsin 53095.

II. Staff Allegations

    4. Between May, 1997 and December, 1998, West Bend manufactured and 
sold approximately 16,004 120 volt model 10120 water distillers. These 
units were manufactured for sale to several companies, who sold the 
product under their private labels, and to distributors both inside and 
outside of the United States. These water distillers were then sold to 
consumers throughout the U.S. for use in or around households or 
residences. Therefore, West Bend is a ``manufacturer'' of a ``consumer 
product'' ``distributed in commerce'' pursuant to 15 U.S.C. 2052(a)(1), 
(4) and (11).
    5. The water distiller consists of three pieces: a main housing, a 
boiling chamber and a depository tank. The boiling chamber is filled 
with water, and the consumer pushes a button to turn the product on. 
The main housing then heats up the water, and directs the residual 
steam through condensing coils. A motor, which sits on top of the 
distiller, activates and operates a cooling fan that blows over the 
condensing coils. The water then condenses and drips into the 
depository tank. The total time for distilling one gallon of water is 
four hours.
    6. A defect within the water distiller's motor made the unit 
susceptible to voltage surges. When subjected to these surges, the 
motor produced electrical arcs and would catch on fire. The resultant 
motor fire would destroy the water distiller, and presented a fire 
hazard to the consumer.
    7. In November, 1998, West Bend learned from its regional 
distributor that two (2) of its water distillers failed in Taiwan. The 
consumers reported hearing explosive and popping sounds, and observed 
flames and smoke coming out of the top of the product. The fires then 
spread to surrounding combustibles, and damaged the consumers' homes. 
The regional distributor informed West Bend that he suspected that the 
motor burned and was the source of the fires.
    8. In December, 1998, West Bend contracted with an outside 
consultant to help it determine the cause of their failures, and 
received the failed Taiwan unit in Wisconsin. In the interim, West Bend 
elected to place a fuse in line with the motor circuit, and made the 
housing material more flame retardant. Upon its initial examination of 
the failed Taiwan units, West Bend preliminarily opined that voltage 
surges were causing the product's motor to fail.
    9. In January, 1999, West Bend learned of a third water distiller 
failure in Taiwan in which the unit was reported to have melted. The 
following day West Bend's General Counsel sent a letter to the Hong 
Kong counsel of the motor manufacturer, and notified him of West Bend's 
intent to seek indemnification for the above incidents.
    10. On February 1, 1999, the West Bend consultant arranged for the 
first tests to be conducted on sample water distiller motors. These 
voltage surge tests were run on February 11, 1999, and reproduced the 
failure scenario. On February 22, 1999, West Bend's consultant inquired 
about the ``need to determine whether a recall is required.'' IN April, 
1999, West Bend elected to recall the water distillers sold in Taiwan. 
On April 30, 1999, West Bend's consultant reported that the motors were 
susceptible to voltage surges, and could fail in castastrophic fashion. 
Between April, 1999 and August, 1999, six (6) similar water distiller 
failures occurred in the United States. Again, the fires spead outside 
of the product, and damaged the consumers' homes. The above information 
reasonably supported the conclusion that the product contained a defect 
that could create a substantial product hazard.

[[Page 11566]]

    11. On August 20, 1999, West Bend notified the Commission about the 
water distillers.
    12. West Bend failed to report to the Commission in a timely manner 
as required by Section 15(b) of the CPSA, 15 U.S.C. 2064(b). A failure 
to furnish information under section 15(b) of the CPSA is a prohibited 
act under 15 U.S.C. 2067(a)(4). West Bend ``knowingly'' failed to 
report, as that term is defined in 15 U.S.C. 2069(d), and is subject to 
a civil penalty, pursuant to 15 U.S.C. 2069(a)(1).

III. Response of West Bend

    13. West Bend denies all of the allegations of the staff and in 
particular denies that it violated the reporting requirements of 
Section 15(b) of the CPSA, 15 U.S.C. 2064(b) or 16 CFR Part 1115. West 
Bend believes that it has demonstrated to the Commission that it 
investigated and dealt with product failures promptly and responsibly 
and that it reasonably relied on expert consultant advice that the 
product failures were due to conditions highly unlikely to occur in the 
United States. In settling this matter, West Bend does not admit any 
fault, liability or statutory or regulatory violation.
    14. West Bend contends that the motor manufacturer improperly 
assembled some of the cooling motors, making the unit susceptible to 
voltage surges and causing the motors to fail unsafely. These surges 
and failures could cause the motor and housing to ignite, presenting a 
fire hazard to the consumer. West Bend and the motor manufacturer are 
currently in litigation. See The West Bend Company v. Chiaphua 
Components Ltd., Case No. 00-C-0617, Eastern District of Wisconsin.

IV. Agreement of the Parties

    15. The Commission has jurisdiction over this matter under the 
Consumer Product Safety Act (CPSA), 15 U.S.C. 2051 et seq.
    16. West Bend knowingly, voluntarily and completely waivers any 
rights it may have to:
    a. The issuance of a compliant in this matter.
    b. an administrative or judicial hearing with respect to the staff 
allegations discussed in paragraphs 4 through 12 above;
    c. judicial review or other challenge or contest of the validity of 
the Commission's Order;
    d. a determination by the Commission as to whether a violation of 
section 15(b) of the CPSA, 15 U.S.C. 2064(b) has occurred;
    e. a statement to findings of fact and conclusion of law with 
regard to the staff allegations; and
    f. to any claims under The Equal Access to Justice Act.
    17. Upon provisional acceptance of this Settlement Agreement and 
order by the Commission, this Settlement Agreement and Order shall be 
placed on the public records and shall be published in the Federal 
Register in accordance with 16 CFR 1118.20.
    18. The Settlement Agreement and Order becomes effective upon final 
acceptance by the Commission and service of the Final Order upon West 
Bend.
    19. Upon final acceptance of this Settlement Agreement by the 
Commission, West Bend agrees to pay to the United States Treasury a 
civil penalty in the amount of Two Hundreds and Twenty Five Thousands 
Dollars ($225,000.00) within ten calendar days after receipt of service 
of the Final Order, in settlement of the allegations in paragraphs four 
through twelve above.
    20. West Bend agrees to entry of the attached Order, which is 
incorporated herein by reference, and to be bound by its terms.
    21. This Settlement Agreement and Order are entered into for 
settlement purposes only and shall not constitute a determination or 
admission of any fault, liability or statutory or regulatory violation.
    22. The Commission's Order in this matter is issued under the 
provisions of the CPSA, 15 U.S.C. 2051, et seq., and 16 CFR 1118.20, 
and a violation of this Order may subject West Bend to appropriate 
legal action.
    23. This Settlement Agreement and Order is binding upon and shall 
inure to the benefit of West Bend, its agents, representatives and 
employees, and West Bend's corporate parents, assigns or successors.
    24. Agreements, understanding, representations, or interpretations 
made outside of this Settlement Agreement and Order may not be used to 
vary or to contradict its terms.
    25. For the purposes of section 6(b) of the CPSA, 15 U.S.C. 
2055(b), this matter shall be treated as if a complaint had been 
issued, and the Commission may publicize the terms of the Settlement 
Agreement and Order.


    Dated: January 22, 2001.
    The West Bend Company.
Neil Halvorson, Esq.,
General Counsel.

    Dated: January 24, 2001.
U.S. Consumer Product Safety Commission.
Alan H. Schoem,
Assistant Executive Director, Office of the Compliance.

Eric L. Stone,
Director, Legal Division, Office of Compliance.

Jimmie L. Williams, Jr.,
Trial Attorney, Legal Division, Office of Compliance.

Order

    Upon consideration of the Settlement Agreement entered into between 
the West Bend Company, a Subsidiary of Illinois Tool Works, Inc., and 
the staff of the U.S. Consumer Product Safety Commission; and the 
Commission having jurisdiction over the subject matter and The West 
Bend Company, and it appearing that the Settlement Agreement and Order 
is in the public interest, it is
    Ordered, that the Settlement Agreement be, and hereby is, accepted, 
and it is
    Further Ordered, that upon final acceptance of the Settlement 
Agreement and Final Order, The West Bend Company shall pay the 
Commission a civil penalty in the amount of Two Hundreds and Twenty 
Five Thousand Dollars ($225,000.00) within 10 calendar days after 
service of this Final Order upon The West Bend Company.

    Provisionally accepted and Provisional Order issued on the 20th 
day of January, 2001.
    By Order of the Commission.
Sadye E. Dunn,
Secretary,
U.S. Consumer Product Safety Commission.
[FR Doc. 01-4559 Filed 2-23-01; 8:45 am]
BILLING CODE 6355-01-M