[Federal Register: October 8, 2004 (Volume 69, Number 195)]
[Notices]
[Page 60364-60366]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08oc04-45]
=======================================================================
-----------------------------------------------------------------------
CONSUMER PRODUCT SAFETY COMMISSION
[CPSC Docket No. 05-C0001]
Johnson Health Tech Co., Ltd. and Horizon Fitness, 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 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
Johnson Health Tech Co., Ltd. and Horizon Fitness, Inc., containing a
civil penalty of $500,00.
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 25, 2004.
ADDRESSES: Persons wishing to comment on this Settlement Agreement
should send written comments to the Comment 05-C0001, Office of the
Secretary, Consumer Product Safety Commission, Washington, DC 20207.
FOR FURTHER INFORMATION CONTACT: Michelle F. Gillice, Trial Attorney,
Office of Compliance, Consumer Product Safety Commission, Washington,
DC 20207; telephone (301) 504-7667.
SUPPLEMENTARY INFORMATION: The text of the Agreement and Order appears
below.
Dated: October 4, 2004.
Todd A. Stevenson,
Secretary.
In the Matter of Johnson Health Tech Co., Ltd. and Horizon Fitness,
Inc.; Settlement Agreement and Order
[CPSC Docket No. 05-C001]
1. Johnson Health Tech Co., Ltd. and Horizon Fitness, Inc. and
(hereinafter,
[[Page 60365]]
``Johnson'', ``Horizon'' or collectively ``Respondents'') enter into
this Settlement Agreement and Order (hereinafter ``Settlement
Agreement'' or ``Agreement'') with the staff of the Consumer Product
Safety Commission (hereinafter ``Commission''), and agree to the
entry of the attached Order incorporated by reference herein. The
Settlement Agreement resolves the Commission staff's allegations set
forth regarding reporting violations of the Respondents with respect
to all Johnson treadmills manufactured with the Asia Star motor
control board.
I. The Parties
2. The Commission is an independent Federal regulatory
commission responsible for the enforcement of the Consumer Product
Safety Commission Act (``CPSA''), 15 U.S.C. 2051-2084.
3. Johnson is the manufacturer of treadmills and other fitness
equipment with its principal office located at 26, Ching Chuan Road,
Taya Hsiang, Taichung Hsien, 42844, Taiwan, R.O.C.
4. Horizon was incorporated on August 1, 1999. It is organized
and existing under the laws of Wisconsin with its principal office
located at 800 Burton Boulevard, DeForest, Wisconsin 53532. Horizon
imports and sells treadmills and other fitness equipment
manufactured by Johnson. Horizon is 87% owned by Johnson
International Holding Corp., Ltd. which is a subsidiary of Johnson.
II. Staff Allegations
5. Section 15(b) of the CPSA, 15 U.S.C. 2064(b) requires that
every manufacturer, importer, distributor and retailer who obtains
information that reasonably supports the conclusion that a consumer
product (1) contains a defect which could create a substantial
product hazard, or (2) creates an unreasonable risk of serious
injury or death, immediately inform the Commission of the defect or
risk.
6. Between August 2000 and June 2001, Johnson manufactured
treadmills with a motor control board (``MCB'') manufactured by
subcontractor, Asia Star.
7. Between September 2000 and December 2001, Horizon imported
and distributed nationwide approximately 10,644 Johnson Treadmills
with the Asia Star MCB under the model names, ``Paragon'',
``Quantum'' and ``Omega'' (hereinafter ``treadmills'').
8. The treadmills are ``consumer products'' which were
``distributed in commerce'' as those terms are defined in section
3(a)(1), (11) and (12) of the CPSA, 15 U.S.C. 2052(a)(1), (11) and
(12).
9. Johnson and Horizon are ``manufacturers'' of the treadmills
as that term is defined in section 3(a)(4) of the CPSA, 15 U.S.C.
2052(4).
10. The treadmills are defective because a component in the MCB
can overheat causing (1) a sudden acceleration of the walking belt
between 12.9 and 16.5 miles per hour (also known as a ``runaway''
situation) and (2) the safety stop key to fail. These defects could
cause consumers to suffer serious injury.
11. Between January 2001 and January 14, 2002 (date of
Respondents' full report), Respondents learned of 180 incidents of
``runaway'' treadmills and safety stop key failures. Fifteen of
these reports alleged injury including sprains, strains, a torn
rotator cuff, bruises and serious friction burns.
12. In response to consumer complaints, between January 2001 and
January 14, 2002, Respondents made three modifications to the
treadmill, first in February 2001, then in March 2001, and finally
in May 2001, in an attempt to correct the defects. At none of these
points, did Respondents provide the Commission with a full report.
13. On January 11, 2002, the Commission staff contacted Horizon
to schedule an establishment inspection. Three days later, on
January 14, 2002, Respondents submitted a full report.
14. Although Respondents had obtained sufficient information to
reasonably support the conclusion that these treadmills (1)
contained defects which could create a substantial product hazard or
(2) created an unreasonable risk of serious injury or death, they
failed to timely report such information to the Commission, as
required by section 15(b) of the CPSA, 15 U.S.C. 2064(b).
15. By failing to timely report to the Commission pursuant to
section 15(b) of the CPSA, Respondents violated section 19(a)(4) of
the CPSA, 2068(a)(4).
16. Respondents committed this failure to report to the
Commission ``knowingly'' as that term is defined in section 20(d) of
the CPSA, 15 U.S.C. 2069(d), thus subjecting Respondents to civil
penalties under section 20 of the CPSA, 15 U.S.C. 2069.
III. Response of Johnson and Horizon
17. Respondents deny the staff allegations in paragraphs 5
through 16.
18. Respondents deny that the treadmills contained defects which
could create a substantial product hazard within the meaning of
sections 15(a) and 15(b) of the CPSA, 15 U.S.C. 2064(a) and 2064(b).
19. Respondents deny that they treadmills created an
unreasonable risk of serious injury or death pursuant to section
15(b) of the CPSC, 15 U.S.C. 2064(b) and deny the allegations of
injury in paragraph 10 above.
20. Respondents deny that they knowingly violated the reporting
requirements of section 15(b) of the CPSA, 15 U.S.C. 2064(b). They
deny that the information available to them reasonably supported the
conclusion that the treadmills contained a defect which could create
a substantial product hazard or that the treadmills created an
unreasonable risk of serious injury or death. They deny that a
report was required under section 15(b) of the CPSA, 15 U.S.C.
2064(b).
21. Although Respondents do not believe the treadmills had a
reportable defect or risk, they diligently investigated and
addressed the circumstances relating to the consumer complaints
about the treadmills and fully responded to all consumer complaints
and, by May of 2001, they had designed a corrective measure that
fully addressed any of the alleged defects.
22. The Respondents had already decided to file a full report
with the CPSC and to implement a recall of the treadmills prior to
being contacted by the CPSC on January 11, 2002. Respondents' full
report to the CPSC and voluntary recall did not result from the CPSC
investigation, but instead was part of their ongoing effort to fully
address and respond to customer complaints regarding the treadmills.
23. Respondents agree to this Settlement Agreement and Order
solely to avoid incurring additional legal costs and expenses. They
do not admit to any fault, any liability, any violation of any law
or any wrongdoing with respect to the treadmills. Their willingness
to enter into this Settlement Agreement and Order does not
constitute, nor is it evidence of, an admission by them of any
fault, any liability, any violation of any law or any wrongdoing.
IV. Agreement of the Parties
24. The Commission has jurisdiction over Respondents and the
subject matter of this Settlement Agreement and Order under the
CPSA, 15 U.S.C. 2051-2084.
25. Respondents agree to be bound by, and comply with, this
Settlement Agreement and Order.
26. This Agreement is entered into for settlement purposes only
and does not constitute an admission by Respondents, or a
determination by the Commission, that Respondents knowingly violated
the CPSA's reporting requirement.
27. In settlement of the staff's allegations, Respondents agree
to pay a civil penalty of five hundred thousand 00/100 dollars
($500,000) in full settlement of this matter. The penalty shall be
paid in four installments. The first payment of $125,000.00 shall be
paid within twenty (20) calendar days of service of the final
Settlement Agreement and Order. The second payment of $125,000.00
shall be paid within 110 days of such service. The third payment of
$125,000.00 shall be paid within 200 days of such service. The
fourth and final payment of $125,000.00 shall be paid within 290
days of such service.
28. Upon provisional acceptance of this Agreement by the
Commission, this Agreement shall be placed on the public 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 objections within 15
days, the Agreement will be deemed finally accepted on the 16th day
after the date it is published in the Federal Register.
29. Upon final acceptance of this Agreement by the Commission,
and issuance of the Final Order, Respondents knowingly, voluntarily,
and completely waive any rights they may have in this matter (1) to
an administrative hearing, (2) to judicial review or other challenge
or contest of the validity of the Commission's actions, (3) to a
determination by the Commission as to whether Respondents failed to
comply with CPSA and the underlying regulations, (4) to a statement
of findings of fact and conclusions of law, and (5) to any claims
under the Equal Access to Justice Act.
30. The Commission may publicize the terms of the Settlement
Agreement and Order.
31. The Commission's Order in this matter is issued under the
provisions of CPSA, 15
[[Page 60366]]
U.S.C. 2051-2084. Violation of this Order may subject Respondents to
appropriate legal action.
32. This Settlement Agreement may be used in interpreting the
Order. Agreements, understandings, representations, or
interpretations apart from those contained in this Settlement
Agreement and Order may not be used to vary or contradict its terms.
33. If, after the effective date hereof, any provision of this
Settlement Agreement and Order is held to be illegal, invalid, or
unenforceable under present or future laws effective during the
terms of the Settlement Agreement and Order, such provision shall be
fully severable. The rest of the Settlement Agreement and Order
shall remain in full effect, unless the Commission and Respondents
determine that severing the provision materially affects the purpose
of the Settlement Agreement and Order.
34. This Settlement Agreement and Order shall not be waived,
changed, amended, modified, or otherwise altered, except in writing
executed by the party against whom such amendment, modification,
alteration, or waiver is sought to be enforced and approved by the
Commission.
35. The provisions of this Settlement Agreement and Order shall
apply to Respondents and each of their successors and assigns.
Dated: September 6, 2004.
Johnson Health Tech Co., Ltd.
Jason Lo,
Chief Executive Officer.
Dated: August 25, 2004.
Horizon Fitness, Inc.
Robert Whip,
President.
Thomas L. Skalmoski, Esquire,
Attorney for Respondents Horizon and Johnson.
The U.S. Consumer Product Safety Commission.
Alan H. Schoem,
Director Office of Compliance.
Eric L. Stone,
Director, Legal Division, Office of Compliance.
Dated: September 10, 2004.
By: Michelle Faust Gillice,
Trial Attorney
Belinda V. Bell,
Trial Attorney. Legal Division, Office of Compliance.
In the Matter of Johnson Health Tech Co., Ltd. and Horizon Fitness,
Inc.; Order. [CPSC Docket No. 05-C0001]
Upon consideration of the Settlement Agreement between Respondents
Johnson Health Tech Co., Ltd (``Johnson'') and Horizon Fitness, Inc.
(``Horizon'') and the staff of the Consumer Product Safety Commission,
and the Commission having jurisdiction over the subject matter and over
Johnson and Horizon, 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 Johnson and Horizon shall pay the United
States Treasury a civil penalty of five hundred thousand 00/100 dollars
($500,000) in four installments. The first payment of $125,000.00 shall
be paid within twenty (20) calendar days of service of the final
Settlement Agreement and Order. The second payment of $125,000.00 shall
be paid within 110 days of such service. The third payment of
$125,000.00 shall be paid within 200 days of such service. The fourth
and final payment of $125,000.00 shall be paid within 290 days of such
service. Upon failure of Respondents Johnson and Horizon to make a
payment or upon the making of a late payment by Respondents Johnson and
Horizon (a) the entire amount of the civil penalty shall be due and
payable, and (b) interest on the outstanding balance shall accrue and
be paid at the Federal legal rate of interest under the provisions of
28 U.S.C. 1961(a) and (b).
Provisionally accepted and Provisional Order issued on the 4th
day of October, 2004.
By Order of the Commission:
Todd A. Stevenson,
Secretary, Consumer Product Safety Commission.
[FR Doc. 04-22719 Filed 10-7-04; 8:45 am]
BILLING CODE 6355-01-M