Gund, Inc., a Corporation; Provisional Acceptance of a Settlement Agreement and Order

[Federal Register: October 20, 1994]


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CONSUMER PRODUCT SAFETY COMMISSION
[CPSC Docket No. 95-C0001]


Gund, Inc., a Corporation; Provisional Acceptance of a Settlement
Agreement and Order

AGENCY: Consumer Product Safety Commission.

ACTION: Provisional acceptance of a settlement agreement under the
Consumer Product Safety Act.

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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)
through (h). Published below is a provisionally-accepted Settlement
Agreement with Gund, Inc., a corporation.

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 4, 1994.

ADDRESSES: Persons wishing to comment on this Settlement Agreement
should send written comments to the Comment 95-C0001, Office of the
Secretary, Consumer Product Safety Commission, Washington, D.C. 20207.

FOR FURTHER INFORMATION CONTACT:

Eric L. Stone, Trial Attorney, Office of Compliance and Enforcement,
Consumer Product Safety Commission, Washington, D.C. 20207; telephone
(301) 504-0626.

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

    Dated: October 14, 1994.
Sadye E. Dunn,
Secretary.

Settlement Agreement and Order

    Gund, Inc. (``Gund or ``Respondent'') enters into this Settlement
Agreement and Order (``the Agreement'') with the staff (``the staff'')
of the Consumer Product Safety Commission (``the Commission'') pursuant
to the procedures set forth in Sec. 1118.20 of the Commission's
Procedures for Investigations, Inspections, and Inquiries under the
Consumer Product Safety Act (CPSA), 16 CFR Part 1118.

The Parties

    1. The Consumer Product Safety Commission is an independent
regulatory agency of the United States government responsible for the
enforcement of the Consumer Product Safety Act, 15 U.S.C. 2051-2084,
and the Federal Hazardous Substances Act (FHSA), 15 U.S.C. 1261-1277.
    2. Respondent Gund is a corporation organized and existing under
the laws of the State of New Jersey with principal corporate offices at
1 Runyons Lane, Edison, NJ 08818. Gund is a manufacturer and importer
of plush toys and cribmobiles known as ``Gundmobiles.''

Staff Allegations

    3. The Gundmobile is a musical mobile designed to be attached to
the side of a baby's crib. It is a consumer product, as that term is
defined in section 3(a)(1) of the CPSA, 15 U.S.C. 2052(a)(1) and also a
toy or other article intended for use by children under three years of
age, 16 CFR 1501.2.
    4. From May 30, 1991 through July 1992 Gund knowingly introduced or
delivered for introduction into interstate commerce, and received in
interstate commerce and delivered or proffered delivery of certain
Gundmobiles that were banned hazardous substances under
Sec. 1500.18(a)(9) and part 1501 of Title 16 CFR. Gund, therefore,
knowingly violated sections 4 (a) and (c) of the FHSA, 15 U.S.C. 1263
(a) and (c), and is subject to civil penalties under section 5(c) of
the FHSA, 15 U.S.C. 1264(c).
    5. Although Gund received test reports showing its product produced
small parts during use and abuse testing, as well as numerous consumer
reports of breakage of the Gundmobile hooks, it failed to notify the
staff in a timely manner that its Gundmobiles created an unreasonable
risk of serious injury or death and/or contained a defect which could
create a substantial product hazard. This knowing violation of the
reporting requirements in section 15(b) of the CPSA, 15 U.S.C. 2064(b),
is a violation of section 19(a)(4) of the CPSA, 15 U.S.C. 2068(a)(4)
and subjects the firm to civil penalties under section 20 of the CPSA,
15 U.S.C. 2069.

Response of Gund

    6. Gund denies each and every staff allegation with respect to its
Gundmobiles. Gund specifically denies that:
    (a) Its Gundmobiles were defective;
    (b) It introduced or delivered for introduction into interstate
commerce Gundmobiles that were banned hazardous substances under 16 CFR
1500.18(a)(9) and Part 1501;
    (c) It violated sections 4 (a) and (c) of the FHSA, 15 U.S.C. 1263
(a) and (c) and it is, therefore, subject to civil penalties under
section 5(c) of the FHSA, 15 U.S.C. 1264(c);
    (d) It failed to notify the Commission in a timely manner that its
products contain a defect that could create a substantial product
hazard and that it violated the reporting requirements of section 15(b)
of the CPSA, 15 U.S.C. 2064(b) thereby violating section 19(a)(4) of
the CPSA, 15 U.S.C. 2068(a)(4) thereby subjecting it to civil penalties
under Section 20 of the CPSA, 15 U.S.C. 2069.

Agreement of the Parties

    7. The Commission has jurisdiction over this matter under the
Consumer Product Safety Act, 15 U.S.C. 2051 et seq. (CPSA), and the
Federal Hazardous Substances Act, 15 U.S.C. 1261 et seq. (FHSA).
    8. This Agreement settles the allegations of the staff and does not
constitute an admission by Respondent that it violated the law, or a
finding of fact or law by the Commission with respect to any of the
staff's allegations.
    9. This Agreement becomes effective only upon its final acceptance
by the Commission and service of the incorporated Order upon
Respondent.
    10. Respondent waives any rights to a formal hearing, and any
findings of fact and conclusions of law regarding the staff
allegations. Respondent waives any right to seek judicial review or
otherwise challenge or contest the validity of the Commission's Order.
    11. For purposes of section 6(b) of the CPSA, 15 U.S.C. 2055(b),
this matter shall be treated as though a Complaint had issued, and the
Commission may publicize the terms of the Settlement Agreement and
Order.
    12. This 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.
    13. The provisions of this Settlement Agreement and Order shall
apply to Gund, Inc. and its successors and assigns.
    14. Upon provisional acceptance of this Agreement by the
Commission, the Commission will place this Settlement Agreement and
Order on the public record and publish it in the Federal Register in
accordance with the procedures in 16 CFR 1118.20 (e) through (h). If
the Commission does not receive any requests not to accept the
Agreement within 15 days of such publication, the Agreement shall be
deemed finally accepted and the Final Order shall issue on the 16th
day.
    15. Upon final acceptance of this Agreement, the Commission shall
issue the attached Order.

    Dated: August 15, 1994.

    For Respondent Gund.
Bruce Raiffe,
President, Gund, Inc.

    Dated: September 6, 1994.

    For the staff.
Eric L. Stone,
Trial Attorney.
David Schmeltzer,
Assistant Executive Director, Office of Compliance and Enforcement.

Order

I.

    Upon consideration of the Settlement Agreement between the staff
and Respondent, 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
    Further ordered, that Respondent shall pay to the U.S. Treasury
a civil penalty in the amount of ONE HUNDRED AND FIFTY THOUSAND
DOLLARS ($150,000) in two installment payments of seventy-five
thousand dollars ($75,000.00) each, over a 12 month period after
service of this final Order upon Respondent. Respondent shall pay
the first installment within 20 days of service, and the second
installment of $75,000.00 within 365 days after service of the Final
Order. Upon the failure of Respondent to make a payment, or upon the
making of a late payment, the entire amount of the civil penalty
shall be due and payable, and 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 14th
day of October, 1994.

    By Order of the Commission.
Sadye E. Dunn,
Secretary, Consumer Product Safety Commission.
[FR Doc. 94-25966 Filed 10-19-94; 8:45 am]
BILLING CODE 6355-01-M