[Federal Register Volume 69, Number 159 (Friday, October 8, 2004)]
[Notices]
[Pages 60366-60368]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-22718]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 05-C0002]


Sears, Roebuck and Company, a Corporation, 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 
Sears, Roebuck and Co., a corporation, containing a civil penalty of 
$500,000.

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 (October 25, 2004.).

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 05-C00002, Office of the 
Secretary, Consumer Product Safety Commission, Washington, DC 20207.

FOR FURTHER INFORMATION CONTACT: Dennis C. Kacoyanis, Trial Attorney, 
Office of Compliance, Consumer Product Safety Commission, Washington, 
DC 20207; telephone (301) 504-7587.

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

    Dated: October 4, 2004.
Todd A. Stevenson,
Secretary.

In the Matter of Sears, Roebuck and Co., a corporation; Settlement 
Agreement and Order

    1. This Settlement Agreement is made by and between the staff 
(``the staff'') of the U.S. Consumer Product Safety Commission (``the 
Commission'') and Sears, Roebuck and Co. (``Sears'' or ``Respondent''), 
a corporation, in accordance with 16 CFR 1118.20 of the Commission's 
Procedures for Investigations, Inspections, and Inquiries under the 
Consumer Product Safety Act (``CPSA''). This Settlement Agreement 
settles the staff's allegations set forth below.

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 et seq.
    3. Sears is a corporation organized and existing under the laws of 
the State of New York with its principal corporate offices located at 
3333 Beverly Road, Hoffman Estates, IL 60179.

II. Allegations of the Staff

    4. Between January 1995 and January 2002, Murray, Inc., 219 
Franklin Road, Brentwood, TN 37027, manufactured for Sears 
approximately 36,000 rear-engine riding lawnmowers, model numbers, 
502.270210, 502.270211, 502.256210, 502.256220, 502.251250, 536.270211, 
and 536.270212 (``the subject rear-engine riding lawnmowers'' or ``the 
lawnmowers''). Sears sold the lawnmowers under the Craftsman label.
    5. The subject rear-engine riding lawnmowers were sold to consumers 
for use in or around a permanent or temporary household or residence 
and are, therefore, ``consumer products'' as defined in section 
3(a)(1)(i) of the Consumer Product Safety Act (CPSA), 15 U.S.C. 
2052(a)(1)(i). Respondent is a ``retailer'' and a ``private labeler'' 
of the subject rear-engine riding lawnmowers, which were ``distributed 
in commerce''

[[Page 60367]]

as those terms are defined in sections 3(a)(6), (7), (11), and (12) of 
the CPSA, 15 U.S.C. 2052(a)(6), (7), (11), and (12).
    6. The subject rear-engine riding lawnmowers' fuel tanks can crack 
and leak fuel and the leaking fuel can ignite, posing a burn or fire 
hazard to consumers.
    7. From 1999 through 2001, Sears received approximately 1,600 
reports of fuel leakage and fuel tank cracking associated with the 
subject rear-engine riding lawnmowers. Sears replaced the fuel tanks on 
the lawnmowers.
    8. On four occasions between July 1999 and September 2001, Sears 
forwarded to Murray reports of consumers alleging fuel tank leaks on 
the subject rear-engine riding lawnmowers. During this period, Sears 
and Murray communicated about the fuel tanks leaking.
    9. On or about July 15, 2000 and on or about August 31, 2000 the 
Commission's National Injury Information Clearinghouse 
(``Clearinghouse'') forwarded to Sears two reports of consumers 
alleging fuel tank leaks on the subject near-engine riding lawnmovers. 
In both instances, the Clearinghouse advised Sears that the forwarded 
reports, either alone or with other information Sears had or may later 
obtain on the lawnmowers, may reasonably support the conclusion that 
the product contained a defect which could create a substantial product 
hazard, or create an unreasonable risk of serious injury or death. If 
this were the case, the Clearinghouse instructed Sears to report under 
section 15(b) of the CPSA, 15 U.S.C. 2064(b).
    10. Despite being aware of the information set forth in paragraphs 
4 through 9 above, Sears never reported to the Commission.
    11. Sears obtained information which reasonably supported the 
conclusion that the subject rear-engine riding lawnmower as described 
in paragraph 4 above contained a defect which could create a 
substantial product hazard or created an unreasonable risk of serious 
injury or death, but failed to report to the Commission as required by 
sections 15(b)(2) and (3) of the CPSA, 15 U.S.C. 2064(b)(2) and (3).
    12. By failing to immediately inform the Commission as required by 
section 15(b) of the CPSA, 15 U.S.C. 2064(b), Sears violated section 
19(a)(4) of the CPSA, 15 U.S.C. 2068(a)(4).
    13. Sears committed this failure to report ``knowingly'' as the 
term ``knowingly'' is defined in section 20(d) of the CPSA, 15 U.S.C. 
2069(d), thus, subjecting Sears to civil penalties under section 20 of 
the CPSA, 15 U.S.C. 2069.

III. Sears' Response

    14. Sears contests and denies the staff's allegations set forth 
above in this Settlement Agreement. Sears enters into this Settlement 
Agreement and Order to resolve this claim without the expense and 
distraction of litigation. By agreeing to this settlement, Sears does 
not admit any of the allegations set forth above in this Settlement 
Agreement, or any fault, liability or statutory or regulatory 
violation.
    15. Sears provided all of the reported incidents to Murray-the 
company that had designed and manufactured the subject rear-engine 
riding lawnmowers-and Sears reasonably expected Murray to assess 
whether, based upon all of the information available to Murray, CPSC 
should be notified and/or a corrective action should be undertaken.
    16. Sears cooperated in the voluntary recall of the subject rear-
engine riding lawnmowers.

IV. Agreement of the Parties

    17. The Consumer Product Safety Commission has jurisdiction over 
this matter and over Sears under the Consumer Product Safety Act, 15 
U.S.C. 2051 et seq.
    18. This Agreement is entered into for settlement purposes only and 
does not constitute an admission by Sears that it has violated the law 
or a determination by the Commission of any disputed issue of law or 
fact.
    19. In settlement of the staff's allegations, Sears agrees to pay a 
civil penalty in the amount of FIVE HUNDRED THOUSAND DOLLARS 
($500,000.00) as set forth in the incorporated Order.
    20. Upon final acceptance of this Agreement by the Commission and 
issuance of the Final Order, 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 actions, (3) 
to a determination by the Commission as to whether Respondent failed to 
comply with the 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 of Justice Act.
    21. Upon provisional acceptance of this Agreement by the 
Commission, this Agreement 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 the Agreement within 15 days, 
the Agreement will be deemed finally accepted on the 16th day after the 
date it is published in the Federal Register.
    22. The Commission may publicize the terms of the Settlement 
Agreement and Order.
    23. Sears' full and timely payment to the United States treasury of 
a civil penalty in the amount of FIVE HUNDRED THOUSAND DOLLARS 
($500,000.00) resolves the allegations in paragraphs 4-13 above with 
respect to (a) Sears; (b) any Sears parent, subsidiary, affiliate, 
division, or related entity; (c) any shareholder, director, officer, 
employee, agent or attorney of any entity referenced in (a) or (b) 
above; and (d) any successor, heir, or assign of any entity referenced 
in (a), (b), or (c) above.
    24. The Commission's Order in this matter is issued under the 
provisions of the CPSA, 15 U.S.C. 2051 et seq., and a violation of this 
Order shall subject Sears to appropriate legal action.
    25. 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.
    26. The provisions of this Settlement Agreement and Order shall 
apply to Sears and each of its successors and assigns.

Respondent Sears, Roebuck and CO.

    Dated: September 8, 2004.

Pamela R. Schneider, Vice President, Deputy General Counsel, Sears, 
Roebuck and Co., 3333 Beverly Road, Hoffman Estates, IL 60179.

    Dated: September 13, 2004.

Eric A. Rubel, Esquire,
Arnold & Porter, Attorneys for Respondent Sears, Roebuck and Co., 
555 Twelfth Street, NW., Washington, DC 20004-1206.

Commission Staff

Nicholas Marchica,
Acting Assistant Executive Director, Office of Compliance, Consumer 
Product Safety Commission, Washington, DC 20207-0001.

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

    Dated: September 14, 2004.

Dennis C. Kacovanis,
Trial Attorney, Legal Division, Office of Compliance.

In the Matter of Sears, Roebuck, and Co., a corporation; Order

    Upon consideration of the Settlement Agreement entered into between 
Respondent Sears, Roebuck and Co., a corporation, and the staff of the 
Consumer Product Safety Commission; and the Commission having 
jurisdiction over the subject matter and Respondent Sears, Roebuck and 
Co.; and it

[[Page 60368]]

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 Order, Sears, Roebuck and Co. shall pay to the Commission 
a civil penalty in the amount of FIVE HUNDRED THOUSAND DOLLARS 
($5000,000.00) within twenty (20) days after service upon Respondent of 
the Final Order of the Commission accepting the attached Settlement 
Agreement. Upon the failure of Respondent Sears, Roebuck and Co. to pay 
or to make untimely pay the civil penalty, interest 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 
date of October, 2004.

    By Order of The Commission.

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

[FR Doc. 04-22718 Filed 10-7-04; 8:45 am]
BILLING CODE 6355-01-M