[Federal Register Volume 65, Number 15 (Monday, January 24, 2000)]
[Notices]
[Pages 3670-3672]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-1564]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket NO. 00-C0004]


Lancaster Colony Corporation, a Corporation; Settlement Agreement 
and Order

    1. This Settlement Agreement and Order, entered into between 
Lancaster Colony Corporation, a corporation (hereinafter, ``Lancaster 
Colony'' or ``Respondent''), and the staff of the Consumer Product 
Safety Commission (hereinafter, ``staff''), pursuant to the procedures 
set forth in 16 C.F.R. Sec. 1118.20, is a compromise resolution of the 
matter described herein, without a hearing or determination of issues 
of law and fact.

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 Safety Act (hereinafter, ``CPSA''), 
as amended, 15 U.S.C. Sec. 2053.
    3. Respondent Lancaster Colony is a corporation organized and 
existing under the laws of the State of Ohio with its principal 
corporate offices located in Columbus, Ohio. Lancaster Colony has an 
operating division named Candle-lite located in Cincinnati, Ohio, which 
manufactures and sells candles.

Staff Allegations

    4. Section 15(b) of the CPSA, 15 U.S.C. Sec. 2064(b), requires a 
manufacturer of a consumer product who, inter alia, obtains information 
that reasonably supports the conclusion that the product contains a 
defect which could 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.
    5. Between August 1995 and February 1996, Lancaster Colony through 
its Candle-lite division, manufactured and sold nationwide, 
approximately three million Clearfire De-lite Candles (hereinafter the 
``Candles'' or the ``product''). A candle is a ``consumer product and 
Lancaster Colony is a ``manufacturer'' of a ``consumer product,'' which 
is ``distributed in

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commerce'' as those terms are defined in sections 3(a)(1), (4), (11) of 
the CPSA, 15 U.S.C. Secs. 2052(a)(1), (4), (11).
    6. The product is a candle made of a clear gel-like substance which 
is packaged in a textured glass jar.
    7. The Candles are defective because they could flare up 
unexpectedly during use, causing the Candles' glass holders to overheat 
and break. If this occurs, consumers could be burned or injured by 
broken glass.
    8. On or about November 20, 1995, Lancaster Colony first received a 
report of an incident involving Candle flare-up.
    9. By December 31, 1995, Lancaster Colony was aware of 
approximately forty four incidents involving Candle flare-up, resulting 
in reports alleging five personal injuries and twenty one occurrences 
of property damage.
    10. In January 1996, with the incidents continuing to mount, 
Respondent stopped manufacture of the Candles.
    11. In February 1996, Respondent revised the formulation of its 
original Candle, in part, to address the flare-up problem, and 
introduced a new candle in its place.
    12. On or about May 2, 1996, the date the staff conducted an 
establishment inspection of the firm, Respondent was aware of at least 
142 incidents involving candle flare-ups, including reports of 
approximately 20 incidents involving personal injury and reports of 
more than 55 incidents involving property damage.
    13. Although Lancaster Colony through its Candle-lite division, had 
obtained sufficient information to reasonably support the conclusion 
that these Candles contained a defect which could create a substantial 
product hazard, or created an unreasonable risk of serious injury or 
death, it failed to report such information to the Commission prior to 
the inspection, as required by section 15(b) of the CPSA. This is a 
violation of section 19(a)(4) of the CPSA, 15 U.S.C. Sec. 2068(a)(4).
    14. Respondent's 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, 15 U.S.C. Sec. 2069(d), and 
Lancaster Colony is subject to civil penalties under Section 20 of the 
CPSA.

Response of Lancaster Colony

    15. Lancaster Colony denies the allegations of the staff that the 
Clearfire De-lite candles contain a defect which could create a 
substantial product hazard pursuant to section 15(a) of the CPSA, 15 
U.S.C. Sec. 2065(a); denies that it violated the reporting requirements 
of section 15(b) of the CPSA, 15 U.S.C. Sec. 2064(b), and further 
denies the other allegations of the CPSC staff as stated herein.
    16. Lancaster Colony did not have reason to believe that these 
candles posed a substantial product hazard. Lancaster Colony believed 
the information available did not reasonably support the conclusion 
that the products were defective within the meaning of the CPSA or that 
they created an unreasonable risk of serious injury or death, and, 
therefore, no report was required under section 15(b) of the Act.
    17. During the time period in which the CPSC alleges Lancaster 
Colony wrongfully failed to file a report, it conducted its own 
internal testing as well as independent testing at four different 
laboratories of 4,500 candles. Neither the in-house nor outside 
laboratories were able to recreate the scenario about which some 
consumers complained. These test results suggested to Lancaster Colony 
that no defect was present. Likewise, the extremely low complaint rate 
(0.00020) suggested to Lancaster Colony that any flare ups were due to 
consumer misuse and/or environmental contamination rather than an 
inherent product defect. Finally, based upon the nature of the 
complaints received by Lancaster Colony, the firm did not believe that 
the candles could create a substantial product hazard or create an 
unreasonable risk of serious injury or death. For these reasons, 
Lancaster Colony concluded, and outside counsel concurred, that it was 
not required to submit a report to the CPSC.
    18. Nevertheless, Lancaster Colony cooperated fully with the 
Commission staff in designing and implementing a voluntary recall of 
the candles described in paragraphs 5 and 6 above.
    19. By entering into this Settlement Agreement and Order, Lancaster 
Colony does not admit any liability or wrongdoing. This Settlement 
Agreement and Order is agreed to by Lancaster Colony solely for the 
purposes of avoiding the cost of litigation and does not constitute, 
and is not evidence of, an admission of liability or wrongdoing by 
Lancaster Colony.

Agreement of the Parties

    20. The Commission has jurisdiction in this matter under the CPSA, 
U.S.C. Secs. 2051-2084.
    21. Lancaster Colony knowingly, voluntarily and completely waives 
any rights it may have (i) to an administrative or judicial hearing 
with respect to the Commission staff's allegations discussed in 
paragraphs 4 through 14 herein, and to the issuance of a complaint, 
(ii) to judicial review or other challenge or contest of the validity 
of the Commission's Order, (iii) to a determination by the Commission 
as to whether a violation of Section 15(b) of the CPSA, has occurred, 
(iv) to a statement of findings of fact and conclusions of law with, 
and (v) to any claims under the Equal Access to Justice Act.
    22. Upon provisional acceptance of this Settlement Agreement and 
Order by the Commission, the Commission shall place this Agreement and 
Order on the public record and shall publish it in the Federal Register 
in accordance with the procedure set forth in 16 C.F.R. 
Sec. 1118.20(e). If the Commission does not receive any written request 
not to accept the Settlement Agreement and Order within 15 days, the 
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 C.F.R. Sec. 1118.20(f).
    23. This Settlement Agreement and Order becomes effective only upon 
its final acceptance by the Commission and service upon Respondent. 
Compliance by Lancaster Colony with this Final Settlement Agreement and 
Order releases it from liability arising from any allegations of 
violation of section 15(b) of the CPSA regarding the specific candles 
described in paragraphs 5 and 6 above.
    24. Upon final acceptance of this Settlement Agreement, the 
Commission may publicize the terms of the Settlement Agreement and 
Order.
    25. Lancaster Colony agrees to pay to the Commission a civil 
penalty in the amount of one hundred fifty thousand dollars ($150,000), 
in settlement of this matter, payable within twenty (20) days after 
service of the Final Order of the Commission accepting this Settlement 
Agreement.
    26. This Settlement Agreement and Order are entered into for 
settlement purposes only and shall not constitute an admission or 
determination arising from the allegations that the candles contain a 
defect which could create a substantial product hazard or create an 
unreasonable risk of serious injury or death.
    27. The provisions of this Settlement Agreement and Order shall 
apply to Lancaster Colony and 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.
    28. This Settlement Agreement may be used in interpreting the 
Order. Agreements, understandings,

[[Page 3672]]

representations, or interpretations made outside of this Settlement 
Agreement and Order may not be used to vary or to contradict its terms.

    Dated: December 10, 1999.
John L. Boylan,
Treasurer, Lancaster Colony Corporation.

The Consumer Product Safety Commission.
Alan H. Schoem,
Associate Executive Director, Office of Compliance.
Eric L. Stone,
Director, Legal Division, Office of Compliance.

    Dated: December 17, 1999.
Ronald G. Yelenik,
Trial Attorney, Legal Division, Office of Compliance.

Order

    Upon consideration of the Settlement Agreement between Respondent 
Lancaster Colony Corporation, a corporation, and the staff of the 
Consumer Product Safety Commission, and the Commission having 
jurisdiction over the subject matter and over Lancaster Colony 
Corporation, 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 within 20 days of service of the Final Order 
upon Respondent, Lancaster Colony Corporation shall pay to the order of 
the U.S. Treasury a civil penalty in the amount of one hundred fifty 
thousand dollars ($150,000).

    Provisionally accepted and Provisional Order issued on the 18th 
day of January, 2000.

    By order of the Commission.
Sadye E. Dunn,
Secretary, Consumer Product Safety Commission.
[FR Doc. 00-1564 Filed 1-21-00; 8:45 am]
BILLING CODE 6355-01-M