[Federal Register Volume 88, Number 191 (Wednesday, October 4, 2023)]
[Notices]
[Pages 68589-68591]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-21985]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 23-C0004]


BJ's Wholesale Club, Inc.

AGENCY: Consumer Product Safety Commission.

ACTION: Notice.

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SUMMARY: The Commission publishes in the Federal Register any 
settlement that it provisionally accepts under the Consumer Product 
Safety Act. Published below is a provisionally accepted Settlement 
Agreement with BJ's Wholesale Club, Inc., containing a civil penalty in 
the amount of $9,000,000, subject to the terms and conditions of the 
Settlement Agreement. The Commission voted unanimously (4-0) to 
provisionally accept the proposed Settlement Agreement and Order 
pertaining to BJ's Wholesale Club, Inc.

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 19, 2023.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to Comment 23-C0004, Office of the 
Secretary, Consumer Product Safety Commission, 4330 East West Highway, 
Bethesda, MD 20814; telephone: (240) 863-8938 (mobile), (301) 504-7479 
(office); email: <a href="/cdn-cgi/l/email-protection#d2b1a2a1b1ffbda192b1a2a1b1fcb5bda4"><span class="__cf_email__" data-cfemail="9cffecefffb1f3efdcffecefffb2fbf3ea">[email protected]</span></a>.

FOR FURTHER INFORMATION CONTACT: Mark Raffman, Trial Attorney, Division 
of Enforcement and Litigation, Office of Compliance and Field 
Operations, Consumer Product Safety Commission, 4330 East West Highway, 
Bethesda, Maryland 20814; <a href="/cdn-cgi/l/email-protection#acc1decdcacac1cdc2eccfdcdfcf82cbc3da"><span class="__cf_email__" data-cfemail="bed3ccdfd8d8d3dfd0feddcecddd90d9d1c8">[email protected]</span></a>, 301-504-7602 (office).

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

    Dated: September 29, 2023.
Alberta E. Mills,
Secretary.

United States of America

Consumer Product Safety Commission

    In the Matter of: BJ'S WHOLESALE CLUB, INC.

CPSC Docket No.: 23-C0004

Settlement Agreement

    1. In accordance with the Consumer Product Safety Act, 15 U.S.C. 
2051-2089 (``CPSA''), and 16 CFR 1118.20, BJ's Wholesale Club, Inc. 
(``BJ's'' or the ``Firm''), and the United States Consumer Product 
Safety Commission (``Commission'' or ``CPSC''), through its staff, 
hereby enter into this Settlement Agreement (``Agreement''). The 
Agreement and the incorporated attached Order resolve staff's charges 
set forth below.

The Parties

    2. The Commission is an independent federal regulatory agency, 
established pursuant to, and responsible for, the enforcement of the 
CPSA, 15 U.S.C. 2051-2089. By executing the Agreement, staff is acting 
on behalf of the Commission, pursuant to 16 CFR 1118.20(b). The 
Commission issues the Order under the provisions of the CPSA.
    3. BJ's is a corporation, organized and existing under the laws of 
the state of Delaware, with its principal place of business in 
Marlborough, Massachusetts.

Staff Charges

    4. During 2011 and 2012, BJ's distributed in the United States 
approximately 1,778 portable air conditioners manufactured by Royal 
Sovereign International, Inc. (``Royal Sovereign''), model number PAC-
3012 (``Subject Products'').
    5. The Subject Products are ``consumer products'' that were 
``import[ed]'' and ``distribut[ed] in commerce,'' as those terms are 
defined or used in sections 3(a)(5), (8), and (9) of the CPSA, 15 
U.S.C. 2052(a)(5), (8), and (9). BJ's is a ``retailer'' of the Subject 
Products, as such term is defined in section 3(a)(13) of the CPSA, 15 
U.S.C. 2052(a)(13).
Violation of CPSA Section 19(a)(4)
    6. The Subject Products contain a defect which could create a 
substantial product hazard or create an unreasonable risk of serious 
injury or death because the motor in the portable air conditioner can 
ignite the plastic enclosure of the unit, posing a fire and burn 
hazard.
    7. Of the 1,778 units sold by BJ's during 2011 and 2012, a total of 
509 units were returned to BJ's by consumers.
    8. During the early morning hours of August 24, 2016, a Royal 
Sovereign Model PAC-3012 portable air conditioner purchased from BJ's 
was involved in a house fire in Smithtown, New York. A mother and her 
two young children were rescued from the fire; the mother died of her 
injuries in December 2016.
    9. BJ's learned of the fire and pending investigation no later than 
March 2017. At that time, BJ's received a claim letter from plaintiffs' 
counsel and retained counsel for anticipated wrongful-death and 
personal-injury litigation arising out of the fire.
    10. In March 2021, BJ's issued a notice to consumers who had 
purchased one of the Subject Products from BJ's advising that the 
product ``does not meet our safety standards'' and that ``out of an 
abundance of caution [they should] stop using this product 
immediately.''
    11. Despite possessing information that reasonably supported the 
conclusion that the Subject Products contained a defect that could 
create a substantial product hazard or created an unreasonable risk of 
serious injury or death, BJ's never reported to the Commission.
    12. The Commission and Royal Sovereign jointly announced a recall 
of the Subject Products on December 22, 2021.
Failure To Timely Report
    13. Despite having information reasonably supporting the conclusion 
that the Subject Products contained a defect which could create a 
substantial product hazard or created an unreasonable risk of serious 
injury or death, BJ's did not notify the Commission immediately of such 
defect or risk, as required by section 15(b)(3) and (4) of the CPSA, 15 
U.S.C. 2064(b)(3) and (4), in violation of section 19(a)(4) of the 
CPSA, 15 U.S.C. 2068(a)(4).
    14. Because the information in BJ's possession about the Subject 
Products constituted actual and presumed knowledge, BJ's knowingly 
violated section 19(a)(4) of the CPSA, 15 U.S.C. 2068(a)(4), as the 
term ``knowingly'' is defined in section 20(d) of the CPSA, 15 U.S.C. 
2069(d).
    15. Pursuant to section 20 of the CPSA, 15 U.S.C. 2069, BJ's is 
subject to civil penalties for its knowing violation of section 
19(a)(4) of the CPSA, 15 U.S.C. 2068(a)(4).

Response of BJ's

    16. This Agreement does not constitute an admission by BJ's to the 
staff's charges as set forth in paragraphs 4 through 15 above, 
including without limitation that the Subject Products contained a 
defect that could create a substantial product hazard or created an 
unreasonable risk of serious injury or

[[Page 68590]]

death; that BJ's failed to notify the Commission in a timely matter in 
accordance with section 15(b) of the CPSA, 15 U.S.C. 2064(b); and that 
BJ's knowingly violated section 19(a)(4) of the CPSA, 15 U.S.C. 
2068(a)(4), as the term ``knowingly'' is defined in section 20(d) of 
the CPSA, 15 U.S.C. 2069(d).
    17. BJ's enters into this Agreement to settle this matter and to 
avoid the cost, distraction, delay, uncertainty, and inconvenience of 
protracted litigation or other proceedings. BJ's does not admit that it 
violated the CPSA or any other law, and BJ's willingness to enter into 
this Agreement and Order does not constitute, nor is it evidence of, an 
admission by BJ's of liability or violation of any law.
    18. At all relevant times, BJ's has had a product safety compliance 
program, both to help ensure the safety of the products it sells before 
they are marketed and to identify, monitor and evaluate potential 
product safety issues on an ongoing basis. BJ's maintains that upon 
learning of the issue regarding the Subject Products, it relied upon 
and understood that the manufacturer of the Subject Products, Royal 
Sovereign, would report to the CPSC.

Agreement of the Parties

    19. Under the CPSA, the Commission has jurisdiction over the matter 
involving the Subject Products and over BJ's.
    20. The parties enter into the Agreement for settlement purposes 
only. The Agreement does not constitute an admission by BJ's or a 
determination by the Commission that BJ's violated the CPSA.
    21. In settlement of staff's charges, BJ's shall pay a civil 
penalty in the amount of nine million dollars ($9,000,000) (``Total 
Civil Penalty Amount''). The $9,000,000 Payment shall be paid within 
thirty (30) calendar days after receiving service of the Commission's 
final Order accepting the Agreement. All payments to be made under the 
Agreement shall constitute debts owing to the United States and shall 
be made by electronic wire transfer to the United States via http://www.pay.gov, for allocation to, and credit against, the payment 
obligations of BJ's under this Agreement. Failure to make such payment 
by the date specified in the Commission's final Order shall constitute 
Default.
    22. The Commission or the United States may seek enforcement for 
any breach of, or any failure to comply with, any provision of this 
Agreement and Order in United States District Court, to seek relief 
including, but not limited to, collecting amounts due.
    23. All unpaid amounts, if any, due and owing under the Agreement, 
shall constitute a debt due and immediately owing by BJ's to the United 
States, and interest shall accrue and be paid by BJ's at the federal 
legal rate of interest set forth at 28 U.S.C. 1961(a) and (b) from the 
date of Default, until all amounts due have been paid in full 
(hereinafter ``Default Payment Amount'' and ``Default Interest 
Balance''). BJ's shall consent to a Consent Judgment in the amount of 
the Default Payment Amount and Default Interest Balance, and the United 
States, at its sole option, may collect the entire Default Payment 
Amount and Default Interest Balance, or exercise any other rights 
granted by law or in equity, including, but not limited to, referring 
such matters for private collection, and BJ's agrees not to contest, 
and hereby waives and discharges any defenses to, any collection action 
undertaken by the United States, or its agents or contractors, pursuant 
to this paragraph. BJ's shall pay the United States all reasonable 
costs of collection and enforcement under this paragraph, respectively, 
including reasonable attorney's fees and expenses.
    24. After staff receives this Agreement executed on behalf of BJ's, 
staff shall promptly submit the Agreement to the Commission for 
provisional acceptance. Promptly following provisional acceptance of 
the Agreement by the Commission, the Agreement shall be placed on the 
public record and 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 
fifteen (15) calendar days, the Agreement shall be deemed finally 
accepted on the 16th calendar day after the date the Agreement is 
published in the Federal Register, in accordance with 16 CFR 
1118.20(f).
    25. This Agreement is conditioned upon, and subject to, the 
Commission's final acceptance, as set forth above, and it is subject to 
the provisions of 16 CFR 1118.20(h). Upon the later of: (i) the 
Commission's final acceptance of this Agreement and service of the 
accepted Agreement upon BJ's, and (ii) the date of issuance of the 
final Order, this Agreement shall be in full force and effect, and 
shall be binding upon the parties.
    26. Effective upon the later of: (1) the Commission's final 
acceptance of the Agreement and service of the accepted Agreement upon 
BJ's and (2) and the date of issuance of the final Order, for good and 
valuable consideration, BJ's hereby expressly and irrevocably waives 
and agrees not to assert any past, present, or future rights to the 
following, in connection with the matter described in this Agreement as 
between the parties:
    (i) an administrative or judicial hearing;
    (ii) judicial review or other challenge or contest of the 
Commission's actions;
    (iii) a determination by the Commission of whether BJ's failed to 
comply with the CPSA and the underlying regulations;
    (iv) a statement of findings of fact and conclusions of law; and
    (v) any claims under the Equal Access to Justice Act.
    27. BJ's shall maintain a compliance program (``Compliance 
Program'') designed to ensure compliance with the CPSA with respect to 
any consumer product imported, manufactured, distributed or sold by 
BJ's, which shall contain the following elements:
    (i) written standards, policies, and procedures, including those 
designed to ensure that information that may relate to or impact CPSA 
compliance is conveyed effectively to personnel responsible for CPSA 
compliance, whether or not an injury has been reported;
    (ii) procedures and systems for tracking and reviewing claims, 
including warranty claims, and reports for safety concerns and for 
implementing corrective and preventive actions when compliance 
deficiencies or violations are identified;
    (iii) procedures requiring that information required to be 
disclosed by BJ's to the Commission is recorded, processed, and 
reported in accordance with applicable law;
    (iv) procedures requiring that all reporting made to the Commission 
is timely, truthful, complete, accurate, and in accordance with 
applicable law;
    (v) procedures requiring that prompt disclosure is made to BJ's 
management of any significant deficiencies or material weaknesses in 
the design or operation of such internal controls that are reasonably 
likely to affect adversely, in any material respect, BJ's ability to 
record, process and report to the Commission in accordance with 
applicable law;
    (vi) mechanisms to effectively communicate to all applicable BJ's 
employees, through training programs or other means, compliance-related 
company policies and procedures to prevent violations of the CPSA;
    (vii) a mechanism for confidential employee reporting of 
compliance-related questions or concerns to either a compliance officer 
or to another senior

[[Page 68591]]

manager with authority to act as necessary;
    (viii) BJ's senior management responsibility for, and general board 
oversight of, CPSA compliance, including the implementation of steps to 
ensure that incident and injury data is reviewed and analyzed for 
purposes of CPSA Section 15(b) reporting;
    (ix) for at least three (3) years, an annual internal audit of the 
effectiveness of policies, procedures, systems, and training related to 
CPSA compliance that evaluates opportunities for improvement, 
deficiencies or weaknesses, and the Firm's overall culture of 
compliance; and
    (x) retention of all CPSA compliance-related records for at least 
five (5) years, and availability of such records to CPSC staff upon 
request.
    28. BJ's shall submit a report, sworn to under penalty of perjury:
    (i) describing in detail its compliance program and internal 
controls and the actions BJ's has taken to comply with each 
subparagraph of paragraph 27;
    (ii) affirming that during the reporting period, BJ's has reviewed 
its compliance program and internal controls, including the actions 
referenced in subparagraph (i) of this paragraph, for effectiveness, 
and that it complies with each subparagraph of paragraph 27, or 
describing in detail any non-compliance with any such subparagraph; and
    (iii) identifying the results of the annual internal audit 
referenced in paragraph 27(ix) and any changes or modifications made 
during the reporting period to BJ's compliance program or internal 
controls to ensure compliance with the terms of the CPSA and, in 
particular, the requirements of CPSA Section 15 related to timely 
reporting.
    Such reports shall be submitted annually to the Director, Office of 
Compliance, Division of Enforcement and Litigation, for a period of 
three (3) years. The first report shall be submitted 30 days after the 
close of the first 12-month reporting period, which begins on the date 
of the Commission's Final Order of Acceptance of the Agreement, and 
successive reports shall be due annually on the same date thereafter.
    29. Notwithstanding and in addition to the above, upon request of 
staff, BJ's shall promptly provide written documentation of any changes 
or modifications to its compliance program or internal controls and 
procedures, including the effective dates of the changes or 
modifications thereto. BJ's shall cooperate fully and truthfully with 
staff and shall make available all non-privileged information and 
materials and personnel deemed necessary by staff to evaluate BJ's 
compliance with the terms of the Agreement.
    30. The parties acknowledge and agree that the Commission may 
publicize the terms of the Agreement and the Order.
    31. BJ's represents that the Agreement:
    (i) is entered into freely and voluntarily, without any degree of 
duress or compulsion whatsoever;
    (ii) has been duly authorized; and
    (iii) constitutes the valid and binding obligation of BJ's, 
enforceable against BJ's in accordance with its terms. The individuals 
signing the Agreement on behalf of BJ's represent and warrant that they 
are duly authorized by BJ's to execute the Agreement.
    32. The signatories represent that they are authorized to execute 
this Agreement.
    33. The Agreement is governed by the laws of the United States.
    34. The Agreement and the Order shall apply to, and be binding 
upon, BJ's and each of its parents, successors, transferees, and 
assigns; and a violation of the Agreement or Order may subject BJ's, 
and each of its parents, successors, transferees, and assigns, to 
appropriate legal action.
    35. The Agreement, any attachments, and the Order constitute the 
complete agreement between the parties on the subject matter contained 
therein.
    36. The Agreement may be used in interpreting the Order. 
Understandings, agreements, representations, or interpretations apart 
from those contained in the Agreement and the Order may not be used to 
vary or contradict their terms. For purposes of construction, the 
Agreement shall be deemed to have been drafted by both of the parties 
and shall not, therefore, be construed against any party, for that 
reason, in any subsequent dispute.
    37. The Agreement may not be waived, amended, modified, or 
otherwise altered, except as in accordance with the provisions of 16 
CFR 1118.20(h). The Agreement may be executed in counterparts.
    38. If any provision of the Agreement or the Order is held to be 
illegal, invalid, or unenforceable under present or future laws 
effective during the terms of the Agreement and the Order, such 
provision shall be fully severable. The balance of the Agreement and 
the Order shall remain in full force and effect, unless the Commission 
and BJ's agree in writing that severing the provision materially 
affects the purpose of the Agreement and the Order.
(Signatures on next page)
BJ'S WHOLESALE CLUB, INC.

Dated: 9/7/2023

By: /s/----------------------------------------------------------------

Graham Luce, BJ's Wholesale Club, Inc., EVP General Counsel
Dated: 9/7/2023

By: /s/----------------------------------------------------------------

Erik Swanholt, Foley & Lardner, Counsel to BJ's Wholesale Club, Inc.

U.S. CONSUMER PRODUCT SAFETY COMMISSION

Mary B. Murphy, Director, Leah Ippolito, Supervisory Attorney, 
Division of Enforcement and Litigation

Dated:-----------------------------------------------------------------

By:--------------------------------------------------------------------
Mark S. Raffman, Trial Attorney, Division of Enforcement and 
Litigation, Office of Compliance and Field Operations

United States of America

Consumer Product Safety Commission

    In the Matter of: BJ'S WHOLESALE CLUB, INC.

CPSC Docket No.: 23-C0004

Order

    Upon consideration of the Settlement Agreement entered into between 
BJ's Wholesale Club, Inc. (``BJ's'') and the U.S. Consumer Product 
Safety Commission (``Commission'' or ``CPSC''), and the Commission 
having jurisdiction over the subject matter and over BJ's, and it 
appearing that the Settlement Agreement is in the public interest, the 
Settlement Agreement is incorporated by reference and it is:
    Provisionally accepted and this Order issued on the 29th day of 
September, 2023.
BY ORDER OF THE COMMISSION:

/s/--------------------------------------------------------------------
Alberta E. Mills, Secretary, U.S. Consumer Product Safety Commission

[FR Doc. 2023-21985 Filed 10-3-23; 8:45 am]
BILLING CODE 6355-01-P


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