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[Federal Register Volume 78, Number 42 (Monday, March 4, 2013)]
[Notices]
[Pages 14080-14082]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-04909]

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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 13-C0004]

Kolcraft Enterprises, Inc., 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(e). 
Published below is a provisionally-accepted Settlement Agreement with 
Kolcraft Enterprises, Inc., containing a civil penalty of $400,000.00, 
within twenty (20) days of service of the Commission's final Order 
accepting the Settlement Agreement.

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 March 19, 2013.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 13-C0004, Office of the 
Secretary, Consumer Product Safety Commission, 4330 East West Highway, 
Room 820, Bethesda, Maryland 20814-4408.

[[Page 14081]]

FOR FURTHER INFORMATION CONTACT: Richa Shyam Dasgupta, Trial Attorney, 
Division of Compliance, Office of the General Counsel, Consumer Product 
Safety Commission, 4330 East West Highway, Bethesda, Maryland 20814-
4408; telephone (301) 504-7798.

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

    Dated: February 27, 2013.
Todd A. Stevenson,
Secretary.

Settlement Agreement and Order

    1. In accordance with the Consumer Product Safety Act (CPSA), 15 
U.S.C. 2051-2089, (CPSA), and 16 CFR 1118.20, Kolcraft Enterprises, 
Inc. (Kolcraft) and staff (staff) of the United States Consumer Product 
Safety Commission (Commission or CPSC) hereby enter into this 
Settlement Agreement (Agreement). The Agreement and the attached Order 
resolve staff's allegations set forth below.

The Parties

    2. Staff is the staff of the Commission, an independent federal 
regulatory agency established pursuant to, and responsible for, 
enforcement of the CPSA.
    3. Kolcraft is a privately-held company, organized and existing 
under the laws of the state of Delaware, with its principal office 
located in Chicago, IL.
    4. Kolcraft is a small business as set forth in the Small Business 
Administration guidelines regarding size of business.

Staff Allegations

    5. Between 2000 and 2009, Kolcraft imported approximately 1 million 
play yards (the ``Play Yards'') and distributed them nationwide through 
major retailers and Internet sales.
    6. The Play Yards are ``consumer products'' and, at all relevant 
times, Kolcraft was a ``manufacturer'' of ``consumer products,'' of the 
subject Play Yards, which were ``distribute[d] in commerce,'' as those 
terms are defined or used in sections 3(a)(5), (8), and (11) of the 
CPSA, 15 U.S.C. 2052(3)(a)(5), (8), and (11).
    7. The Play Yards are defective because the side rail of a Play 
Yard can fail to latch properly, and when a child pushes against the 
rail, the rail can unlatch unexpectedly, posing a fall hazard to 
children.
    8. From 2000 through July 2009, Kolcraft received approximately 350 
reports of Play Yards collapsing unexpectedly, including 21 incidents 
that resulted in injuries to young children.
    9. In July 2005, Kolcraft engaged failure analysis experts to 
examine and test the latching system on the Play Yards. By August 2005, 
these experts had identified the potential for false latching.
    10. During 2006, Kolcraft made prospective improvements to the 
warning labels, instruction sheets, and the side-rail latch to 
eliminate false latching in future production of the Play Yards. None 
of these improvements addressed the potential for false latching that 
existed in the more than 880,000 Play Yards in commerce at the time.
    11. Kolcraft waited until January 15, 2009, however, to report to 
the CPSC regarding the Play Yards.
    12. On July 8, 2009, Kolcraft, in cooperation with the CPSC, 
announced a recall of the Play Yards.
    13. Well before January 15, 2009, Kolcraft had obtained sufficient 
information to reasonably support the conclusion that the Play Yards 
contained a defect that could create a substantial product hazard, or 
created an unreasonable risk of serious injury or death; yet, Kolcraft 
failed to inform the Commission immediately of such defect or risk, as 
required by sections 15(b)(3) and (4) of the CPSA, 15 U.S.C. 2064(b)(3) 
and (4). In failing to inform the Commission immediately of the defect 
or risk involving the Play Yards, Kolcraft 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).
    14. Pursuant to section 20 of the CPSA, 15 U.S.C. 2069, Kolcraft is 
subject to civil penalties for its knowing failure to report, as 
required under section 15(b) of the CPSA, 15 U.S.C. 2064(b).

Response of Kolcraft

    15. The Firm denies staff's allegations that it knew that the 
Subject Products contained a defect which could create a substantial 
product hazard pursuant to section 15(a) of the CPSA, 15 U.S.C. 
2064(a), and further denies that it knowingly violated the reporting 
requirements of section 15(b) of the CPSA, 15 U.S.C. 2064(b).

Agreement of the Parties

    16. Under the CPSA, the Commission has jurisdiction over this 
matter and over Kolcraft.
    17. The parties enter this Agreement for settlement purposes only. 
The Agreement does not constitute an admission by Kolcraft or a 
determination by the Commission that Kolcraft knowingly violated the 
CPSA.
    18. In settlement of staff's allegations, Kolcraft shall pay a 
civil penalty in the amount of four hundred thousand dollars 
($400,000.00) (Settlement Amount). The civil penalty shall be paid 
within twenty (20) calendar days of service of the Commission's final 
Order accepting the Agreement. The payment shall be made to the CPSC 
via: www.pay.gov.
    19. Upon 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 it is published in the Federal Register, in accordance 
with 16 CFR 1118.20(f).
    20. Upon the Commission's final acceptance of the Agreement and 
issuance of the Order, Kolcraft knowingly, voluntarily, and completely 
waives any rights it may have in this matter to the following: (a) An 
administrative or judicial hearing; (b) judicial review or other 
challenge or contest of the Commission's actions; (c) a determination 
by the Commission of whether Kolcraft failed to comply with the CPSA 
and the underlying regulations; (d) a statement of findings of fact and 
conclusions of law; and (e) any claims under the Equal Access to 
Justice Act.
    21. Kolcraft shall maintain and enforce a system of internal 
controls and procedures designed to ensure that: (i) Information 
required to be disclosed by Kolcraft to the Commission is recorded, 
processed and reported in accordance with applicable law; (ii) all 
reporting made to the Commission is timely, truthful, complete and 
accurate; and (iii) prompt disclosure is made to Kolcraft's management 
of any significant deficiencies or material weaknesses in the design or 
operation of such internal controls that are reasonably likely to 
adversely affect in any material respect Kolcraft's ability to record, 
process and report to the Commission in accordance with applicable law.
    22. Upon request of Staff, Kolcraft shall provide written 
documentation of such improvements, processes, and controls, including, 
but not limited to, the effective dates of such improvements, 
processes, and controls. Kolcraft shall cooperate fully and truthfully 
with Staff and shall make available all information, materials, and

[[Page 14082]]

personnel deemed necessary by Staff to evaluate Kolcraft's compliance 
with the terms of the Agreement.
    23. Kolcraft shall implement and maintain a compliance program 
designed to ensure compliance with the safety statutes and regulations 
enforced by the CPSC that, at a minimum, contains the following 
elements (i) written standards and policies; (ii) a mechanism for 
confidential employee reporting of compliance-related questions or 
concerns to either a compliance officer or to another senior manager 
with authority to act as necessary; (iii) effective communication of 
company compliance-related policies and procedures to all employees 
through training programs or otherwise; (iv) senior manager 
responsibility for compliance; (v) board oversight of compliance (if 
applicable); and (vi) retention of all compliance-related records for 
at least five (5) years and availability of such records to CPSC upon 
request.
    24. The Commission may publicize the terms of the Agreement and the 
final Order.
    25. The Agreement and the final Order shall apply to, and be 
binding upon, Kolcraft, and each of its successors and/or assigns.
    26. The Commission issues the final Order under the provisions of 
the CPSA, and a violation of the final Order may subject Kolcraft, and 
each of its successors and/or assigns, to appropriate legal action.
    27. The Agreement may be used in interpreting the final Order. 
Understandings, agreements, representations, or interpretations apart 
from those contained in the Agreement and the Order may not be used to 
vary or contradict the terms or the Agreement and the final Order. The 
Agreement shall not be waived, amended, modified, or otherwise altered 
without written agreement thereto, executed by the party against whom 
such waiver, amendment, modification, or alteration is sought to be 
enforced.
    28. If any provision of the Agreement or the final Order is held to 
be illegal, invalid, or unenforceable under present or future laws 
effective during the terms of the Agreement and the final Order, such 
provision shall be fully severable. The balance of the Agreement and 
the final Order shall remain in full force and effect, unless the 
Commission and Kolcraft agree that severing the provision materially 
affects the purpose of the Agreement and final Order.
    29. This Agreement may be signed in counterparts.

    Dated: February 25, 2013.

Kolcraft Enterprises, Inc.

By:--------------------------------------------------------------------
Thomas Koltun,
President, Kolcraft Enterprises, Inc.

    Dated: February 26, 2013.

By:--------------------------------------------------------------------
Erika Z. Jones, Esq.,
Counsel to Kolcraft Enterprises, Inc., Mayer Brown LLP, Washington, 
DC

U.S. Consumer Product Safety Commission Staff

Stephanie Tsacoumis,
General Counsel.

Mary B. Murphy,
Assistant General Counsel, Divisions of Compliance and Import 
Surveillance.

    Dated: February 27, 2013.

By:--------------------------------------------------------------------
Richa Shyam Dasgupta,
Trial Attorney, Division of Compliance, Office of the General 
Counsel.

Order

    Upon consideration of the Agreement entered into between Kolcraft 
Enterprises, Inc. (``Kolcraft''), and U.S. Consumer Product Safety 
Commission (Commission) staff, and the Commission having jurisdiction 
over the subject matter and over Kolcraft, and it appearing that the 
Agreement and the Order are in the public interest, it is
    Ordered that the Agreement be, and hereby, is accepted; and it is
    Further ordered, that Kolcraft shall pay a civil penalty in the 
total amount of four hundred thousand dollars ($400,000.00), paid 
within twenty (20) days of service of the Commission's Order upon 
counsel for Kolcraft. The payments shall be made electronically to the 
CPSC via: www.pay.gov. Upon the failure of Kolcraft to make the 
foregoing payment when due, interest on the unpaid amount shall accrue 
and be paid by Kolcraft at the federal legal rate of interest set forth 
at 28 U.S.C. 1961(a) and (b). If Kolcraft fails to make such payment or 
to comply in full with any other provision as set forth in the 
Agreement, such conduct will be considered a violation of this 
Agreement and Order.

    Provisionally accepted and provisional Order issued on the 27th 
day of February 2013.

    By order of the Commission.
Todd A. Stevenson,
Secretary, U.S. Consumer Product Safety Commission.
[FR Doc. 2013-04909 Filed 3-1-13; 8:45 am]
BILLING CODE 6355-01-P
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