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[Federal Register Volume 77, Number 146 (Monday, July 30, 2012)]
[Notices]
[Pages 44593-44595]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-18459]

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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 12-C0008]

Burlington Coat Factory Warehouse 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(e). 
Published below is a provisionally accepted Settlement Agreement with 
Burlington Coat Factory Warehouse Corporation, containing a civil 
penalty of $1,500,000.00, 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 August 14, 2012.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 12-C0008, Office of the 
Secretary, Consumer Product Safety Commission, 4330 East West Highway, 
Room 820, Bethesda, Maryland 20814-4408.

FOR FURTHER INFORMATION CONTACT: Seth B. Popkin, Lead Trial Attorney, 
Division of Compliance, Office of the General Counsel, Consumer Product 
Safety Commission, 4330 East West Highway, Bethesda, Maryland 20814-
4408; telephone (301) 504-7612.

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

    Dated: July 25, 2012.
 Todd A. Stevenson,
 Secretary.

UNITED STATES OF AMERICA

CONSUMER PRODUCT SAFETY COMMISSION

In the Matter of Burlington Coat Factory Warehouse Corporation

 CPSC Docket No. 12-C0008

Settlement Agreement

    1. In accordance with the Consumer Product Safety Act, 15 U.S.C. 
Sec. Sec.  2051-2089 (``CPSA''), and 16 CFR Sec.  1118.20, Burlington 
Coat Factory Warehouse Corporation (``Burlington'') and staff 
(``Staff'') of the U.S. Consumer Product Safety Commission 
(``Commission'') enter into this Settlement Agreement (``Agreement''). 
The Agreement and the incorporated attached Order (``Order'') resolve 
Staff's allegations set forth below.

Parties

    2. Staff is staff of the Commission, an independent federal 
regulatory agency established pursuant to, and responsible for the 
enforcement of, the CPSA.
    3. Burlington is a corporation, organized and existing under the 
laws of Delaware, with its principal offices located in Burlington, New 
Jersey.

Staff Allegations

    4. On multiple occasions and during various periods from November 
2003 to January 2012, Burlington and its subsidiaries sold and/or held 
for sale various styles, models, and quantities of children's upper 
outerwear products with drawstrings at the neck, including, but not 
limited to, the following: Liberty Apparel Company, Inc.--Jewel hooded 
sweatshirts; Jason Evans Associates, LLC--Bay Trading hooded 
sweatshirts and jackets; Koman Sportswear Manufacturing Corporation--
hooded sweatshirts and jackets; Fashion Options, Inc.--Beverly Hills 
Polo Club hooded sweatshirts; Allura Imports, Inc.--Major Diva hooded 
sweatshirts; Baycreek, Inc.--Attitude Gold hooded sweatshirts; 
Franshaw, Inc.--Blue Heart and Just a Girl hooded sweatshirts; Bobens 
Trading Company, Inc.--Old Skool hooded sweatshirts; Weeplay Kids, 
LLC--Candy Queen and AKDMKS hooded sweatshirts; Ten West Apparel, 
Inc.--hooded jackets; Brand Evolution LLC--All Over Locks, All Over 
Skaters, and Rock Mask Hoody hooded sweatshirts; Regaliti, Inc.--Betty 
Blue hooded jackets; Byer California--jackets; Haselson International 
Trading, Inc.--Kani Gold and Roadblock hooded sweatshirts; Bubblegum 
USA--hooded jackets; North-Sportif, Inc.--hooded jackets; Five Star 
Apparel--hooded jackets; Trendset Originals LLC--Shampoo hooded 
jackets; Hind Fashions, Inc.--Hind leather and Lil Phat hooded jackets; 
Lollytogs, Ltd.--Rim Rocka hooded sweatshirts; S. Rothschild & Company, 
Inc.--wool coats; AJS Group LLC--Apple Bottom hooded jackets; 
Millennium Apparel Group Inc.--Disney Winnie the Pooh hooded jackets; 
and Winco USA, Inc.--Sergio Benini hooded jackets. The products 
identified in this paragraph are collectively referred to herein as 
``Garments.''

[[Page 44594]]

    5. Burlington sold the Garments, and/or held the Garments for sale, 
to consumers.
    6. The Garments are ``consumer product[s],'' and, at all relevant 
times, Burlington was a ``retailer'' of those consumer products, which 
were ``distributed in commerce,'' as those terms are defined in CPSA 
sections 3(a)(5), (8), and (13), 15 U.S.C. Sec.  2052(a)(5), (8), and 
(13).
    7. In February 1996, Staff issued the Guidelines for Drawstrings on 
Children's Upper Outerwear (``Guidelines'') to help prevent children 
from strangling or entangling on neck and waist drawstrings. The 
Guidelines state that drawstrings can cause, and have caused, injuries 
and deaths when they catch on items such as playground equipment, bus 
doors, or cribs. In the Guidelines, Staff recommends that no children's 
upper outerwear in sizes 2T to 12 be manufactured or sold to consumers 
with hood and neck drawstrings.
    8. In June 1997, ASTM adopted a voluntary standard (ASTM F1816-97) 
incorporating the Guidelines. The Guidelines state that firms should be 
aware of the hazards associated with drawstrings and should ensure that 
garments they sell conform to the voluntary standard.
    9. On May 19, 2006, the Commission posted on its Web site a letter 
from the Commission's Director of the Office of Compliance to 
manufacturers, importers, and retailers of children's upper outerwear. 
The letter urges them to make certain that all children's upper 
outerwear sold in the United States complies with ASTM F1816-97. The 
letter states that Staff considers children's upper outerwear with 
drawstrings at the hood or neck area to be defective and to present a 
substantial risk of injury to young children under Federal Hazardous 
Substances Act (``FHSA'') section 15(c), 15 U.S.C. Sec.  1274(c). The 
letter also references the CPSA's section 15(b) (15 U.S.C. Sec.  
2064(b)) reporting requirements.
    10. Staff provided Burlington with multiple direct notifications of 
the hazards associated with drawstrings on children's upper outerwear.
    11. Burlington's distribution in commerce of the Garments did not 
comply with the Guidelines or ASTM F1816-97, failed to comport with 
Staff's May 2006 defect notice, and posed strangulation hazards to 
children.
    12. Burlington informed the Commission that there had been no 
reported incidents or injuries associated with the Garments.
    13. The Commission, in cooperation with Burlington and/or other 
firms that were the Garments' manufacturers, importers, or 
distributors, announced recalls of the Garments.
    14. Based in part on information available through the sources set 
forth in paragraphs 7 through 10, Burlington had presumed and actual 
knowledge that the Garments distributed in commerce posed strangulation 
hazards and presented substantial risks of injury to children under 
FHSA section 15(c)(1), 15 U.S.C. Sec.  1274(c)(1). Burlington obtained 
information that reasonably supported the conclusion that the Garments 
contained defects that could create substantial product hazards or that 
the Garments created unreasonable risks of serious injury or death. 
Pursuant to CPSA sections 15(b)(3) and (4), 15 U.S.C. Sec.  2064(b)(3) 
and (4), Burlington was required to inform the Commission immediately 
of these defects and risks.
    15. Burlington knowingly and repeatedly failed to inform the 
Commission immediately about the Garments, as required by CPSA sections 
15(b)(3) and (4), 15 U.S.C. Sec.  2064(b)(3) and (4), and as the term 
``knowingly'' is defined in CPSA section 20(d), 15 U.S.C. Sec.  
2069(d). These knowing failures violated CPSA section 19(a)(4), 15 
U.S.C. Sec.  2068(a)(4). Pursuant to CPSA section 20, 15 U.S.C. Sec.  
2069, these knowing failures subjected Burlington to civil penalties.
    16. On repeated occasions from in or about September 2008 to 
January 2012, Burlington offered Garments for sale, sold Garments, and/
or otherwise distributed Garments in commerce that were subject to 
voluntary corrective actions taken by the Garments' manufacturers in 
consultation with the Commission. The Commission had notified the 
public of those voluntary corrective actions.
    17. Burlington knowingly engaged in the acts alleged in paragraph 
16, as the term ``knowingly'' is defined in CPSA section 20(d), 15 
U.S.C. Sec.  2069(d). These knowing acts violated CPSA section 
19(a)(2)(B), 15 U.S.C. Sec.  2068(a)(2)(B). Pursuant to CPSA section 
20, 15 U.S.C. Sec.  2069, these knowing acts subjected Burlington to 
civil penalties.
    18. Staff denies and/or does not concur with Burlington's 
responsive allegations below.

Burlington Responsive Allegations

    19. Burlington denies Staff's allegations above, including but not 
limited to any claim that Burlington failed to timely report to the 
Commission the sale or distribution of any children's upper outerwear 
products with drawstrings pursuant to Sec.  15(b) of the CPSA, or that 
Burlington knowingly offered Garments for sale, knowingly sold 
Garments, and/or otherwise knowingly distributed Garments in commerce 
that were subject to voluntary corrective actions.
    20. Burlington enters into the Agreement to settle this matter 
without the expense of litigation. Burlington enters into the Agreement 
and agrees to pay the amount referenced below in compromise of disputed 
and unproven allegations. Burlington's entering into the Agreement is 
not an admission of liability of any kind, whether legal or factual.
    21. Burlington did not manufacture the Garments. It purchased them 
from vendors and other suppliers. Consistent with practice in the 
retail industry, Burlington contractually required the Garment vendors 
to supply products that complied with all federal, state, and local 
laws, regulations, and standards, and relied on its suppliers to 
provide compliant products, as the suppliers were in the best position 
to know and understand the many legal requirements that were or 
potentially were applicable to their products.
    22. Since the Commission first issued the Guidelines in 1996, 
Burlington's children's apparel purchasing policy has prohibited 
Burlington's apparel buyers from purchasing children's upper outerwear 
with drawstrings. Prior to 2009, Burlington's management had procedures 
in place that it reasonably believed prevented the purchase of 
children's upper outerwear products with drawstrings. Upon learning in 
2009 that, despite such procedures, certain Garments had been 
discovered in Burlington's stores, Burlington undertook an extensive 
manual audit of all children's upper outerwear in all of its stores to 
determine whether it had unknowingly purchased other products subject 
to the Guidelines. This audit was a massive undertaking, as 
Burlington's personnel in all of its approximately 450 stores at that 
time had to visually inspect all items of children's upper outerwear, 
and the Guidelines and ASTM standard contain ambiguities that made it 
difficult to determine whether certain items failed to comply.
    23. Prior to the audit, Burlington's product compliance and safety 
personnel and children's apparel buyers had no knowledge, whether 
actual or constructive, that the Garments actually supplied by 
Burlington's suppliers contained drawstrings. Burlington promptly 
notified the Commission pursuant to Sec.  15(b) of the CPSA upon 
discovering as a result of the audit that it had purchased and sold 
many of the Garments.

[[Page 44595]]

    24. Burlington is unaware of any incidents or injuries associated 
with the Garments.

Agreement of the Parties

    25. Under the CPSA, the Commission has jurisdiction over this 
matter and over Burlington.
    26. The parties enter into the Agreement for settlement purposes 
only. The Agreement does not constitute an admission by Burlington, or 
a determination by the Commission, that Burlington knowingly violated 
the CPSA.
    27. The Agreement is a full and complete resolution between Staff 
and Burlington, and its parents, shareholders, divisions, subdivisions, 
subsidiaries, partners, sister companies and their successors and 
assigns of all claims for civil penalties that have been or could have 
been asserted based on the facts contained in Staff's allegations 
above, with regard to the failure to report the Garments or sale of the 
Garments after corrective action.
    28. In settlement of Staff's allegations, Burlington shall pay a 
civil penalty in the amount of one million five hundred thousand 
dollars ($1,500,000.00). 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 via www.pay.gov.
    29. Burlington agrees that it will not seek or accept, directly or 
indirectly, indemnification, reimbursement, insurance, or any other 
form of compensation or payment, including, but not limited to, cash, 
account credit, or set-off, from any vendor or supplier from which 
Burlington acquired the Garments, or from any other firm or person, for 
the civil penalty that Burlington agrees and is ordered to pay pursuant 
to the Agreement and Order.
    30. Upon provisional acceptance of the Agreement, the Agreement 
shall be placed on the public record and published in the Federal 
Register, in accordance with the procedures set forth in 16 C.F.R. 
Sec.  1118.20(e). In accordance with 16 C.F.R. Sec.  1118.20(f), if 
within fifteen (15) calendar days, the Commission does not receive any 
written request not to accept the Agreement, the Agreement shall be 
deemed finally accepted on the sixteenth (16th) calendar day after the 
date it is published in the Federal Register.
    31. Upon the Commission's final acceptance of the Agreement and 
issuance of the final Order, Burlington knowingly, voluntarily, and 
completely waives any rights it may have in this matter to the 
following: (1) An administrative or judicial hearing; (2) judicial 
review or other challenge or contest of the validity of the Order or of 
the Commission's actions; (3) a determination by the Commission of 
whether Burlington failed to comply with the CPSA and its underlying 
regulations; (4) a statement of findings of fact and conclusions of 
law; and (5) any claims under the Equal Access to Justice Act.
    32. The Commission may publicize the terms of the Agreement and the 
Order.
    33. The Agreement and the Order shall apply to, and be binding 
upon, Burlington and each of its successors and assigns.
    34. The Commission issues the Order under the provisions of the 
CPSA, and a violation of the Order may subject Burlington and each of 
its successors and assigns to appropriate legal action.
    35. 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. 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. The Agreement may 
be executed in counterparts.
    36. If any provision of the Agreement and 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 Burlington agree that severing the provision materially affects the 
purpose of the Agreement and the Order.

Burlington Coat Factory Warehouse Corporation

    Dated: June 29, 2012.
By:--------------------------------------------------------------------

Paul Tang,
Executive Vice President and General Counsel, 1830 Route 130, 
Burlington, NJ 08016.

    Dated: July 3, 2012.

By:--------------------------------------------------------------------

Jeffrey B. Margulies, Esq.
William L. Troutman, Esq.
Fulbright & Jaworski L.L.P., 555 South Flower Street, 41st Floor, 
Los Angeles, CA 90071.
Counsel--Burlington Coat Factory Warehouse Corporation.

U.S. Consumer Product Safety
Commission Staff.

Cheryl A. Falvey,
General Counsel.

Mary B. Murphy,
Assistant General Counsel, Office of the General Counsel.

    Dated: July 12, 2012
By:--------------------------------------------------------------------

Seth B. Popkin,
Lead Trial Attorney, Division of Compliance, Office of the General 
Counsel.

UNITED STATES OF AMERICA

CONSUMER PRODUCT SAFETY COMMISSION

In the Matter of Burlington Coat Factory Warehouse Corporation

CPSC Docket No. 12-C0008

ORDER

    Upon consideration of the Settlement Agreement entered into between 
Burlington Coat Factory Warehouse Corporation (``Burlington'') and U.S. 
Consumer Product Safety Commission (``Commission'') staff, and the 
Commission having jurisdiction over the subject matter and over 
Burlington, and it appearing that the Settlement Agreement and the 
Order are in the public interest, it is
    Ordered, that the Settlement Agreement be, and hereby is, accepted; 
and it is
    Further ordered, that Burlington shall pay a civil penalty in the 
amount of one million five hundred thousand dollars ($1,500,000.00) 
within twenty (20) calendar days of service of the Commission's final 
Order accepting the Agreement. The payment shall be made via 
www.pay.gov. Upon the failure of Burlington to make the foregoing 
payment when due, interest on the unpaid amount shall accrue and be 
paid by Burlington at the federal legal rate of interest set forth at 
28 U.S.C. Sec.  1961(a) and (b).
    Provisionally accepted and provisional Order issued on the 25th day 
of July, 2012.

    By Order of the Commission:

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Todd A. Stevenson,
Secretary, U.S. Consumer Product Safety Commission.
[FR Doc. 2012-18459 Filed 7-27-12; 8:45 am]
BILLING CODE 6355-01-P
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