04-1607. E&B Giftware, LLC, Provisional Acceptance of a Settlement Agreement and Order

AGENCY:

Consumer Product Safety Commission.

ACTION:

Notice.

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 E&B Giftware, LLC., containing a civil penalty of $100,000.

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 February 11, 2004.

ADDRESSES:

Persons wishing to comment on this Settlement Agreement should send written comments to Comment 04-C0002, Office of the Secretary, Consumer Product Safety Commission, Washington, DC 20207.

FOR FURTHER INFORMATION CONTACT:

Michelle F. Gillice, Trial Attorney, Office of Compliance, Consumer Product Safety Commission, Washington, DC 20207; telephone [phone].

SUPPLEMENTARY INFORMATION:

The text of the Agreement and Order appears below.

Dated: January 20, 2004.

Todd A. Stevenson,

Secretary.

Settlement Agreement and Order

1. E&B Giftware, LLC enters into this Settlement Agreement and Order (hereinafter, “Settlement Agreement” or “Agreement”) with the staff of the Consumer Product Safety Commission (the “Commission”), and agrees to the entry of the attached Order incorporated by reference herein. The Settlement Agreement settles the Commission 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 (“CPSA”), 15 U.S.C. 2051 et seq.

3.(a) E&B Giftware, LLC, established in June 2000, is a limited liability company, organized and existing under the laws of the State of Delaware, with its principal office located at 4 Executive Plaza, Yonkers, New York, 10701.

(b) Sun-It Corporation (“Sun-It”) was a partially-owned subsidiary of E&B Giftware, Inc. (“Giftware, Inc.”).

(c) E&B Giftware, Inc. owned 80% of the stock of Sun-It at the time of the events discussed in this Agreement. Without admitting that it is a successor in interest, E&B Giftware, LLC (hereinafter, “Respondent”) agrees to be bound by and comply with this Settlement Agreement and Order.

II. Staff Allegations

4. Between February 1997 and September 1997, Sun-It (a subsidiary of E&B Giftware, Inc.) manufactured and distributed approximately 47,000 “Money to Burn Torch” citronella candles (“candles”), style number 330N.

5. The candles were sold to and/or used by consumers for use in or around a permanent or temporary household or residence, a school, in recreation, or otherwise and are, therefore, “consumer products” as defined in section 3(a)(1) of the CPSA, 15 U.S.C. 2052(a)(1). Sun-It was a “manufacturer” and “distributor” of the candles which were “distributed into commerce” as those terms are defined in sections 3(a)(4), (5), (11) and (12) of the CPSA, 15 U.S.C. 2052(a)(4), (5), (11) and (12).

6. The candle is defective because the wrapper which surrounds the candle traps a pool of hot wax which becomes super heated. Consumers were exposed to a burn risk because the candles could release molten wax when the consumer blew on the candle in an attempt to extinguish it, bumped into the candle, or when the candle unexpectedly flared up.

7. Between May 1997 and October 1997, E&B Giftware, Inc. through its subsidiary Sun-It, received notice of fourteen incidents in which consumers suffered serious burns. Several consumers reported that the burns left permanent scarring. One consumer reported receiving third degree burns.

8. In the fall of 1997, E&B Giftware, Inc. approved of Sun-It's decision to stop sale of the candles and notify retailers to return candles in their inventory. Sun-It contacted the retailers to recall the candles.

9. Respondent claims that 13,424 candles were returned and subsequently destroyed along with 3,382 units of unshipped inventory. E&B Giftware, Inc. received notice of another three incidents after its unilateral recall. In one of these post recall incidents, a consumer reported receiving third degree burns.

10. On August 24, 1999, the Commission contacted E&B Giftware, Inc. regarding two incidents that it had become aware of and requested that E&B Giftware, Inc. submit a full report pursuant to Section 15 of the CPSA.

11. E&B Giftware, Inc. provided a full report on September 27, 1999.

12. By the time E&B Giftware, Inc. initiated a stop sale and recall of inventory in the fall of 1997, it had obtained information which reasonably supported the conclusion that the candles 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 such information in a timely manner to the Commission as required by sections 15(b)(2) and (3) of the CPSA, 15 U.S.C. 2064(b)(2), (3).

13. By failing to provide the information to the Commission in a timely manner as required by section 15(b) of the CPSA, 15 U.S.C. 2064(b), E&B Giftware, Inc. violated 19(a)(4) of the CPSA, 15 U.S.C. 2068(a)(4).

14. E&B Giftware, Inc. committed this failure to report to the Commission “knowingly” as the term “knowingly” is defined in section 20(d) of the CPSA, 15 U.S.C. 2069(d), thus, subjecting E&B Giftware to civil penalties under section 20 of the CPSA, 15 U.S.C. 2069.

III. E&B Giftware LLC Response

15. Respondent denies the staff's allegations in paragraph 6 that the candles were defective and that it violates the CPSA as set forth in paragraphs 12 through 14.

IV. Agreement of the Parties

16. The Consumer Product Safety Commission has jurisdiction over this matter and over E&B Giftware, LLC under the Consumer Product Safety Act, 15 U.S.C. 2051 et seq.

17. This Agreement is entered into for settlement purposes only and does not constitute an admission by Respondent or a determination by the Commission that E&B Giftware, Inc. knowingly violated the CPSA's reporting requirement.

18. In settlement of the staff's allegations, Respondent agrees to pay a civil penalty of one hundred thousand and 00/100 dollars ($100,000.00), in full settlement of this matter, and payable within twenty (20) calendar days of receiving service of the final Settlement Agreement and Order, or by December 31, 2003, whichever occurs later.

19. 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 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 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 to Justice Act.

20. 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 objections within 15 days, the Agreement will be deemed finally accepted on the 16th day after the date it is published in the Federal Register.

21. The Commission may publicize the terms of the Settlement Agreement and Order.

22. The Commissioner's Order in this matter is issued under the provisions of the CPSA, 15 U.S.C. 2051 et seq. Violation of this Order may subject Respondent to appropriate legal action.

23. 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.

24. The provisions of this Settlement Agreement and Order shall apply to E&B Giftware, LLC and each of its successors and assigns.

E&B Giftware, LLC.

Dated: November 10, 2003

Edward Sacks,

Chief Executive Officer.

William Walsh,

Esquire, Respondent's Attorney.

The U.S. Consumer Product Safety Commission.

Alan H. Schoem,

Director, Office of Compliance.

Eric L. Stone,

Director, Legal Division, Office of Compliance.

January 16, 2004.

Michelle F. Gillice,

Trial Attorney, Legal Division, Office of Compliance.

Order

Upon consideration of the Settlement Agreement between Respondent E&B Giftware, LLC and the staff of the Consumer Product Safety Commission, and the Commission having jurisdiction over the subject matter and over E&B Giftware LLC, and it 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 E&B Giftware, LLC shall pay the United States Treasury a civil penalty in the amount of one hundred thousand and 00/100 dollars, ($100,000.00), payable within twenty (20) days of the service of the Final Order upon E&B Giftware, LLC, or by December 31, 2003, whichever occurs later.

Provisionally accepted and Provisional Order issued on the 20th day of January, 2004.

By Order of the Commission.

Todd A. Stevens,

Secretary, Consumer Product Safety Commission.