E9-8688. Kidz World, Inc., d/b/a High Energy USA, 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 Kidz World, Inc., d/b/a High Energy USA, containing a civil penalty of $25,000.00.

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 May 1, 2009.

ADDRESSES:

Persons wishing to comment on this Settlement Agreement should send written comments to the Comment 09-C0014, Office of the Secretary, Consumer Product Safety Commission, 4330 East West Highway, Room 502, Bethesda, Maryland 20814-4408.

FOR FURTHER INFORMATION CONTACT:

Dennis C. Kacoyanis, Trial Attorney, Division of Compliance, Office of the General Counsel, Consumer Product Safety Commission, 4330 East West Highway, Bethesda, Maryland 20814-4408; telephone [phone].

SUPPLEMENTARY INFORMATION:

The text of the Agreement and Order appears below.

Dated: April 9, 2009.

Todd A. Stevenson,

Secretary.

Settlement Agreement

1. In accordance with 16 CFR 1118.20, Kidz World, Inc., d/b/a High Energy USA (“Kidz World”) and the staff (“Staff”) of the United States Consumer Product Safety Commission (“Commission”) enter into this Settlement Agreement (“Agreement”). The Agreement and the incorporated attached Order (“Order”) settle the Staff's allegations set forth below.

Parties

2. The Commission is an independent federal regulatory agency established pursuant to, and responsible for the enforcement of the Consumer Product Safety Act, 15 U.S.C. 2051-2089 (“CPSA”).

3. Kidz World is a corporation organized and existing under the laws of the State of New York, with its principal offices located in New York, NY. Kidz World is an importer of apparel.

Staff Allegations

4. From September 2007 to October 2007, Kidz World imported and/or sold to U.S. retailers about 5,000 boy's hooded sweatshirts with drawstrings (“Drawstring Sweatshirts”).

5. The Drawstring Sweatshirts are “consumer product[s],” and, at all times relevant hereto, Kidz World was a “manufacturer” of those consumer products, which were “distributed in commerce,” as those terms are defined in CPSA sections 3(a), (5), (8), and (11), 15 U.S.C. 2052(a), (5), (8), and (11).

6. In February 1996, the 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, the Staff recommends that there be no hood and neck drawstrings in children's upper outerwear sized 2T to 12.

7. In June 1997, ASTM adopted a voluntary standard, ASTM F1816-97, that incorporated the Guidelines. The Guidelines state that firms should be aware of the hazards and should be sure garments they sell conform to the voluntary standard.

8. 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 the 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. 1274(c). The letter also notes the CPSA's section 15(b) reporting requirements.

9. Kidz World reported to the Commission there had been no incidents or injuries involving Drawstring Sweatshirts.

10. Kidz World's importation and distribution in commerce of the Drawstring Sweatshirts did not meet the Guidelines or ASTM F1816-97, failed to comport with the Staff's May 2006 defect notice, and posed a strangulation hazard to children.

11. On March 28, 2008, the Commission and Kidz World announced a recall of the Drawstring Sweatshirts. The recall informed consumers that they should immediately remove the drawstrings to eliminate the hazard.

12. Kidz World had presumed and actual knowledge that the Drawstring Sweatshirts distributed in commerce posed a strangulation hazard and presented a substantial risk of injury to children under FHSA section 15(c)(1), 15 U.S.C. 1274(c)(1). Kidz World had obtained information that reasonably supported the conclusion that the Drawstring Sweatshirts contained a defect that could create a substantial product hazard or that they created an unreasonable risk of serious injury or death. CPSA sections 15(b)(3) and (4), 15 U.S.C. 2064(b)(3) and (4), required Kidz World to immediately inform the Commission of the defect and risk.

13. Kidz World knowingly failed to immediately inform the Commission about the Drawstring Sweatshirts as required by CPSA sections 15(b)(3) and (4), 15 U.S.C. 2064(b)(3) and (4), and as the term “knowingly” is defined in CPSA section 20(d), 15 U.S.C. 2069(d). This failure violated CPSA section 19(a)(4), 15 U.S.C. 2068(a)(4). Pursuant to CPSA section 20, 15 U.S.C. 2069, this failure subjected Kidz World to civil penalties.

Kidz World Response

14. Kidz World denies the Staff's allegations that Kidz World violated the CPSA.

Agreement of the Parties

15. Under the CPSA, the Commission has jurisdiction over this matter and over Kidz World.

16. The parties enter into the Agreement for settlement purposes only. The Agreement does not constitute an admission by Kidz World, or a determination by the Commission, that Kidz World has knowingly violated the CPSA.

17. In settlement of the Staff's allegations, Kidz World shall pay a civil penalty in the amount of twenty-five thousand dollars ($25,000.00) in three (3) installments as follows: The first installment payment of $8,334.00 shall be paid within twenty (20) calendar days of service of the Commission's final Order accepting the Agreement; the second installment payment of $8,333.00 shall be paid within one (1) year of service of the Commission's final Order accepting the Agreement; and the third installment of $8,333.00 shall be paid within two (2) years of service of the Commission's final Order accepting the Agreement. Each installment payment shall be by check payable to the order of the United States Treasury.

18. 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 CFR 1118.20(e). In accordance with 16 CFR 1118.20(f), 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 sixteenth (16th) calendar day after the date it is published in the Federal Register.

19. Upon the Commission's final acceptance of the Agreement and issuance of the final Order, Kidz World knowingly, voluntarily, and completely waives any rights it may have regarding the Staff's allegations 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 Kidz World 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.

20. The Commission may publicize the terms of the Agreement and the Order.

21. The Agreement and the Order shall apply to, and be binding upon, Kidz World and each of its successors and assigns.

22. The Commission issues the Order under the provisions of the CPSA, and violation of the Order may subject Kidz World to appropriate legal action.

23. 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.

24. 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 Kidz World agree that severing the provision materially affects the purpose of the Agreement and the Order.

Kidz World, Inc., d/b/a High Energy USA.

Dated: December 29, 2008.

By:

Victor Hara,

President, Kidz World, Inc., d/b/a High Energy USA, Empire State Building, 350 5th Avenue, Suite 5005, New York, NY 10118.

Dated: January 7, 2009.

By:

Dennis R. McCoy,

Esquire, Counsel for Respondent Kidz World, Inc., d/b/a High Energy USA, Hiscock & Barclay, 1100 M & T Center, 3 Fountain Plaza, Buffalo, NY 14203.

U.S. Consumer Product Safety Commission.

Cheryl A. Falvey,

General Counsel.

Ronald G. Yelenik,

Assistant General Counsel, Office of the General Counsel.

Dated: January 7, 2009

By:

Dennis C. Kacoyanis,

Trial Attorney, Division of Compliance, Office of the General Counsel.

Order

Upon consideration of the Settlement Agreement entered into between Kidz World, Inc., d/b/a High Energy USA (“Kidz World”) and the U.S. Consumer Product Safety Commission (“Commission”) staff, and the Commission having jurisdiction over the subject matter and over Kidz World, 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, Kidz World shall pay a civil penalty in the amount of twenty-five thousand dollars ($25,000.00) in three (3) installments as follows: The first installment payment of $8,334.00 shall be paid within twenty (20) calendar days of service of the Commission's final Order accepting the Agreement; the second installment payment of $8,333.00 shall be paid within one (1) year of service of the Commission's final Order accepting the Agreement; and the third installment of $8,333.00 shall be paid within two (2) years of service of the Commission's final Order accepting the Agreement. Each installment payment shall be by check payable to the order of the United States Treasury.

Upon the failure of Kidz World to make the foregoing payment when due, interest on the unpaid amount shall accrue and be paid by Kidz World at the federal legal rate of interest set forth at 28 U.S.C. 1961(a) and (b).

Provisionally accepted and provisional Order issued on the 8th April, 2009.

By Order of the Commission.

Todd A. Stevenson,

Secretary, U.S. Consumer Product Safety Commission.