05-13288. Rose Art Industries, Inc., a Corporation, 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 Rose Art Industries, Inc., a corporation, containing a civil penalty of $300,000.00.

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 July 21, 2005.

ADDRESSES:

Persons wishing to comment on this Settlement Agreement should send written comments to the Comment 05-C0009, Office of the Secretary, Consumer Product Safety Commission, Washington, DC 20207.

FOR FURTHER INFORMATION CONTACT:

Ronald G. Yelnik, 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: June 30, 2005.

Todd A. Stevenson,

Secretary.

Settlement Agreement and Order

1. This Settlement Agreement is made by and between the staff (the “staff”) of the U.S. Consumer Product Safety Commission (the “Commission”) and Rose Art Industries, Inc. (“Rose Art” or “Respondent”), a corporation, in accordance with 16 CFR section 1118.20 of the Commission's procedures for Investigations, Inspections, and Inquiries under the Consumer Product Safety Act (“CPSA”). This Settlement Agreement and the incorporated attached Order settle the staff's allegations set forth below.

The Parties

2. The Commission is an independent federal regulatory agency responsible for the enforcement of the Consumer Product Safety Act, 15 U.S.C. sections 2051-2084.

3. Rose Art is a corporation organized and existing under the laws of the State of New Jersey with its principal corporate offices located in Livingston, New Jersey. Respondent manufactures are materials, toys and stationery products.

Staff Allegations

4. Between August 1997 and December 2001, Rose Art manufactured and sold nationwide approximately 124,000 Glamour Gear Soap Making Kits, models 4054 and 4121 (the “Kit(s)” or the “product(s)”. Each Kit includes bars of soap, molds, and a plastic cup to melt soap chunks. These Kits are intended for use by children eight years of age and older.

5. The Kits are “consumer products” and Respondent is a “manufacturer” of “consumer products,” which were “distributed in commerce” as those terms are defined in sections 3(a)(1), (4), (11) and (12) of the CPSA, 15 U.S.C. 2052(a)(1), (4), (11), and (12).

6. The Kits are defective because the plastic cup used to heat the soap in a microwave oven may become deformed or develop a hole in the bottom, causing the hot soap contained therein to leak from the cup. If this occurs, young children and others may sustain serious burn injuries.

7. Between January 1998 and January 2002, Rose Art received reports of 10 children who were burned by hot soap while removing the plastic cup from a microwave oven. The majority of these children sustained second and third degree burns.

8. Despite being aware of the aforementioned reports, Rose Art did not inform the Commission about this information until February 14, 2002, when it submitted both a section 15 and a section 37 report.

9. Although Rose Art had obtained sufficient information to reasonably support the conclusion that the Kits contained a defect which could create a substantial product hazard, or created an unreasonable risk of serious injury or death, long before February 14, 2002, it failed to immediately inform the Commission of such defect or risk as required by sections 15(b)(2) and (3) of the CPSA, 15 U.S.C. 2064(b)(2) and (3). By failing to do so, Rose Art violated section 19(a)(4) of the CPSA, 15 U.S.C. 2068(a)(4).

10. Respondent committed this failure to immediately inform the Commission of the subject defect or risk “knowingly” as the term “knowingly” is defined in section 20(d) of the CPSA, 15 U.S.C. 2069(d), and pursuant to section 20 of the CPSA, 15 U.S.C. 2069, Respondent is subject to civil penalties.

Response of Rose Art

11. Rose Art denies the allegations of the staff that the Kits contain a defect which could create a substantial product hazard, or create an unreasonable risk of serious injury or death, and denies that it violated the reporting requirements of section 15(b) of the CPSA, 15 U.S.C. 2064(b). Respondent also denies that the products when maintained and used properly create a substantial product hazard or an unreasonable risk of serious injury or death under section 15(b) of the CPSA, 15 U.S.C. 2064(b). Respondent asserts that it did not “knowingly” violate any reporting requirements under the CPSA. Respondent further asserts that any injury associated with the use of its products was attributable to unreasonable consumer misuse of the products contrary to instructions and without adequate adult supervision.

12. Notwithstanding its denial that the Kits contain a defect which could create a substantial product hazard, or create an unreasonable risk of serious injury or death, Respondent nevertheless, cooperated with the staff in recalling the products.

Agreement of The Parties

13. The Commission has jurisdiction over this matter and over Rose Art Under the CPSA, 15 U.S.C. 2051-2084.

14. In settlement of the staff's allegations, Rose Art agrees to pay a civil penalty of three hundred thousand dollars ($300,000.00) in two installments. The first installment of one hundred fifty thousand dollars ($150,000.00) shall be paid within twenty (20) calendar days of service of the Final Order of the Commission accepting this Settlement Agreement. The second installment of one hundred fifty thousand dollars ($150.000.00) shall be paid on or before January 31, 2006. These payments shall be made by check payable to the order of the United States Treasury.

15. The parties enter into this Settlement Agreement for settlement purposes only. The Settlement Agreement does not constitute an admission by Rose Art, or a determination by the Commission that Rose Art has violated the CPSA's reporting requirements.

16. Upon provisional acceptance of this Settlement Agreement and Order by the Commission, the Commission shall place this Agreement and Order on the public record and shall publish it in the Federal Register in accordance with he procedure set forth in 16 C.F.R. 1118.20(e). If the Commission does not receive any written request not to accept the Settlement Agreement and Order within 15 days, the Agreement and Order shall be deemed finally accepted on the 16th day after the date it is published in the Federal Register

17. Upon final acceptance of this Settlement Agreement by the Commission and issuance of the Final Order, Rose Art knowingly, voluntarily and completely waives any rights it may have in this matter to the following: (i) An administrative or judicial hearing; (ii) judicial review or other challenge or contest of the validity of the Commission's actions; (iii) a determination by the Commission as to whether Respondent failed to comply with the CPSA and its underlying regulations; (iv) a statement of findings of fact and conclusions of law; and (v) any claims under the Equal Access to Justice Act.

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

19. This Settlement Agreement and Order shall apply to, and be binding upon Respondent and each of its successors and assigns.

20. The Commission's Order in this matter is issued under the provisions of the CPSA, 15 U.S.C. 2051-2084, and a violation of the Order may subject Respondent to appropriate legal action.

21. This Settlement Agreement may be used in interpreting the Order. Agreements, understandings, representations, or interpretations made outside of this Settlement Agreement and Order may not be used to vary or to contradict its terms.

22. The Settlement Agreement and Order shall not be waived, changed, amended, modified, or otherwise altered, except in writing executed by the party against whom such amendment, modification, alteration, or waiver is sought to be enforced, and approved by the Commission.

23. If, after the effective date hereof, any provision of this Settlement Agreement and Order is held to be illegal, invalid, or unenforceable under present or future laws effective during the terms of the Settlement Agreement and Order shall remain in full effect, unless the Commission and Respondent determine that severing the provision materially impacts the purpose of the Settlement Agreement and Order.

Rose Art Industries, Inc.

Dated: April 25, 2005

Jeffrey Rosen,

Chief Operating Officer, Rose Art Industries, Inc., 6 Regent Street, Livingston, NJ 07039.

Frederick B. Locker, Esq.,

Locker, Brainin & Greenberg, 420 Fifth Avenue, New York, NY 10018, Counsel for Rose Art Industries, Inc.

U.S. Consumer Product Safety Commission.

John Gibson Mullan,

Director, Office of Compliance.

Eric L. Stone, Director,

Legal Division, Office of Compliance.

Dated: April 27, 2005.

Ronald G. Yelenik,

Senior Attorney, M. Reza Malihi, Trial Attorney, Legal Division, Office of Compliance.

Order

Upon consideration of the Settlement Agreement entered into between Rose Art Industries, Inc. (“Rose Art”) and the staff of the U.S. Consumer Product Safety Commission (the “Commission”), and the Commission having jurisdiction over the subject matter and over Rose Art, and it appearing that the Settlement Agreement is in the public interest, it is

Ordered, that the Settlement Agreement be, and hereby is, accepted; and it is

Further Ordered, that Rose Art shall pay a civil penalty of three hundred thousand dollars ($300,000.00) in two installments. The first installment of one hundred fifty thousand dollars ($150,000.00) shall be paid within twenty (20) calendar days of service of the Final Order of the Commission accepting the Settlement Agreement. The second installment of one hundred fifty thousand dollars ($150,000.00) shall be paid on or before January 31, 2006. These payments shall be made by check payable to the order of the United States Treasury. Upon the failure of Rose Art to make a payment or upon the making of a late payment, (i) the entire amount of the civil penalty shall become due and payable, and (ii) interest on the outstanding balance shall accrue and be paid at the federal legal rate of interest under the provisions of 28 U.S.C. 1961(a) and (b).

Provisionally accepted and Provisional Order issued on the 30th day of June, 2005.

By Order of the Commission,

Todd A. Stevenson,

Secretary, Consumer Product Safety Commission.