01-26287. Chemetron Corporation, Chemetron Investments, Inc., Sunbeam Corporation, Sprinkler Corporation of Milwaukee, Inc., and Grucon Corporation; Complaint

AGENCY:

Consumer Product Safety Commission.

ACTION:

Publication of a complaint under the Consumer Product Safety Act.

SUMMARY:

Under provisions of its Rules of Practice for Adjudicative Proceeding (16 CFR part 1025), the Consumer Product Safety Commission must publish in the Federal Register Complaints which it issues. Published below is a Complaint in the matter of Chemetron Corporation, Chemetron Investments, Inc., Sunbeam Corporation, Sprinkler Corporation of Milwaukee, Inc., and Grucon Corporation.

SUPPLEMENTARY INFORMATION:

The text of the complaint appears below.

Dated: October 15, 2001.

Todd A. Stevenson,

Acting Secretary.

Consumer Product Safety Commission

In the matter of Chemetron Corporation, f/k/a Chemetron Investments, Inc. and Chemetron Investments, Inc., f/k/a Chemetron Corporation and Sunbeam Corporation and Sprinkler Corporation of Milwaukee, Inc., f/k/a Star Sprinkler Corporation, f/k/a Grunau Sprinkler Manufacturing Company, Inc. and Grucon Corporation; Complaint

Nature of Proceedings

1. This is an administrative proceeding pursuant to section 15 of the Consumer Product Safety Act (“CPSA”), 15 U.S.C. 2064, for public notification and remedial action to protect the public from a substantial product hazard presented by failure of the Star ME-1 fire sprinkler manufactured from 1977 to 1995. This proceeding is governed by the Rules of Practice for Adjudicative Proceedings before the United States Consumer Product Safety Commission, 16 CFR part 1025.

Jurisdiction

2. This proceeding is instituted pursuant to the authority contained in section 15(c), (d), and (f) of the CPSA, 15 U.S.C. 2064(c), (d), and (f).

Parties

3. Complaint Counsel is the staff of the Legal Division of the Office of Compliance of the United States Consumer Product Safety Commission (“Commission”), and independent regulatory commission established by section 4 of the CPSA, 15 U.S.C. 2053.

4. Respondent Chemetron Corporation (“CC”), formerly and also known as “Chemetron Investments, Inc.” and formerly doing business as “Star Sprinkler,” is a Delaware corporation, with its principal place of business at 2381 Executive Center Drive, Boca Raton, Florida 33431. CC manufactured the Star ME-1 from in or about 1976 to in or about 1982.

5. Respondent Chemetron Investments, Inc. (“CI”), formerly and also known as “Chemetron Corporation,” is a Delaware corporation, with its principal place of business at 2381 Executive Center Drive, Boca Raton, Florida 33431.

6. Respondent Sunbeam Corporation (“Sunbeam”) is a Delaware corporation, with its principal place of business at 2381 Executive Center Drive, Boca Raton, Florida 33431. Under an Asset Purchase Agreement dated September 28, 1990, Sunbeam acquired the stock and assets of CC and CI. CC and CI have been and are Sunbeam subsidiaries. By virtue of the Asset Purchase Agreement and Sunbeam's stock and assets acquisition of CC and CI, Sunbeam assumed CC's and CI's liabilities for the Star ME-I relief sought herein.

7. Respondent Sprinkler Corporation of Milwaukee, Inc., formerly known as “Star Sprinkler Corporation” and “Grunau Sprinkler Manufacturing Company, Inc.” (“SCM”), is a Wisconsin corporation with its last known principal place of business at 307 West Layton Avenue, Milwaukee, Wisconsin 53207. SCM manufactured the Star ME-1 from in or about 1983 through in or about early 1996.

8. Respondent Grucon Corporation (“Grucon”) is Delaware corporation with its principal place of business at 1100 West Anderson Court, Oak Creek, Wisconsin 53154. From 1983 to the present, Grucon owned and operated SCM under a variety of names. Grucon and SCM have engaged in actions disregarding corporate form and identities, and/or they have failed to take actions to property maintain corporate form and identities. These actions, failures, and related effects include, but are not limited to, the following: common business interests, common control and management, SCM's dependence on Grucon, SCM's absence of assets or employees, SCM's undercapitalization, SCM's board of directors resolution to temporarily pay down the credit lines and debt obligations of Grucon and other Grucon subsidies with proceeds to SCM's assets sale, SCM's board of directors resolution to pay to Grucon proceeds to SCM 's assets sale, SCM's failure to make corporate filings, and/or Grucon's guarantees on behalf of SCM.

9. There was and/or is such unity of interest and ownership between SCM and Grucon that the purported separate personalities of the corporations did not and/or do not exist. Given the compelling public interest at stake in effectuating the relief sought herein, and SCM's reported lack of assets with which to fund such relief, adherence to the fiction of the separate corporate existences of SCM and Grucon would promote injustice and/or inequitable consequences.

10. Each of the Respondents was and/or is a “manufacturer” and/or a “distributor” as those terms are defined in section 3(a)(4) and (5) of the CPSA, 15 U.S.C. 2052(a)(4) and (5).

Consumer Product

11. The Star ME-1 fire sprinkler is a dry fire sprinkler manufactured under the “Star” brand name that was labeled and sold as model “ME-1” in various sizes, temperature ratings, finishes, and installation positions (“Star ME-1”). The Star ME-1 is intended to suppress and/or extinguish fire.

12. The Star ME-1 is an article produced and distributed for the personal use, consumption, and/or enjoyment of a consumer in or around a household or residence, in recreation, or otherwise. The Star ME-1 is used in, among other places, day care centers, nursing homes, and health care facilities. The Star ME-1 is a “consumer product” that was “distributed in commerce,” as those terms are defined in section 3(a)(1) and (11) of the CPSA, 15 U.S.C. 2052(a)(1), (11).

Defect

13. The Star ME-1 is intended to operate in accordance with applicable industry standards and building code requirements. The Star ME-1 is intended to operate when the temperature to which it is exposed reaches a particular level, at which point a thermal sensing element at the exposed end of the sprinkler should melt, and water would flow through and discharge from the sprinkler.

14. As a result of inadequate design and/or manufacturing, the Star ME-1 has failed and is likely to fail to operate as intended in fires.

15. The inadequate design and/or manufacturing of the Star ME-1 constitutes a “defect” as that term is used in section 15(a)(2) of the CPSA, 15 U.S.C. 2064(a)(2).

Substantial Risk of Injury and Substantial Product Hazard

16. From 1977 through 1995, Respondents manufactured and/or distributed approximately 700,000 Star ME-1's.

17. Star ME-1's are likely to fail to operate as intended in a fire. Failure of the Star ME-1 to operate as intended in a fire creates a likelihood the fire will grow and spread, exposing consumers to the risk of serious injury and death.

18. The defect in the Star ME-1 manufactured from 1977 through 1995 creates a “substantial risk of injury to the public” within the meaning of section 15(a)(2) of the CPSA, 15 U.S.C. 2064(a)(2).

19. The Star ME-1 manufactured from 1977 through 1995 constitutes a “substantial product hazard” as that term is defined and used in section 15(a)(2), (c), and (d) of the CPSA, 15 U.S.C. 2064(a)(2), (c), and (d).

Relief Sought

Wherefore, in the public interest, Complaint Counsel requests that the Commission:

A. Determine that the Star ME-1 manufactured from 1977 through 1995 was distributed in commerce and presents a “substantial product hazard” within the meaning of section 15(a)(2) of the CPSA, 15 U.S.C. 2064(a)(2).

B. Determine under section 15(c) of the CPSA, 15 U.S.C. 2064(c), that public notification is required to protect the public adequately from the substantial product hazard presented by the Star ME-1 manufactured from 1977 through 1995, and order that the respondents:

1. Give prompt public notice of the defect in the Star ME-1 manufactured from 1977 through 1995, the risk of injury and the hazard to the public, and the remedies available to remove the risk of injury and hazard;

2. Mail such notice to each person who is or has been a manufacturer, distributor, or retailer of the Star ME-1;

3. Mail such notice to each person to whom the Respondents know the Star ME-1 manufactured from 1977 through 1995 was delivered or sold; and

4. Include in such notice a complete description of the risk and hazard presented, a warning that the Star ME-1 manufactured from 1977 through 1995 must be replaced immediately, clear instructions informing consumers of the means by which to avail themselves of any and all remedies ordered by the Commission, and such other information as the Commission may order.

C. Determine that action under section 15(d) of the CPSA, 15 U.S.C. 2064(d), is in the public interest and order Respondents:

1. To elect to repair the defect in all the Star ME-1's manufactured from 1977 through 1995 so they will operate as intended and required and not present a risk of injury and hazard to the public; to replace all the Star ME-1's manufactured from 1977 through 1995 with a like or equivalent product that does not contain the defect, operates as intended and required, and will not present a risk of injury and hazard to the public; or to refund to consumers the purchase price of the Star ME-1's manufactured from 1977 through 1995;

2. To make no charge to consumers and to reimburse them for any foreseeable expenses incurred in availing themselves of any remedy provided under any Commission Order issued in this matter;

3. To reimburse distributors, dealers, contractors, and installers for expenses in connection with carrying out any Commission Order issued in this matter;

4. To submit a plan satisfactory to the Commission for taking action under C(1) through (3) above;

5. To submit monthly reports documenting progress of the corrective action program;

6. For a period of five (5) years after entry of a Final Order in this matter, to keep records of all actions taken to comply with C(1) through (5) above, and to supply those records to the Commission, upon request, for the purpose of monitoring compliance with the Final Order;

7. To notify the Commission at least 60 days prior to any change in the Respondents' business (such as incorporation, dissolution, assignment, sale, or petition for bankruptcy) that results in, or is intended to result in, the emergence of successor ownership, the creation or dissolution of subsidiaries, going out of business, or any other change that might affect compliance with any Order issued by the Commission in this matter; and

8. To take such other and further actions as the Commission deems necessary to protect the public health and safety and to comply with the CPSA.

Issued by Order of the Commission.

Alan H. Schoem,

Assistant Executive Director, Office of Compliance, U.S. Consumer Product Safety Commission, [phone].

Eric L. Stone,

Director, Legal Division, Office of Compliance.

Seth B. Popkin,

Complaint Counsel, Office of Compliance, 4330 East West Highway, Room 613, Bethesda, Maryland 20814, [phone], ext. 1358.