Gund, Inc., a Corporation; Provisional Acceptance of a Settlement Agreement and Order

CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 95-C0001]

Gund, Inc., a Corporation; Provisional Acceptance of a Settlement

Agreement and Order

AGENCY: Consumer Product Safety Commission.

ACTION: Provisional acceptance of a settlement agreement under the

Consumer Product Safety Act.

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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)

through (h). Published below is a provisionally-accepted Settlement

Agreement with Gund, Inc., a corporation.

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 November 4, 1994.

ADDRESSES: Persons wishing to comment on this Settlement Agreement

should send written comments to the Comment 95-C0001, Office of the

Secretary, Consumer Product Safety Commission, Washington, D.C. 20207.

FOR FURTHER INFORMATION CONTACT:

Eric L. Stone, Trial Attorney, Office of Compliance and Enforcement,

Consumer Product Safety Commission, Washington, D.C. 20207; telephone

(301) 504-0626.

SUPPLEMENTARY INFORMATION: The text of the Agreement and Order appears

below.

Dated: October 14, 1994.

Sadye E. Dunn,

Secretary.

Settlement Agreement and Order

Gund, Inc. (``Gund or ``Respondent'') enters into this Settlement

Agreement and Order (``the Agreement'') with the staff (``the staff'')

of the Consumer Product Safety Commission (``the Commission'') pursuant

to the procedures set forth in Sec. 1118.20 of the Commission's

Procedures for Investigations, Inspections, and Inquiries under the

Consumer Product Safety Act (CPSA), 16 CFR Part 1118.

The Parties

1. The Consumer Product Safety Commission is an independent

regulatory agency of the United States government responsible for the

enforcement of the Consumer Product Safety Act, 15 U.S.C. 2051-2084,

and the Federal Hazardous Substances Act (FHSA), 15 U.S.C. 1261-1277.

2. Respondent Gund is a corporation organized and existing under

the laws of the State of New Jersey with principal corporate offices at

1 Runyons Lane, Edison, NJ 08818. Gund is a manufacturer and importer

of plush toys and cribmobiles known as ``Gundmobiles.''

Staff Allegations

3. The Gundmobile is a musical mobile designed to be attached to

the side of a baby's crib. It is a consumer product, as that term is

defined in section 3(a)(1) of the CPSA, 15 U.S.C. 2052(a)(1) and also a

toy or other article intended for use by children under three years of

age, 16 CFR 1501.2.

4. From May 30, 1991 through July 1992 Gund knowingly introduced or

delivered for introduction into interstate commerce, and received in

interstate commerce and delivered or proffered delivery of certain

Gundmobiles that were banned hazardous substances under

Sec. 1500.18(a)(9) and part 1501 of Title 16 CFR. Gund, therefore,

knowingly violated sections 4 (a) and (c) of the FHSA, 15 U.S.C. 1263

(a) and (c), and is subject to civil penalties under section 5(c) of

the FHSA, 15 U.S.C. 1264(c).

5. Although Gund received test reports showing its product produced

small parts during use and abuse testing, as well as numerous consumer

reports of breakage of the Gundmobile hooks, it failed to notify the

staff in a timely manner that its Gundmobiles created an unreasonable

risk of serious injury or death and/or contained a defect which could

create a substantial product hazard. This knowing violation of the

reporting requirements in section 15(b) of the CPSA, 15 U.S.C. 2064(b),

is a violation of section 19(a)(4) of the CPSA, 15 U.S.C. 2068(a)(4)

and subjects the firm to civil penalties under section 20 of the CPSA,

15 U.S.C. 2069.

Response of Gund

6. Gund denies each and every staff allegation with respect to its

Gundmobiles. Gund specifically denies that:

(a) Its Gundmobiles were defective;

(b) It introduced or delivered for introduction into interstate

commerce Gundmobiles that were banned hazardous substances under 16 CFR

1500.18(a)(9) and Part 1501;

(c) It violated sections 4 (a) and (c) of the FHSA, 15 U.S.C. 1263

(a) and (c) and it is, therefore, subject to civil penalties under

section 5(c) of the FHSA, 15 U.S.C. 1264(c);

(d) It failed to notify the Commission in a timely manner that its

products contain a defect that could create a substantial product

hazard and that it violated the reporting requirements of section 15(b)

of the CPSA, 15 U.S.C. 2064(b) thereby violating section 19(a)(4) of

the CPSA, 15 U.S.C. 2068(a)(4) thereby subjecting it to civil penalties

under Section 20 of the CPSA, 15 U.S.C. 2069.

Agreement of the Parties

7. The Commission has jurisdiction over this matter under the

Consumer Product Safety Act, 15 U.S.C. 2051 et seq. (CPSA), and the

Federal Hazardous Substances Act, 15 U.S.C. 1261 et seq. (FHSA).

8. This Agreement settles the allegations of the staff and does not

constitute an admission by Respondent that it violated the law, or a

finding of fact or law by the Commission with respect to any of the

staff's allegations.

9. This Agreement becomes effective only upon its final acceptance

by the Commission and service of the incorporated Order upon

Respondent.

10. Respondent waives any rights to a formal hearing, and any

findings of fact and conclusions of law regarding the staff

allegations. Respondent waives any right to seek judicial review or

otherwise challenge or contest the validity of the Commission's Order.

11. For purposes of section 6(b) of the CPSA, 15 U.S.C. 2055(b),

this matter shall be treated as though a Complaint had issued, and the

Commission may publicize the terms of the Settlement Agreement and

Order.

12. This 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 contradict its terms.

13. The provisions of this Settlement Agreement and Order shall

apply to Gund, Inc. and its successors and assigns.

14. Upon provisional acceptance of this Agreement by the

Commission, the Commission will place this Settlement Agreement and

Order on the public record and publish it in the Federal Register in

accordance with the procedures in 16 CFR 1118.20 (e) through (h). If

the Commission does not receive any requests not to accept the

Agreement within 15 days of such publication, the Agreement shall be

deemed finally accepted and the Final Order shall issue on the 16th

day.

15. Upon final acceptance of this Agreement, the Commission shall

issue the attached Order.

Dated: August 15, 1994.

For Respondent Gund.

Bruce Raiffe,

President, Gund, Inc.

Dated: September 6, 1994.

For the staff.

Eric L. Stone,

Trial Attorney.

David Schmeltzer,

Assistant Executive Director, Office of Compliance and Enforcement.

Order

I.

Upon consideration of the Settlement Agreement between the staff

and Respondent, and it appearing 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 Respondent shall pay to the U.S. Treasury

a civil penalty in the amount of ONE HUNDRED AND FIFTY THOUSAND

DOLLARS ($150,000) in two installment payments of seventy-five

thousand dollars ($75,000.00) each, over a 12 month period after

service of this final Order upon Respondent. Respondent shall pay

the first installment within 20 days of service, and the second

installment of $75,000.00 within 365 days after service of the Final

Order. Upon the failure of Respondent to make a payment, or upon the

making of a late payment, the entire amount of the civil penalty

shall be due and payable, and 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 14th

day of October, 1994.

By Order of the Commission.

Sadye E. Dunn,

Secretary, Consumer Product Safety Commission.

[FR Doc. 94-25966 Filed 10-19-94; 8:45 am]

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