Shimano American Corporation; Provisional Acceptance of a Settlement Agreement and Order

CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 99-C0006]

Shimano American Corporation; Provisional Acceptance of a

Settlement Agreement and Order

AGENCY: Consumer Product Safety Commission.

ACTION: Notice.

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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.

Published below is a provisionally-accepted Settlement Agreement with

Shimano American Corporation, containing a civil penalty of $150,000.

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 June 16, 1999.

ADDRESSES: Persons wishing to comment on this Settlement Agreement

should send written comments to the Comment 99-C0006, Office of the

Secretary, Consumer Product Safety Commission, Washington, DC 20207.

FOR FURTHER INFORMATION CONTACT: Deborah Lewis, Trial Attorney, Office

of Compliance and Enforcement, Consumer Product Safety Commission,

Washington DC 20207; telephone (301) 504-0626, 1346.

SUPPLEMENTARY INFORMATION: The text of the Agreement and Order appears

below.

Dated: May 25, 1999.

Sadye E. Dunn,

Secretary.

Settlement Agreement and Order

1. Shimano American Corporation (``Shimano'') a corporation, enters

into this Settlement Agreement and Order with the United States

Consumer Product Safety Commission (``the CPSC'') in accordance with 16

CFR 1118.20 of the Commission's Procedures for Investigations,

Inspections, and Inquiries under the Consumer Product Safety Act

(``CPSA'').

I. The Parties

2. The Consumer Product Safety Commission is an independent federal

regulatory agency responsible for the enforcement of the Consumer

Product Safety Act, 15 U.S.C. 2051-2084.

3. Shimano is a corporation organized and existing under the laws

of the State of California. Its principal offices are located at One

Holland Drive, Irvine, CA, 92618.

II. Staff Allegations

4. Between March, 1994 and November, 1995, Shimano Inc. of Japan

manufactured over one million bicycle cranks--models FC-CT90, FC-M290

and FC-MC12--a significant number of which were imported and

distributed in the United States by Shimano American Corporation.

Shimano is, therefore, a distributor of bicycle cranks in commerce.

5. The bicycle cranks attach to the pedals of bicycles. Shimano

Inc. of Japan and Shimano sold the cranks to 49 bicycle manufacturers.

6. The bicycle cranks can break during use. A consumer can be

injured in a number of ways if the bicycle cranks break will he or she

is riding it: (1) The broken crank or part exposed as a result of the

crank breaking can injure the bicyclist; (2) The bicyclist can fall as

a result of the broken crank, leading to injuries from contact with the

ground; (3) The bicyclist can lose control and collide with another

vehicle or object.

7. Between June, 1995 and July, 1997, Shimano received 22 reports

of injuries from consumers due to broken cranks. The injuries included

fractures, lacerations, puncture wounds, head trauma, and severe

bruising and swelling. Shimano conducted numerous tests on the bicycle

cranks and held at least one meeting at a high level in the corporation

in September, 1996, about its growing concern over the cranks. Yet,

Shimano did not report the problem until July, 1997.

8. Shimano obtained information which reasonably supported the

conclusion that its bicycle cranks contained defects which could create

a substantial product hazard but failed to report that information in a

timely manner as required by section 15(b) of the CPSA, 15 U.S.C.

20643(b).

III. Response of Shimano

9. Shimano denies the allegations of the staff that the bicycle

cranks contain a defect which could create a substantial product hazard

pursuant to section 15(a) of the CPSA, 15 U.S.C. 2064(a), denies that

it violated the reporting requirements of section 15(b) of the CPSA, 15

U.S.C. 2064(b), and further denies the other allegations of the CPSC as

stated herein.

10. Shimano voluntarily contacted the CPSC in May 1997, to seek the

CPSC's cooperation in conducting a recall of the three models of

bicycle cranks. In June, Shimano filed a report under Section 15(b) of

the CPSA and proposed a voluntary product recall under the CPSC's Fast

Track program. Shimano's report and voluntary recall did not result

from any investigation by the CPSC, but rather represented part of

Shimano's effort to maintain its reputation for providing bicycle

components of the highest quality.

11. Prior to May 1997, Shimano did not have reason to believe that

the cranks posed a substantial product hazard. Shimano believes the

information available did not reasonably support the conclusion that

the products were defective within the meaning of the CPSA, and,

therefore, no report was required under Section 15(b) of the Act.

During the time period in which the CPSC alleges Shimano wrongfully

failed to file a report, Shimano conducted its own internal testing as

well as independent testing of the cranks, and these tests suggested

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that no defect was present. Likewise, the extremely low failure rate of

the cranks and the rigorous conditions in which they were used,

suggested that any failures were due to rigorous usage rather than an

inherent product defect. For these reasons, Shimano was not required

to, and did not, report to the CPSC prior to May 1997.

12. By entering into this Settlement Agreement and Order, Shimano

does not admit any liability or wrongdoing. This Settlement Agreement

and Order is agreed to by Shimano to avoid incurring additional legal

costs and does not constitute, and is not evidence of, an admission of

any liability or wrongdoing by Shimano.

IV. Agreement of the Parties

13. The Commission has jurisdiction over this matter under the

Consumer Product Safety Act, 15 U.S.C. 2051 et seq.

14. Shimano knowingly, voluntarily and completely waives any rights

it may have to: (1) an administrative or judicial hearing with respect

to the staff allegations discussed in paragraphs 4 through 8 above; (2)

judicial review or other challenge or contest of the validity of the

Commission's Order; (3) a determination by the Commission as to whether

a violation of section 15(b) of the CPSA, 15 U.S.C. 2064(b), has

occurred; and (4) a statement of findings of fact and conclusion of law

with regard to the staff allegations.

15. Upon provisional acceptance of this Settlement Agreement and

Order by the Commission, this Settlement Agreement and Order shall be

placed on the public record and shall be published in the Federal

Register in accordance with 16 CFR 1118.20.

16. This Settlement Agreement and Order releases Shimano and

Shimano Inc. from liability arising from any allegations of violation

of section 15(b) of the CPSA regarding the bicycle cranks described in

paragraph 4, above. The Settlement Agreement and Order becomes

effective upon final acceptance by the Commission and its service upon

Shimano.

17. Upon final acceptance of this Settlement Agreement by the

Commission, the Commission may issue a press release to advise the

public of the civil penalty Settlement Agreement and Order.

18. Shimano shall pay the Consumer Product Safety Commission a

civil penalty in the amount of $150,000 within ten days of final

acceptance of the Settlement Agreement and Order.

19. Shimano agrees to entry of the attached Order, which is

incorporated herein by reference, and to be bound by its terms.

20. This Settlement Agreement and Order are entered into for

settlement purposes only and shall not constitute an admission or

determination arising from the allegations that the bicycle cranks

contain a defect which could create a substantial product hazard.

21. This Settlement Agreement is binding upon Shimano and the

assigns or successors of Shimano.

22. Agreements, understandings, representations, or interpretations

made outside this Settlement Agreement and Order may not be used to

vary or to contradict its terms.

Dated: March 29, 1999.

By: Shimano American Corporation

U.S. Consumer Product Safety Commission

By: Alan Schoem,

Assistant Executive Director, Office of Compliance.

Eric Stone,

Director, Legal Division, Office of Compliance.

Deborah Lewis,

Attorney, Legal Division, Office of Compliance.

Order

Upon consideration of the Settlement Agreement entered into between

Shimano American Corporation, a corporation, and the staff of the U.S.

Consumer Product Safety Commission; and the Commission having

jurisdiction over the subject matter and Shimano American Corporation,

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, Shimano American Corporation shall pay the

Commission a civil penalty in the amount of one hundred fifty thousand

and 00/100 dollars, ($150,000.00) within ten (10) days after service of

this Final Order upon Shimano American Corporation.

Provisionally accepted and Provisional Order issued on the 25th day

of May, 1999.

By Order of the Commission.

Sadye E. Dunn,

Secretary, U.S. Consumer Product Safety Commission.

[FR Doc. 99-13669 Filed 5-28-99; 8:45 am]

BILLING CODE 6355-01-M