Crawford Textile Corporation, a Corporation, Provisional Acceptance of a Settlement Agreement and Order

AGENCY:

Consumer Profice 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(f). Published below is a provisionally-accepted Settlement Agreement with Crawford Textile Corporation, a 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 October 23, 2000.

ADDRESSES:

Persons wishing to commment on this Settlement Agreement should send written comments to the Comment 01-C0001, Office of the Secretary, Consumer Product Safety Commission, Washington, DC 20207.

FOR FURTHER INFORMATION CONTACT:

Dennis C. Kacoyanis, Trial Attorney, Office of Compliance and Enforcement, Consumer Product Safety Commission, Washington, DC 20207; telephone (301) 504-0226, 1346.

SUPPLEMENTARY INFORMATION:

The text of the Agreement and Order appears below.

Settlement Agreement and Order

1. This Settlement Agreement and Order, entered into between Crawford Textile Corporation (hereinafter, “Crawford” or “Respondent”), a corporation, and the staff of the Consumer Product Safety Commission (hereinafter, “Staff”), pursuant to the procedures set forth in 16 CFR 1118.20, is a compromise resolution of the matter described herein, without a hearing or determination of issues of law and fact.

I. The Parties

2. The “staff” is the staff of the Consumer Product Safety Commission (hereinafter, “Commission”), an independent federal regulatory commission of the United States government established pursuant to section 4 of the Consumer Product Safety Act (CPSA), as amended, 15 U.S.C. 2053.

3. Respondent Crawford Textile Corporation is a corporation organized and existing under the laws of the State of North Carolina. Its office is located at 319-A South Westgate Drive, Greensboro, NC 27407. Respondent is a converter of circular knitted fabrics.

II. Allegations of the Staff

A. Violation of the Flammable Fabrics Act

4. On August 27, 1998, Respondent entered into a contract with Milano Express, Inc. (hereinafter, “Milano”) whereby Respondent agreed to manufacture for sale approximately 25,000 yards of weathered blue sherpa fabric, style number 11012, 80% cotton/20% polyester (hereinafter, “fabric”).

5. In September 1998, Respondent manufactured for sale approximately 22,570 yards of fabric for Milano.

6. Respondent sold, caused to be transported, and delivered after a sale, in commerce, approximately 22,570 yards of fabric to Milano in September 1998.

7. The fabric is subject to the Standard for the Flammability of Clothing Textiles (hereinafter, “Clothing Standard”), 16 CFR Part 1610, issued under section 4 of the Flammable Fabrics Act (FFA), 15 U.S.C. 1193.

8. After Respondent had shipped and distributed all of the fabric to Milano, Respondent received flammability test reports for the fabric on October 7 and 9, 1998. The test results showed that several lots of the fabric did not comply with the Clothing Standard and, therefore, were dangerously flammable and unsuitable to be made into clothing because of their rapid and intense burning.

9. Respondent never informed Milano that several lots of the fabric did not comply with the Clothing Standard. As a result, Milano distributed to a retailer between 3,300 to 4,000 sweatshirts made from fabric that violated the Clothing Standard.

10. On February 2, 1999, the staff learned an 80 year old woman suffered third degree burns to 18% of her body when the blue pullover Milano sweatshirt she was wearing caught fire when she struck a book match to light her cigarette and a burning fragment of the match head landed on it.

11. After receiving this report, the staff sampled a Milano blue pullover sweatshirt from a retailer. The staff tested the sweatshirt. The test results showed the sweatshirt violated the Clothing Standard and, therefore, was dangerously flammable and unsuitable for clothing because it was susceptible to rapid and intense burning when exposed to an ignition source. Respondent manufactured the blue sherpa fabric used by Milano to manufacture the sweatshirt that the staff tested.

12. On March 17, 1999, the staff notified Milano that the sweatshirt failed to comply with the Clothing Standard.

13. After receipt of this information, Milano tested sweatshirts made from fabric manufactured by Respondent. The test results confirmed the sweatshirts violated the Clothing Standard.

14. Respondent knowingly manufactured for sale, sold, caused to be transported, and delivered after a sale, in commerce, fabric that violated the Clothing Standard, as the term “knowingly” is defined in section 5(e)(4) of the FFA, 15 U.S.C. 1194(e)(4), in violation of section 3 of the FFA, 15 U.S.C. 1192, and subjects Respondent to civil penalties pursuant to section 5(e)(1) of the FFA, 15 U.S.C. 1194(e)(1).

B. Violation of the Consumer Product Safety Act

15. The allegations contained in paragraphs 4 through 14 above are repeated and realleged, as applicable.

16. The fabric is a “consumer product” and Respondent Crawford Textile Corporation is a “manufacturer” of a “consumer product” which is “distributed in commerce” as those terms are defined in sections 3(a)(1), (4), and (11) of the CPSA, 15 U.S.C. 2052(a)(1), (4), and (11).

17. Upon receipt of failing flammability test results in October 1998, Respondent had sufficient information to conclude that several lots of the fabric contained a defect which could create a substantial product hazard or created an unreasonable risk of serious injury or death. Specifically, the fabric presented a flammability risk.

18. Respondent also had sufficient information to foresee that its fabric could cause severe burn injuries or death.

19. Respondent did not notify Milano or the Commission of its failing test results, or of the risk presented by garments manufactured with its fabric.

20. On or about March 25, 1999, Respondent learned from Milano that the Commission had sampled and tested a sweatshirt made from fabric manufactured by Respondent and found it was dangerously flammable and unsuitable for clothing because of its rapid and intense burning.

21. On or about March 29, 1999, Milano faxed to Respondent the Commission's and its own flammability test reports for sweatshirts made from fabric manufactured by Respondent. The test results showed that sweatshirts made from that fabric violated the Clothing Standard.

22. Only after receiving all of this evidence and knowing the Commission was already aware of the hazard did Respondent notify the Commission about its hazardous fabric pursuant to section 15(b) of the CPSA.

23. By October 1998, Respondent had obtained sufficient information to reasonably support the conclusion that the fabric contained a defect which could create a substantial product hazard or created an unreasonable risk of serious injury or death. Respondent failed to report such information in a timely manner as required by section 15(b) of the CPSA. A failure to report under section 15(b) is a prohibited act under section 19(a)(4) of the CPSA, 15 U.S.C. 2068(a)(4). By knowingly failing to report, Respondent is subject to civil penalties under section 20 of the CPSA, 15 U.S.C. 2069.

III. Response of Respondent

24. Respondent denies the staff's allegations set forth in paragraphs 4 through 23 above.

25. Respondent denies that it knowingly violated either the Flammable Fabrics Act or the Consumer Product Safety Act.

IV. Agreement of the Parties

26. The Commission has jurisdiction over Respondent and the subject matter of this Settlement Agreement and Order under the Consumer Product Safety Act (CPSA), 15 U.S.C. 2051 et seq.; the Flammable Fabrics Act (FFA), 15 U.S.C. 1191 et seq.; and the Federal Trade Commission Act (FTCA), 15 U.S.C. 41 et seq.

27. This Agreement is entered into for settlement purposes only and does not constitute an admission by Respondent or a determination by the Commission that Respondent knowingly violated the FFA's Clothing Standard and/or the CPSA's Reporting Requirement.

28. 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 the procedures set forth in 16 CFR 1118.20(f). If the Commission does not receive any written request not to accept the Settlement Agreement and Order within 15 days, the Settlement Agreement and Order will be deemed to be finally accepted on the 16th day after the date it is published in the Federal Register.

29. Upon final acceptance of this Settlement Agreement by the Commission and issuance of the Final Order, Respondent knowingly, voluntarily, and completely waives any rights it may have in this matter (1) to an administrative or judicial hearing, (2) to judicial review or other challenge or contest of the validity of the Commission's actions, (3) to a determination by the Commission as to whether Respondent failed to comply with the FFA, as alleged, or the CPSA, as alleged, (4) to a statement of findings of facts and conclusions of law, and (5) to any claims under the Equal Access to Justice Act.

30. In settlement of the staff's allegations, Respondent agrees to pay a $150,000.00 civil penalty as set forth in the incorporated Order.

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

32. Upon final acceptance by the Commission of this Settlement Agreement and Order, the Commission shall issue the attached Order incorporated herein by reference.

33. A violation of the attached Order shall subject Respondent to appropriate legal action.

34. Agreement, understandings, representations, or interpretations made outside this Settlement Agreement and Order may not be used to vary or contradict its terms.

35. The provisions of this Settlement Agreement and Order shall apply to Respondent and each of its successors and assigns.

Respondent Crawford Textile Corporation

John C. McCuiston,

President, Crawford Textile Corporation, 319-A South Westgate Drive, Greensboro, NC 27407.

Commission Staff

Alan H. Schoem,

Assistant Executive Director, Consumer Product Safety Commission, Office of Compliance, Washington, D.C. 20207-0001.

Eric L. Stone,

Director, Legal Division, Office of Compliance.

Dennis C. Kacoyanis,

Trial Attorney, Legal Division, Office of Compliance.

Order

Upon consideration of the Settlement Agreement entered into between Respondent Crawford Textile Corporation (hereinafter, “Respondent”), a corporation, and the staff of the Consumer Product Safety Commission (“Commission”); and the Commission having jurisdiction over the subject matter and Respondent; 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, that upon final acceptance of the Settlement Agreement and Order, Respondent Crawford Textile Corporation shall pay to the United States Treasury a civil penalty in the amount of One Hundred Fifty Thousand and 00/100 Dollars ($150,000,000) in three (3) payments each. The first payment of Fifty Thousand and 00/100 Dollars ($50,000) shall be paid within twenty (20) days after service of the Final Order of the Commission (hereinafter, “the anniversary date”). The second payment of Fifty Thousand and 00/100 Dollars ($50,000.00) shall be paid within one (1) year of the anniversary date. The third payment shall be paid within two (2) years of the anniversary date. Upon the failure of Respondent Crawford Textile Corporation to make a payment or upon the making of a late payment by Respondent Crawford Textile Corporation (a) the entire amount of the civil penalty shall be due and payable, and (b) 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).