RRK Holdings, Inc., 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. Published below is a provisionally-accepted Settlement Agreement with RRK Holdings, Inc., containing a civil penalty of $100,000.

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 September 15, 2004.

ADDRESSES:

Persons wishing to comment on this Settlement Agreement should send written comments to the Comment 04-C0005, Office of the Secretary, Consumer Product Safety Commission, Washington, DC 20207.

FOR FURTHER INFORMATION CONTACT:

Michelle Faust Gillice, Trial Attorney, Office of Compliance, Consumer Product Safety Commission, Washington, DC 20207; telephone (301) 504-7667.

SUPPLEMENTARY INFORMATION:

The text of the Agreement and Order appears below.

In the Matter of RRK Holdings, Inc.; Settlement Agreement and Order

1. RRK Holdings, Inc., (hereinafter “Respondent”) formerly known as Roto Zip Tool Corporation (hereinafter “Roto Zip”) enters into this Settlement Agreement and Order (hereinafter, “Settlement Agreement” or “Agreement”) with the staff of the Consumer Product Safety Commission (the “Commission”), and agrees to the entry of the attached Order incorporated by reference herein. The Settlement Agreement resolves the Commission staff's allegations set forth below.

I. The Parties

2. The Commission is an independent federal regulatory commission responsible for the enforcement of the Consumer Product Safety Act (“CPSA”), 15 U.S.C. 2051 et seq.

3. Respondent, established in September of 1977 as Roto Zip Tool Corporation, is organized and existing under the laws of the State of Wisconsin. Its principal office is located at 4524 Blue Mounds Trail, Black Earth, Wisconsin 53515. On August 1, 2003, Roto Zip sold all of its assets to the Robert Bosch Tool Corporation and subsequently ceased operations. Roto Zip was renamed RRK Holdings, Inc.

II. Staff Allegations

4. Between 1999 and October 2001, Respondent manufactured and distributed approximately 1.4 million spiral saws under the model names Revolution, Rebel and Solaris. The spiral saws are hand-held power tools with interchangeable spiral bits. The Rebel was manufactured for Respondent by two different companies, SB Power Tools and Scientific Molding Corporation, Ltd. (hereinafter “SMC”). The Revolution and Solaris were manufactured exclusively by SMC.

5. The saws were sold to and/or used by consumers for use in or around a permanent or temporary household or residence, a school, in recreation, or otherwise and are, therefore, “consumer products” as defined in section 3(a)(1) of the CPSA, 15 U.S.C. 2052(a)(1). Roto Zip was a “manufacturer” and “distributor” of the spiral saws which were “distributed into commerce” as those terms are defined in sections 3(a)(4), (5), (11) and (12) of the CPSA, 15 U.S.C. 2052(a)(4), (5), (11) and (12).

6. Certain Revolution, Rebel and Solaris spiral saws exhibited a loose fit between the handle and the tool body. The loose fit was a result of variations in the placement of the housing receptacle on the tool body and the length of the mating stud on the handle. The spiral saws are defective because the handle, if loose, could detach from the body of the saw while the saw is in use. The falling saw could cause lacerations and other injuries to consumers.

7. In the fall of 2000, Respondent began receiving notice of saws detaching from the handles. The precise number of detaching incidents in 2000 is not available because Respondent recorded such incidents under the general term “broken handle”. Between January 1, 2001 and October 23, 2001 (the date upon which Respondent submitted a full report to the Commission), Respondent had received notice of at least 235 alleged incidents of saws detaching from handles. (This number of incidents is in addition to numerous reports of the handle being too loose).

8. Between the fall of 2000 and October 23, 2001, Respondent received notice of twenty injuries alleged to be due to the saw detaching from the handle while the saw was in use. Several consumers received lacerations requiring sutures to hands and legs, and one report where a consumer allegedly received serious laceration injuries necessitating surgery.

9. In February of 2001, Respondent determined that the handles on Rebel models manufactured by SB Power Tools were too loose and required that SB Power Tools modify the product for a tighter fit. However, Respondent continued to receive complaints about the saw falling off the handles. As a result, Respondent investigated and determined that the location of the receptacle housing in the tool body and the length of the mating stud were not uniform. On March 20, 2001, Respondent made a design change to all three spiral saw models and made changes to quality control to require a visual inspection and a tolerance test of every saw. About the same time, Respondent asked SMC to modify its inventory. By the end of March 2001, Respondent had received 81 spiral saw warranty returns due to the saws detaching.

10. On September 11, 2001, the Commission conducted an establishment inspection of Respondent's headquarters in response to incident reports it had received. Following that inspection, Respondent filed a full report pursuant to section 15(b) of the CPSA on October 23, 2001.

11. By the time Respondent made design changes on March 29, 2001, it had obtained information which reasonably supported the conclusion that the Revolution, Solaris and Rebel spiral saws contained a defect which could create a substantial product hazard or created and unreasonable risk of serious injury or death, but failed to report such information in a timely manner to the Commission as required by sections 15(b)(2) and (3) of the CPSA, 15 U.S.C. 2064(b)(2), (3).

12. By failing to provide the information to the Commission in a timely manner as required by section 15(b) of the CPSA, 15 U.S.C. 2064(b), Respondent violated 19(a)(4) of the CPSA, 15 U.S.C. 2068(a)(4).

13. Respondent committed this failure to report to the Commission “knowingly” as the term “knowingly” is defined in section 20(d) of the CPSA, 15 U.S.C. 2069(d),thus, subjecting Respondent to civil penalties under section 20 of the CPSA, 15 U.S.C. 2069.

III. Response of RRK Holdings, Inc.

15. Respondent denies the staff's allegations in paragraphs 6 through 10 that the spiral saws were defective and that it violated the CPSA as set forth in paragraphs 11 through 13. In settling this matter, Respondent does not admit any fault, liability or statutory or regulatory violation.

IV. Agreement of the Parties

16. The Consumer Product Safety Commission has jurisdiction over this matter and over Respondent under the consumer Product Safety Act, 15 U.S.C. 2051 et. seq.

17. Respondent agrees to be bound by and comply with this Settlement Agreement and Order.

18. 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 CPSA's reporting requirement.

19. In settlement of the staff's allegations, Respondent agrees to pay a civil penalty of one hundred thousand and 00/100 dollars ($100,000.00), in full settlement of this matter, and payable within twenty (20) calendar days of receiving service of the final Settlement Agreement and Order.

20. Upon final acceptance of this 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 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 CPSA and the underlying regulations, (4) to a statement of findings of fact and conclusions of law and (5) to any claims under the Equal Access to Justice Act.

21. Upon provisional acceptance of this Agreement by the Commission, this Agreement 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(e). If the Commission does not receive any written objections within 15 days, the Agreement will be deemed finally accepted on the 16th day after the date it is published in the Federal Register.

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

23. The Commission's Order in this matter is issued under the provisions of the CPSA, 15 U.S.C. 2051 et seq. Violation of this Order may subject Respondent to appropriate legal action.

24. This Settlement Agreement may be used in interpreting the Order. Agreements, understandings, representations, or interpretations apart from those contained in this Settlement Agreement and Order may not be used to vary or contradict its terms.

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

Dated: March 19, 2004.

RRK Holdings, Inc.

Robert K. Kopras,

Chief Executive Officer.

James F. Stern,

Respondent's Attorney.

Dated: August 25, 2004.

The U.S. Consumer Product Safety Commission

Alan H. Schoem,

Director, Office of Compliance.

Eric L. Stone,

Director, Legal Division, Office of Compliance.

Dated: August 25, 2004.

Michelle Faust Gillice,

Trial Attorney, Legal Division, Office of Compliance.

In the Matter of RRK Holdings, Inc.; Order

Upon consideration of the Settlement Agreement between Respondent RRK Holdings, Inc. and the staff of the Consumer Product Safety Commission, and the Commission having jurisdiction over the subject matter and over RRK Holdings, Inc., 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 RRK Holdings, Inc. shall pay the United States Treasury a civil penalty in the amount of one hundred thousand and 00/100 dollars, ($100,000.00), payable within twenty (20) days of the service of the Final Order upon RRK Holdings, Inc.

Provisionally accepted and Provisional Order issued on the 25th day of August, 2004.

By Order of the Commission.

Todd A. Stevenson,

Secretary, Consumer Product Safety Commission.