80 FR 31576 - Office Depot, Inc., Provisional Acceptance of a Settlement Agreement and Order

CONSUMER PRODUCT SAFETY COMMISSION

Federal Register Volume 80, Issue 106 (June 3, 2015)

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). Published below is a provisionally-accepted Settlement Agreement with Office Depot, Inc., containing a civil penalty of $3,400,000, within twenty (20) days of service of the Commission's final Order accepting the Settlement Agreement.\1\ ---------------------------------------------------------------------------

[Federal Register Volume 80, Number 106 (Wednesday, June 3, 2015)]
[Notices]
[Pages 31576-31579]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-13422]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 15-C0004]


Office Depot, Inc., 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(e). 
Published below is a provisionally-accepted Settlement Agreement with 
Office Depot, Inc., containing a civil penalty of $3,400,000, within 
twenty (20) days of service of the Commission's final Order accepting 
the Settlement Agreement.\1\
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    \1\ Chairman Elliot F. Kaye and Commissioners Robert S. Adler 
and Marietta S. Robinson voted to provisionally accept the 
Settlement Agreement and Order. Commissioners Joseph P. Mohorovic 
and Ann Marie Buerkle voted to reject the Settlement Agreement and 
Order. Commissioner Mohorovic submitted a statement regarding the 
matter. The statement will be available from the Office of the 
Secretariat and the CPSC Web site, www.cpsc.gov.

DATES: Any interested person may ask the Commission not to accept this 
agreement or otherwise comment on its contents by filing a written 
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request with the Office of the Secretary by June 18, 2015.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 15-C0004 Office of the 
Secretary, Consumer Product Safety Commission, 4330 East West Highway, 
Room 820, Bethesda, Maryland 20814-4408.

FOR FURTHER INFORMATION CONTACT: Sean R. Ward, Trial Attorney, Office 
of the General Counsel, Division of Compliance, Consumer Product Safety 
Commission, 4330 East West Highway,

[[Page 31577]]

Bethesda, Maryland 20814-4408; telephone (301) 504-7602.

SUPPLEMENTARY INFORMATION: The text of the Agreement and Order appears 
below.

    Dated: May 28, 2015.
Todd A. Stevenson,
Secretary.

UNITED STATES OF AMERICA

CONSUMER PRODUCT SAFETY COMMISSION

In the Matter of:

Office Depot, Inc.

CPSC Docket No.: 15-C0004

SETTLEMENT AGREEMENT

    1. In accordance with the Consumer Product Safety Act, 15 U.S.C. 
2051-2089 (``CPSA'') and 16 CFR 1118.20, Office Depot, Inc. (``Office 
Depot'' or ``Firm''), and the United States Consumer Product Safety 
Commission (``Commission''), through its staff, hereby enter into this 
Settlement Agreement (``Agreement''). The Agreement, and the 
incorporated attached Order, resolve staff's charges set forth below.

THE PARTIES

    2. The Commission is an independent federal regulatory agency, 
established pursuant to, and responsible for the enforcement of, the 
CPSA, 15 U.S.C. 2051-2089. By executing the Agreement, staff is acting 
on behalf of the Commission, pursuant to 16 CFR 1118.20(b). The 
Commission issues the Order under the provisions of the CPSA.
    3. Office Depot is a corporation, organized and existing under the 
laws of the state of Delaware, with its principal place of business in 
Boca Raton, Florida.

STAFF CHARGES

Quantum Chair

    4. Between May 2006 and August 2009, Office Depot sold in the 
United States approximately 150,000 Quantum Realspace PROTM 
9000 Series Mid-Back Multifunction Mesh Chairs and Quantum Realspace 
PROTM 9000 Series Mid-Back Multifunction Mesh Chairs with 
Headrest (``Quantum Chair'').
    5. The Quantum Chair is a ``consumer product'' ``distributed in 
commerce,'' as those terms are defined or used in sections 3(a)(5), (8) 
of the CPSA, 15 U.S.C. 2052(a)(5), (8). Office Depot was a ``retailer'' 
of the Quantum Chair, as such term is defined in section 3(a)(13) of 
the CPSA, 15 U.S.C. 2052(a)(13).
    6. The Quantum Chair is defective and creates an unreasonable risk 
of serious injury because the bolts attaching the seatback on the 
Quantum Chair can loosen and detach, posing a fall and injury hazard to 
consumers.
    7. Office Depot first received notice of a Quantum Chair failure in 
2007 when a consumer reported to Office Depot that the seatback 
loosened or detached on the Quantum Chair, causing the consumer to 
sustain injuries.
    8. In 2008, Office Depot became aware that, in an effort to 
eliminate seatback detachment, the manufacturer of the Quantum Chair 
made two design changes to the Quantum Chair and a change to the 
accompanying instructions.
    9. In 2008 and 2009, Office Depot received 13 additional reports of 
injury, some requiring medical attention, and 33 total reports of the 
seatback detaching.
    10. Despite having information regarding the defect in and risk of 
injury relating to the Quantum Chair, Office Depot did not notify the 
Commission immediately of such defect or risk, as required by section 
15(b)(3) and (4) of the CPSA, 15 U.S.C. 2064(b)(3) and (4). Office 
Depot never notified the Commission about the Quantum Chair as required 
by the CPSA.

Gibson Chair

    11. Between 2003 and 2012, Office Depot imported into the United 
States and sold approximately 1.4 million Gibson Leather Task Chairs 
(``Gibson Chair'').
    12. The Gibson Chair is a ``consumer product'' ``distributed in 
commerce,'' as those terms are defined or used in sections 3(a)(5), (8) 
of the CPSA, 15 U.S.C. 2052(a)(5), (8). Office Depot was a 
``manufacturer'' of the Gibson Chair, as such term is defined in 
section 3(a)(11) of the CPSA, 15 U.S.C. 2052(a)(11). Office Depot also 
was a ``retailer'' of the Gibson Chair, as such term is defined in 
section 3(a)(13) of the CPSA, 15 U.S.C. 2052(a)(13).
    13. The Gibson Chair is defective and creates an unreasonable risk 
of serious injury because the mounting weld can break and separate the 
seat from the base of the Gibson Chair, posing a fall hazard to 
consumers.
    14. Office Depot first received notice of a Gibson Chair failure in 
2005, when one consumer reported to Office Depot that the seat broke 
and separated from the base of the Gibson Chair, causing the consumer 
to sustain injuries.
    15. Office Depot continued to receive reports of injuries and 
incidents involving breakage of the Gibson Chair mounting plate weld 
and the resulting separation of the seat from the base of the Gibson 
Chair, with some injuries requiring medical attention. Office Depot 
settled the claims of several consumers who reported injuries resulting 
from the Gibson Chair's failure.
    16. In all, Office Depot received 25 reports of injuries and 153 
incident reports from consumers of the seat breaking and separating 
from the base of the Gibson Chair.
    17. Despite having information regarding the defect in and risk of 
injury relating to the Gibson Chair, Office Depot did not notify the 
Commission immediately of such defect or risk, as required by section 
15(b)(3) and (4) of the CPSA, 15 U.S.C. 2064(b)(3) and (4). Office 
Depot failed to notify the Commission about the Gibson Chair until 
December 14, 2012, after receiving staff's letter requesting a Full 
Report. Office Depot recalled the Gibson Chair on May 22, 2014.

Failure to Report

    18. In failing to inform the Commission immediately about the 
Quantum Chair and the Gibson Chair (together, ``Subject Products''), 
Office Depot knowingly violated section 19(a)(4) of the CPSA, 15 U.S.C. 
2068(a)(4), as the term ``knowingly'' is defined in section 20(d) of 
the CPSA, 15 U.S.C. 2069(d).
    19. Pursuant to section 20 of the CPSA, 15 U.S.C. 2069, Office 
Depot is subject to civil penalties for its knowing failure to report, 
as required under section 15(b) of the CPSA, 15 U.S.C. 2064(b).

RESPONSE OF OFFICE DEPOT

    20. This Agreement does not constitute an admission by Office Depot 
that the law has been violated. Office Depot neither admits nor denies 
the staff's charges set forth above, including but not limited to the 
contention that the Subject Products ``contain[] a defect which could 
create a substantial product hazard . . . or create[] an unreasonable 
risk of serious injury or death,'' 15 U.S.C. 2064(b); that Office Depot 
did not notify the Commission in a timely manner, in accordance with 15 
U.S.C. 2064(b); and that there was any allegedly ``knowing'' violation 
of the CPSA as that term is defined in 15 U.S.C. 2069(d).
    21. The Quantum recall notice states that Office Depot received 14 
reports of injuries in connection with about 150,000 Quantum chairs 
sold. There were fewer reports of consumers seeking medical treatment 
in connection with any reported injuries. The Gibson recall notice 
states that Office Depot received 25 reports of injuries in connection 
with about 1.4 million Gibson chairs sold. There were fewer reports of 
consumers seeking medical treatment in connection

[[Page 31578]]

with any reported injuries. Office Depot investigated the reports, 
including by contacting the manufacturers of the Subject Products and 
the consumers making the reports.
    22. The Subject Products passed multiple safety tests administered 
by independent third party testing organizations.
    23. Following discussions with Office Depot, the manufacturer of 
the Quantum Chair reported the Quantum Chair to the CPSC in April 2009. 
Therefore, Office Depot did not make its own report.
    24. At all relevant times, Office Depot has had a product safety 
compliance program, including dedicated product safety personnel and 
appropriate product safety testing.
    25. As a retailer, Office Depot sells thousands of products and 
relies on product testing, conducted pursuant to voluntary industry 
standards, in order to protect its consumers. Office Depot reviews and 
reacts to consumer complaints and parts requests associated with office 
chairs.
    26. Office Depot enters into this Agreement to settle this matter 
without the delay and expense of litigation. Office Depot enters into 
this Agreement and agrees to pay the amount referenced below in 
compromise of staff's charges.

AGREEMENT OF THE PARTIES

    27. Under the CPSA, the Commission has jurisdiction over the matter 
involving the Subject Products described herein and over Office Depot.
    28. The parties enter into the Agreement for settlement purposes 
only. The Agreement does not constitute an admission by Office Depot or 
a determination by the Commission that Office Depot violated the CPSA's 
reporting requirements.
    29. In settlement of staff's charges, and to avoid the cost, 
distraction, delay, uncertainty, and inconvenience of protracted 
litigation or other proceedings, Office Depot shall pay a civil penalty 
in the amount of three million, four hundred thousand dollars 
($3,400,000) (``Settlement Payment'') within thirty (30) calendar days 
after receiving service of the Commission's final Order accepting the 
Agreement. The payment shall be made by electronic wire transfer to the 
Commission via: http://www.pay.gov.
    30. After staff receives this Agreement executed on behalf of 
Office Depot, staff shall promptly submit the Agreement to the 
Commission for provisional acceptance. Promptly following provisional 
acceptance of the Agreement by the Commission, the Agreement shall be 
placed on the public record and 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 request not to accept the 
Agreement within fifteen (15) calendar days, the Agreement shall be 
deemed finally accepted on the 16th calendar day after the date the 
Agreement is published in the Federal Register, in accordance with 16 
CFR 1118.20(f).
    31. This Agreement is conditioned upon, and subject to, the 
Commission's final acceptance, as set forth above, and it is subject to 
the provisions of 16 CFR 1118.20(h). Upon the later of: (i) 
Commission's final acceptance of this Agreement and service of the 
accepted Agreement upon Office Depot, and (ii) the date of issuance of 
the final Order, this Agreement shall be in full force and effect and 
shall be binding upon the parties.
    32. Effective upon the later of: (i) the Commission's final 
acceptance of the Agreement and service of the accepted Agreement upon 
Office Depot, and (ii) and the date of issuance of the final Order, for 
good and valuable consideration, Office Depot hereby expressly and 
irrevocably waives and agrees not to assert any past, present, or 
future rights to the following, in connection with the matter described 
in this Agreement: (i) an administrative or judicial hearing; (ii) 
judicial review or other challenge or contest of the Commission's 
actions; (iii) a determination by the Commission of whether Office 
Depot failed to comply with the CPSA and the underlying regulations; 
(iv) a statement of findings of fact and conclusions of law; and (v) 
any claims under the Equal Access to Justice Act.
    33. Office Depot has and shall maintain a compliance program 
designed to ensure compliance with the CPSA with respect to any 
consumer product imported, manufactured, distributed, or sold by Office 
Depot. Office Depot's compliance program shall contain the following 
elements: (i) written standards and policies, including those designed 
to convey effectively to personnel responsible for CPSA compliance 
information (whether in the form of complaints, parts requests, 
incident reports, or otherwise) that may relate to or impact CPSA 
compliance; (ii) a mechanism for confidential employee reporting of 
compliance-related questions or concerns to either a compliance officer 
or to another senior manager with authority to act as necessary; (iii) 
effective communication of company compliance-related policies and 
procedures regarding the CPSA to the appropriate employees through 
training programs or otherwise; (iv) Office Depot senior management 
responsibility for, and general board oversight of, CPSA compliance; 
and (v) retention of all CPSA compliance-related records for at least 
five (5) years, and reasonable availability of such records, insofar as 
they are not protected by attorney-client, work product, or other 
privilege, to staff upon reasonable request.
    34. Office Depot has, and shall maintain and enforce, a system of 
internal controls and procedures designed to ensure that, with respect 
to all consumer products imported, manufactured, distributed, or sold 
by Office Depot: (i) information required to be disclosed by Office 
Depot to the Commission is recorded, processed, and reported in 
accordance with applicable law; (ii) all reporting made to the 
Commission is timely, truthful, complete, accurate, and in accordance 
with applicable law; and (iii) prompt disclosure is made to Office 
Depot's management of any significant deficiencies or material 
weaknesses in the design or operation of such internal controls that 
are reasonably likely to affect adversely, in any material respect, 
Office Depot's ability to record, process, and report to the Commission 
in accordance with applicable law.
    35. Upon reasonable request of staff, Office Depot shall provide 
written documentation of its internal controls and procedures, 
including, but not limited to, the effective dates of the procedures 
and improvements thereto. Office Depot shall cooperate fully and 
truthfully with staff and shall make available all non-privileged 
information and materials, and personnel deemed necessary by staff to 
evaluate Office Depot's compliance with the terms of the Agreement.
    36. The parties acknowledge and agree that the Commission may 
publicize the terms of the Agreement and the Order.
    37. Office Depot represents that the Agreement: (i) is entered into 
freely and voluntarily, without any degree of duress or compulsion 
whatsoever; (ii) has been duly authorized; and (iii) constitutes the 
valid and binding obligation of Office Depot, enforceable against 
Office Depot in accordance with its terms. Office Depot will not 
directly or indirectly receive any reimbursement, indemnification, 
insurance-related payment, or other payment in connection with the 
civil penalty to be paid by Office Depot pursuant to the Agreement and 
Order. The individuals signing the Agreement on behalf of Office Depot 
represent and

[[Page 31579]]

warrant that they are duly authorized by Office Depot to execute the 
Agreement.
    38. The signatories represent that they are authorized to execute 
this Agreement.
    39. The Agreement is governed by the laws of the United States.
    40. The Agreement and the Order shall apply to, and be binding 
upon, Office Depot and each of its successors, transferees, and 
assigns, and a violation of the Agreement or Order may subject Office 
Depot, and each of its successors, transferees and assigns, to 
appropriate legal action.
    41. The Agreement and the Order constitute the complete agreement 
between the parties on the subject matter contained therein.
    42. The Agreement may be used in interpreting the Order. 
Understandings, agreements, representations, or interpretations apart 
from those contained in the Agreement and the Order may not be used to 
vary or contradict their terms. For purposes of construction, the 
Agreement shall be deemed to have been drafted by both of the parties 
and shall not, therefore, be construed against any party for that 
reason in any subsequent dispute.
    43. The Agreement may not be waived, amended, modified, or 
otherwise altered, except as in accordance with the provisions of 16 
CFR 1118.20(h). The Agreement may be executed in counterparts.
    44. If any provision of the Agreement or the Order is held to be 
illegal, invalid, or unenforceable under present or future laws 
effective during the terms of the Agreement and the Order, such 
provision shall be fully severable. The balance of the Agreement and 
the Order shall remain in full force and effect, unless the Commission 
and Office Depot agree in writing that severing the provision 
materially affects the purpose of the Agreement and the Order.

    Dated: May 11, 2015
OFFICE DEPOT, INC.

By:--------------------------------------------------------------------
Heather Stern
Vice President, Associate General Counsel
Office Depot, Inc.
6600 North Military Trail
Boca Raton, FL 33496

    Dated: May 11, 2015
By:--------------------------------------------------------------------
Daniel F. Katz
Luba Shur
Counsel to Office Depot, Inc.
Williams & Connolly LLP
725 Twelfth Street NW.
Washington, DC 20005

U.S. CONSUMER PRODUCT SAFETY COMMISSION
Stephanie Tsacoumis
General Counsel

Mary T. Boyle
Deputy General Counsel

Mary B. Murphy
Assistant General Counsel

    Dated: May 11, 2015
By:--------------------------------------------------------------------
Sean R. Ward
Trial Attorney
Division of Compliance
Office of the General Counsel

UNITED STATES OF AMERICA

CONSUMER PRODUCT SAFETY COMMISSION

In the Matter of:

Office Depot, Inc.

CPSC Docket No.: 15-C0004

ORDER

    Upon consideration of the Settlement Agreement entered into 
between Office Depot, Inc. (``Office Depot''), and the U.S. Consumer 
Product Safety Commission (``Commission''), and the Commission 
having jurisdiction over the subject matter and over Office Depot, 
and it appearing that the Settlement Agreement and the Order are in 
the public interest, it is:
    ORDERED that the Settlement Agreement be, and is, hereby, 
accepted; and it is
    FURTHER ORDERED that Office Depot shall comply with the terms of 
the Settlement Agreement and shall pay a civil penalty in the amount 
of three million, four hundred thousand dollars ($3,400,000) within 
thirty (30) days after service of the Commission's final Order 
accepting the Settlement Agreement. The payment shall be made by 
electronic wire transfer to the Commission via: http://www.pay.gov. 
Upon the failure of Office Depot to make the foregoing payment when 
due, interest on the unpaid amount shall accrue and be paid by 
Office Depot at the federal legal rate of interest set forth at 28 
U.S.C. 1961(a) and (b). If Office Depot fails to make such payment 
or to comply in full with any other provision of the Settlement 
Agreement, such conduct will be considered a violation of the 
Settlement Agreement and Order.

    Provisionally accepted and provisional Order issued on the 28th 
day of May, 2015.

    By order of the Commission.
Todd A. Stevenson,
Secretariat, U.S. Consumer Product Safety Commission.
[FR Doc. 2015-13422 Filed 6-2-15; 8:45 am]
BILLING CODE 6355-01-P