80 FR 44081 - LG Electronics Tianjin Appliance Co., Ltd. and LG Electronics USA Inc., Provisional Acceptance of a Settlement Agreement and Order

CONSUMER PRODUCT SAFETY COMMISSION

Federal Register Volume 80, Issue 142 (July 24, 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 CFR1118.20(e). Published below is a provisionally-accepted Settlement Agreement with LG Electronics Tianjin Appliance Co., Ltd. and LG Electronics USA Inc. containing a civil penalty of $1,825,000, within twenty (20) days of service of the Commission's final Order accepting the Settlement Agreement.

[Federal Register Volume 80, Number 142 (Friday, July 24, 2015)]
[Notices]
[Pages 44081-44083]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-18150]



[[Page 44081]]

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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 15-C0005]


LG Electronics Tianjin Appliance Co., Ltd. and LG Electronics USA 
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 CFR1118.20(e). 
Published below is a provisionally-accepted Settlement Agreement with 
LG Electronics Tianjin Appliance Co., Ltd. and LG Electronics USA Inc. 
containing a civil penalty of $1,825,000, within twenty (20) days of 
service of the Commission's final Order accepting the Settlement 
Agreement.

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 August 10, 2015.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 15-C0005 Office of the 
Secretary, Consumer Product Safety Commission, 4330 East West Highway, 
Room 820, Bethesda, Maryland 20814-4408.

FOR FURTHER INFORMATION CONTACT: Dennis C. Kacoyanis, General Attorney, 
Office of the General Counsel, Division of Enforcement and Information, 
Consumer Product Safety Commission, 4330 East West Highway, Bethesda, 
Maryland 20814-4408; telephone (301) 504-7587.

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

    Dated: July 21, 2015.
Todd A. Stevenson,
Secretary.

UNITED STATES OF AMERICA

CONSUMER PRODUCT SAFETY COMMISSION

    In the Matter of: LG Electronics Tianjin Appliance Co., Ltd. and LG 
Electronics USA Inc.

CPSC Docket No.: 15-C0005

SETTLEMENT AGREEMENT

    1. In accordance with the Consumer Product Safety Act, 15 U.S.C. 
2051-2089 (``CPSA'') and 16 CFR 1118.20, LG Electronics Tianjin 
Appliance Co., Ltd. and its affiliated U.S. company LG Electronics USA 
Inc. (collectively ``LG'' 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. LG Electronics Tianjin Appliance Co., Ltd. is a Chinese 
corporation with its principal corporate offices in Tianjin, China. LG 
Electronics USA, Inc. is a Delaware corporation with its principal 
corporate offices located in Englewood Cliffs, NJ.

STAFF CHARGES

Dehumidifiers

    4. From 2003 to 2005 LG manufactured and imported about 795,000 
Dehumidifiers (``Dehumidifiers'' or ``Subject Products'') under a major 
U.S. retailer's brand name. The retailer sold the Subject Products 
until 2009. The dehumidifiers consist of the following models: (a) 70-
pint, model nos. 580.53701300/400/500; (b) 35-pint, model no. 
580.54351400; and (c) 50-pint, model no. 580.5309300.
    5. The Dehumidifiers are ``consumer products'' ``distributed in 
commerce,'' as those terms are defined or used in section 3(a)(5) and 
(8) of the CPSA, 15 U.S.C. 2052(a)(5) and (8). LG Electronics Tianjin 
Appliance Co., Ltd. and LG Electronics USA Inc. were ``manufacturers'' 
of the Subject Products, as such term is defined in section 3(a)(11) of 
the CPSA, 15 U.S.C. 2052(a)(11).
    6. The Dehumidifiers contain a defect which could create a 
substantial product hazard or creates an unreasonable risk of serious 
injury or death in that the Dehumidifiers' motors posed a fire and burn 
risk to consumers.
    7. Between 2003 and 2009 LG received complaints of smoke and fire 
damage resulting from overheating of the motors and electrical failures 
in the Subject Products. During this period three consumers reported 
smoke inhalation injuries. The Subject Products' failures also resulted 
in serious fires causing extensive property damage.
    8. Despite having information regarding the defect and the 
unreasonable risk of serious injury or death LG did not immediately 
notify the Commission, as required by section 15(b)(3) and (4) of the 
CPSA, 15 U.S.C. 2064(b)(3) and (4). LG notified the Commission about 
the Dehumidifiers only after its principal retailer notified the 
Commission.

Failure to Report

    9. In failing to inform the Commission immediately about the 
Dehumidifiers, LG 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).
    10. Pursuant to section 20 of the CPSA, 15 U.S.C. 2069, LG 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 LG

    11. LG does not admit the charges set forth in paragraphs 4 through 
10 above, including, but not limited to, the charge that the Subject 
Products contained a defect that could create a substantial product 
hazard or creates an unreasonable risk of serious injury or death, the 
charge that LG failed to notify the Commission in a timely manner in 
accordance with section 15(b) of the CPSA, 15 U.S.C. Sec.  2064(b), and 
the charge that LG ``knowingly'' violated section 19(a)(4) of the CPSC, 
15 U.S.C. 2068(a)(4).
    12. At all relevant times, LG has had a product safety compliance 
program and has improved that program over time. LG has voluntarily 
reported to the Commission in the past when it believed an obligation 
to report existed under the CPSA.
    13. LG enters into this Agreement to settle this matter without the 
delay and expense of litigation.

AGREEMENT OF THE PARTIES

    14. Under the CPSA, the Commission has jurisdiction over the matter 
involving the Subject Products described herein and over LG Electronics 
USA, Inc. LG Tianjin Appliance Co., Ltd., has agreed to a limited 
waiver of its jurisdictional defenses solely for the purpose of 
resolving this dispute.
    15. The parties enter into the Agreement for settlement purposes 
only. The Agreement does not constitute an admission by LG or a 
determination by

[[Page 44082]]

the Commission that LG violated the CPSA's reporting requirements.
    16. The parties agree that LG's conduct set forth in the staff's 
allegations is subject to the civil penalty amounts in effect from 
January 1, 2005 to August 13, 2009.
    17. In settlement of staff's charges, and to avoid the cost, 
distraction, delay, uncertainty, and inconvenience of protracted 
litigation or other proceedings, LG shall pay a civil penalty in the 
amount of one million, eight hundred twenty-five thousand dollars 
($1,825,000) 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.
    18. After staff receives this Agreement executed on behalf of LG, 
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).
    19. 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 Sec.  1118.20(h). Upon the later of: (i) 
Commission's final acceptance of this Agreement and service of the 
accepted Agreement upon LG, 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.
    20. Effective upon the later of: (i) the Commission's final 
acceptance of the Agreement and service of the accepted Agreement upon 
LG, and (ii) and the date of issuance of the final Order, for good and 
valuable consideration, LG 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 LG 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.
    21. LG 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 LG in the United States, 
and which shall contain the following elements:
    (i) written standards, policies and procedures, including those 
designed to ensure that information that may relate to or impact CPSA 
compliance (including information obtained by quality control 
personnel) is conveyed effectively to personnel responsible for 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 CPSA to all applicable employees 
through training programs or otherwise;
    (iv) LG 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 availability of such records to staff upon 
reasonable request.
    22. LG 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 LG in 
the United States: (i) information required to be disclosed by LG 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 LG'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, LG's ability to record, process and report to the 
Commission in accordance with applicable law.
    23. Upon reasonable request of staff, LG shall provide written 
documentation of its internal controls and procedures, including, but 
not limited to, the effective dates of the procedures and improvements 
thereto. LG 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 LG's compliance with 
the terms of the Agreement.
    24. The parties acknowledge and agree that the Commission may 
publicize the terms of the Agreement and the Order.
    25. LG 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 LG, enforceable against LG in accordance with its 
terms. LG 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 LG pursuant to the 
Agreement and Order. The individuals signing the Agreement on behalf of 
LG represent that they are duly authorized by LG to execute the 
Agreement.
    26. The Agreement is governed by the laws of the United States.
    27. The Agreement and the Order shall apply to, and be binding 
upon, LG and each of its successors, transferees, and assigns, and a 
violation of the Agreement or Order may subject LG, and each of its 
successors, transferees and assigns, to appropriate legal action.
    28. The Agreement and the Order constitute the complete agreement 
between the parties on the subject matter contained therein.
    29. 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.
    30. 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.
    31. 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 LG agree in writing that severing the provision materially affects 
the purpose of the Agreement and the Order.

LG ELECTRONICS TIANJIN APPLIANCE CO., LTD.

By:
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[[Page 44083]]

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Zhide Pang
Manager of External/Legal Affairs Part, LG Electronics Tianjin 
Appliance Co., Ltd. JinWei Road, BeiChen District, Tianjin, China

Date: July 2, 2015

LG ELECTRONICS USA, INC.
By:
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Chris Kim
Senior Counsel, NA Product Safety, LG Electronics USA, Inc., 910 
Sylvan Avenue, Englewood Cliffs, New Jersey 07632.

Date: June 30, 2015

By:
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John W. Moss, Esq.
Winston & Strawn LLP, 1700 K Street NW., Washington, DC 20006-3817

Date: July 2, 2015

U.S. CONSUMER PRODUCT SAFETY COMMISSION

Stephanie Tsacoumis
General Counsel

Melissa V. Hampshire
Assistant General Counsel

By:
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Dennis C. Kacoyanis
Alexander W. Dennis
General Attorneys, Division of Enforcement and Information, Office 
of the General Counsel

Date: July 2, 2015

UNITED STATES OF AMERICA

CONSUMER PRODUCT SAFETY COMMISSION

    In the Matter of: LG Electronics Tianjin Appliance Co., Ltd. and LG 
Electronics USA Inc.

CPSC Docket No.: 15-C0005

ORDER

    Upon consideration of the Settlement Agreement entered into between 
LG Electronics Tianjin Appliance Co., Ltd. and LG Electronics USA Inc. 
(``LG''), and the U.S. Consumer Product Safety Commission 
(``Commission''), and the Commission having jurisdiction over the 
subject matter and over LG, 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 LG shall comply with the terms of the 
Settlement Agreement and shall pay a civil penalty in the amount of one 
million, eight hundred twenty-five thousand dollars ($1,825,000) 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 LG to make the foregoing payment when due, interest 
on the unpaid amount shall accrue and be paid by LG at the federal 
legal rate of interest set forth at 28 U.S.C. 1961(a) and (b). If LG 
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 21st day 
of July, 2015.

    By Order of the Commission.
Todd A. Stevenson,
Secretary, U.S. Consumer Product Safety Commission.
[FR Doc. 2015-18150 Filed 7-23-15; 8:45 am]
BILLING CODE 6355-01-P