80 FR 74088 - Philips Lighting North America Corporation, Provisional Acceptance of a Settlement Agreement and Order

CONSUMER PRODUCT SAFETY COMMISSION

Federal Register Volume 80, Issue 228 (November 27, 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 Philips Lighting North America Corporation containing a civil penalty in the amount of two million dollars ($2,000,000), within thirty (30) days of service of the Commission's final Order accepting the Settlement Agreement.\1\ ---------------------------------------------------------------------------

[Federal Register Volume 80, Number 228 (Friday, November 27, 2015)]
[Notices]
[Pages 74088-74091]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-30129]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 16-C0001]


Philips Lighting North America 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(e). 
Published below is a provisionally-accepted Settlement Agreement with 
Philips Lighting North America Corporation containing a civil penalty 
in the amount of two million dollars ($2,000,000), within thirty (30) 
days of service of the Commission's final Order accepting the 
Settlement Agreement.\1\
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    \1\ The Commission voted (4-1) to provisionally accept the 
Settlement Agreement and Order regarding Philips Lighting North 
America Corporation. Chairman Kaye, Commissioner Adler, Commissioner 
Robinson and Commissioner Mohorovic voted to provisionally accept 
the Settlement Agreement and Order. Commissioner Buerkle voted to 
reject the Settlement Agreement and Order.

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 December 14, 2015.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 16-C0001, Office of the 
Secretary, Consumer Product Safety Commission, 4330 East West Highway, 
Room 820, Bethesda, Maryland 20814-4408.

FOR FURTHER INFORMATION CONTACT: Amy S. Colvin, 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) 504-7639.

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

    Dated: November 23, 2015.
Todd A. Stevenson,
Secretary.

United States of America Consumer Product Safety Commission

In the Matter of: Philips Lighting North America Corporation

CPSC Docket No.: 16-C0001

Settlement Agreement

    1. In accordance with the Consumer Product Safety Act, 15 U.S.C. 
2051-2089 (``CPSA'') and 16 CFR 1118.20, Philips Lighting North America 
Corporation (``Philips''), 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

[[Page 74089]]

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. Philips is a corporation, organized and existing under the laws 
of the state of Delaware, with its principal corporate offices located 
in Somerset, New Jersey.

Staff Charges

    4. Between March 2007 and July 2011, grocery and home center stores 
nationwide, online retailers, and professional electrical distributors 
sold in the United States approximately 1.86 million EnergySaver (a/k/a 
``Marathon'' or ``Marathon Classic'') compact fluorescent lamps 
enclosed inside glass envelopes (``Lamps''). Philips manufactured the 
Lamps.
    5. The Lamps are a ``consumer product'' that was ``distributed in 
commerce'' as those terms are defined or used in sections 3(a)(5) and 
(8) of the CPSA, 15 U.S.C. 2052(a)(5) and (8). Philips is a 
``manufacturer'' of the Lamps, as such term is defined in section 
3(a)(11) of the CPSA, 15 U.S.C. 2052(a)(11).
    6. The Lamps are defective and create an unreasonable risk of 
serious injury or death because the glue that attaches the glass outer 
envelope to the body of the Lamp can fail, allowing the glass envelope 
to fall and strike persons and objects below. This poses a laceration 
hazard to consumers.
    7. Philips received numerous reports that glass envelopes separated 
or were loose, including 10 reports of lacerations and seven reports of 
property damage.
    8. In response to these incident reports, Philips implemented 
multiple design changes to remedy the defect and unreasonable risk of 
serious injury or death associated with the Lamps.
    9. Despite having information of a defect and the unreasonable risk 
of serious injury or death associated with the Lamps, Philips did not 
notify the Commission immediately of such defect or risk, as required 
by sections 15(b)(3) and (4) of the CPSA, 15 U.S.C. 2064(b)(3) and (4).
    10. Because the information in Philips's possession constituted 
actual and presumed knowledge, Philips 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).
    11. Pursuant to section 20 of the CPSA, 15 U.S.C. 2069, Philips is 
subject to civil penalties for its knowing violation of section 
19(a)(4) of the CPSA, 15 U.S.C. 2068(a)(4).

Response of Philips

    12. Philips' settlement of this matter does not constitute an 
admission that Philips knew that the Lamps were defective and created 
an unreasonable risk of serious injury or death pursuant to section 
15(a) of the CPSA, 15 U.S.C. 2064(a), or that Philips knowingly 
violated the reporting requirements of section 15(b) of the CPSA, 15 
U.S.C. 2064(b). In particular, Philips notes that the ten reported 
injuries were minor, requiring no medical attention.

Agreement of the Parties

    13. Under the CPSA, the Commission has jurisdiction over the matter 
involving the Lamps and over Philips.
    14. The parties enter into the Agreement for settlement purposes 
only. The Agreement does not constitute an admission by Philips or a 
determination by the Commission that Philips violated the CPSA's 
reporting requirements.
    15. In settlement of staff's charges as set forth in paragraphs 4 
through 11 above, and to avoid the cost, distraction, delay, 
uncertainty, and inconvenience of protracted litigation or other 
proceedings, Philips shall pay a civil penalty in the amount of two 
million dollars ($2,000,000) within thirty (30) calendar days after 
receiving service of the Commission's final Order accepting the 
Agreement. All payments to be made under the Agreement shall constitute 
debts owing to the United States and shall be made by electronic wire 
transfer to the United States via: http://www.pay.gov for allocation to 
and credit against the payment obligations of Philips under this 
Agreement. Failure to make such payment by the date specified in the 
Commission's final Order shall constitute Default.
    16. All unpaid amounts, if any, due and owing under the Agreement 
shall constitute a debt due and immediately owing by Philips to the 
United States, and interest shall accrue and be paid by Philips at the 
federal legal rate of interest set forth at 28 U.S.C. 1961(a) and (b) 
from the date of Default until all amounts due have been paid in full 
(hereinafter ``Default Payment Amount'' and ``Default Interest 
Balance''). Philips shall consent to a Consent Judgment in the amount 
of the Default Payment Amount and Default Interest Balance; and the 
United States, at its sole option, may collect the entire Default 
Payment Amount and Default Interest Balance, or exercise any other 
rights granted by law or in equity, including, but not limited to, 
referring such matters for private collection, and Philips agrees not 
to contest, and hereby waives and discharges any defenses to, any 
collection action undertaken by the United States or its agents or 
contractors pursuant to this paragraph. Philips shall pay the United 
States all reasonable costs of collection and enforcement under this 
paragraph, respectively, including reasonable attorney's fees and 
expenses.
    17. After staff receives this Agreement executed on behalf of 
Philips, 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).
    18. 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 Philips, 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.
    19. Effective upon the later of: (i) the Commission's final 
acceptance of the Agreement and service of the accepted Agreement upon 
Philips, and (ii) and the date of issuance of the final Order, for good 
and valuable consideration, Philips 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 Philips 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.
    20. Philips shall implement, maintain, and enforce a system of 
internal controls and procedures designed to ensure that, with respect 
to all consumer products, as that term is defined or used in section 
3(a)(5) of the CPSA, 15 U.S.C. 2052(a)(5) (``consumer products''), 
imported, manufactured, distributed, or sold by Philips in the United 
States:

[[Page 74090]]

    a. information required to be disclosed by Philips to the 
Commission is recorded, processed, and reported in accordance with 
applicable law;
    b. all reporting made to the Commission is timely, truthful, 
complete, accurate, and in accordance with applicable law; and
    c. prompt disclosure is made to Philips'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, Philips's ability to record, 
process, and report to the Commission in accordance with applicable 
law.
    21. Philips shall implement and maintain a compliance program 
designed to ensure compliance with the CPSA and regulations enforced by 
the Commission with respect to any consumer product imported, 
manufactured, distributed, or sold by Philips in the United States, and 
which, at a minimum, shall contain the following elements:
    a. written standards and policies;
    b. written procedures that provide for the appropriate forwarding 
to compliance personnel of all information that may relate to, or 
impact, CPSA compliance, including all reports and complaints involving 
consumer products, whether an injury is referenced or not, and 
corresponding engineering analyses and risk assessments;
    c. 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;
    d. effective communication of company compliance-related policies 
and procedures regarding the CPSA to all applicable employees through 
training programs or otherwise;
    e. Philips senior management responsibility for CPSA compliance and 
accountability for violations of the statutes and regulations enforced 
by the Commission;
    f. Philips board oversight of CPSA compliance; and
    g. retention of all CPSA compliance-related records for at least 
five (5) years, and availability of such records to staff upon 
reasonable request.
    22. Upon reasonable request of staff, Philips shall provide written 
documentation of its improvements, processes, and controls, including, 
but not limited to, the effective dates of such improvements, 
processes, and controls as set forth in paragraphs 20 through 21 above. 
Philips shall cooperate fully and truthfully with staff and shall make 
available all information, materials, and personnel deemed necessary by 
staff to evaluate Philips's compliance with the terms of the Agreement.
    23. The parties acknowledge and agree that the Commission may 
publicize the terms of the Agreement and the Order.
    24. Philips 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 Philips, enforceable against Philips in 
accordance with its terms. Philips 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 
Philips pursuant to the Agreement and Order. The individuals signing 
the Agreement on behalf of Philips represent and warrant that they are 
duly authorized by Philips to execute the Agreement.
    25. The signatories represent that they are authorized to execute 
this 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, Philips and each of its successors, transferees, and assigns, and 
a violation of the Agreement or Order may subject Philips, 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 Philips agree in writing that severing the provision materially 
affects the purpose of the Agreement and the Order.

Philips Lighting North America Corporation

Dated: November 9, 2015
By:
Michael L. Manning-----------------------------------------------------
Vice President and General Counsel
Philips Lighting North America Corporation
3000 Minuteman Road
Andover, MA 01810

Dated: November 9, 2015
By:
Kathleen M. Sanzo------------------------------------------------------
Counsel to Philips Lighting North America Corporation
Morgan, Lewis & Bockius LLP
1111 Pennsylvania Avenue NW
Washington, DC 20004

U.S. Consumer Product Safety Commission

Stephanie Tsacoumis
General Counsel

Mary T. Boyle
Deputy General Counsel

Melissa V. Hampshire
Assistant General Counsel

Dated: November 10, 2015
By:
Amy S. Colvin----------------------------------------------------------
Attorney
Division of Enforcement and Information
Office of the General Counsel

United States of America Consumer Product Safety Commission

In the Matter of: Philips Lighting North America Corporation
CPSC Docket No.: 16-C0001

Order

    Upon consideration of the Settlement Agreement entered into between 
Philips Lighting North America Corporation (``Philips''), and the U.S. 
Consumer Product Safety Commission (``Commission''), and the Commission 
having jurisdiction over the subject matter and over Philips, 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 Philips shall comply with the terms of the 
Settlement Agreement and shall pay a civil penalty in the amount of two 
million dollars ($2,000,000) 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 Philips to make the 
foregoing payment when due, interest on the unpaid

[[Page 74091]]

amount shall accrue and be paid by Philips at the federal legal rate of 
interest set forth at 28 U.S.C. 1961(a) and (b). If Philips 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 23th day 
of November, 2015.

By Order of the Commission:


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Todd A. Stevenson, Secretary,
U.S. Consumer Product Safety Commission

[FR Doc. 2015-30129 Filed 11-25-15; 8:45 am]
BILLING CODE 6355-01-P