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From Products Liability Law Daily, July 7, 2014

HMI Industries agrees to $725,000 civil penalty for failing to timely report defective floor cleaners

By Joe Bichl

The Consumer Product Safety Commission (CPSC) has provisionally accepted, by a vote of 2 to 1, a settlement agreement with HMI Industries Inc., of Strongsville, Ohio, in which the company agreed to pay $725,000 for failing to timely report to CPSC, as required by federal law, a defect involving Majestic 360 floor cleaners. The agreement does not constitute an admission by HMI that it violated the Consumer Product Safety Act (In the matter of: HMI Industries Inc., CPSC Docket No. 14-C0003, July 2, 2014).

Background. HMI sold the floor cleaners from September 2004 through August 2006, for about $1,800. CPSC staff charged that the floor cleaners’ wiring can overheat, causing electrical arcing and melting, which poses a burn hazard. Additionally, CPSC staff charged that the company underreported the number of incidents and injuries associated with the floor cleaners.

According to the agreement, HMI did not file its full report with CPSC until February 2009. By that time, the company had received approximately 2,000 reports of arcing, 120 consumer reports of overheating and property damage, and injuries to two consumers. However, HMI told CPSC staff that the company knew of only 40 consumer complaints of overheating and damage to carpets, with no reports of injury. On April 29, 2009, HMI and CPSC announced the recall of 44,000 floor cleaners.

Settlement agreement provisions. In addition to paying a monetary penalty, HMI has agreed to fully implement and maintain a compliance program designed to ensure future compliance with CPSC regulations and to maintain and enforce a system of internal controls and procedures design to ensure that: (i) information required to be disclosed by HMI to the Commission is recorded, processed, and reported in accordance with applicable law; (ii) all reporting made to the Commission is timely, truthful, complete, and accurate; and (iii) prompt disclosure is made to HMI’s management of any significant deficiencies or material weaknesses in the design or operation of such internal controls that are reasonably likely to adversely affect in any material respect the company’s ability to record, process, and report to the Commission in accordance with applicable law.

HMI agreed to provide written documentation of such improvements, processes and controls, upon request of CPSC staff; to cooperate fully and truthfully with CPSC staff; and to make available all information, materials and personnel deemed necessary to staff to evaluate the company’s compliance with the terms of the agreement.

Companies: HMI Industries Inc.

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