WASHINGTON – Cinmar LLC will pay a $3.1 million civil penalty to settle charges by the U.S. Consumer Product Safety Commission (CPSC) that the company "knowingly failed" to immediately report defects of mahogany Frontgate step ladders for walk-in closets that it imported from Indonesia.

Retailer of Recalled Wood Step Ladders Agrees to $3.1M PenaltyAccording to the CPSC, Cinmar of West Chester, OH, did not file a report about the Frontgate folding mahogany step ladders until July 29, 2010, by which time approximately 1,200 of the two- and three-step ladders had been returned, most due to breakage, others because of cosmetic problems. In addition, by the time Cinmar filed the report, it had received at least two dozen claims of injuries including one requiring surgery and another in which a fall victim was hospitalized for treatment.

On Jan. 20, 2011, Cinmar and CPSC, citing that the ladders could break and pose a fall hazard, jointly announced a voluntary recall of approximately 38,000 Frontage step ladders sold between December 2005 and July 2010. The ladders, which sold at Frontgate stores in Georgia, North Carolina and Ohio, in Frontgate and Sky Mall catalogs nationwide and on the Internet at Frontgate.com and Sky mall.com were priced between $90 and $150. They were manufactured in Indonesia and distributed in the United States by Dillon Davis, of South San Francisco, CA.

CPSC Alleges Product Defect Cover Up
CPSC staff charged that Cinmar received notice of the product's defect shortly after it began selling them in 2005. By Sept. 28, 2007, CPSC said Cinmar had received more than 600 ladder returns due to breakage in "first and early use" and was subject of at least one personal injury lawsuit filed by a consumer alleging injury from a broken ladder. Federal law requires product manufacturers, distributors, and retailers to report to CPSC within 24 hours after obtaining information reasonably supporting the conclusion that a product contains a defect which could create a substantial product hazard or unreasonable risk of serious injury.

CPSC further charged that by this time Cinmar "had sufficient information that reasonably supported the conclusion that the ladders contained a defect that could create a substantial product hazard or created an unreasonable risk of serious injury or death."

Instead of filing a product safety report with CPSC, CPSC said Cinmar "routinely provided the consumers with replacement Ladders which Cinmar knew were just as likely to break." In addition, the company implemented design changes in an attempt to make the ladders safer, while also paying out claims filed by consumers who reported that they were injured when the ladders broke during use.

Cinmar 'Neither Admits or Denies' Charges
The CPSC voted 3-0 to provisionally accept the settlement. According to the settlement agreement signed May 27 by Cinmar President H.R. Harvey, "Cinmar neither admits nor denies the charges set forth .. including, but not limited to, the charge that the Ladders contained a defect which could create a substantial product hazard or created an unreasonable risk of serious injury or death, and the contention that Cinmar failed to notify the Commission in a timely manner,"

In addition to paying the $3.1 million penalty, Cinmar agreed to implement and maintain a compliance program designed to ensure compliance with the safety statutes and regulations enforced by CPSC. Cinmar also agreed to maintain and enforce a system of internal controls and procedures designed to ensure that:
    • information required to be disclosed by the firm to the CPSC is recorded, processed and reported, in accordance with applicable law;
   • all reporting made to the CPSC is timely, truthful, complete and accurate; and
   • prompt disclosure is made to Cinmar 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 CPSC.

    Cinmar also agreed to provide written documentation of its internal improvements, processes and controls, upon request of CPSC staff.

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