Vermont Business MagazineThe USConsumer Product Safety Commission (CPSC) announced today that Keurig Green Mountain, Inc, based in Waterbury, has agreed to pay a$5.8 millioncivil penaltyto the government. The penalty settles charges that Keurig knowingly failed to report a defect and unreasonable risk of serious injury to CPSC immediately with Keurig MINI Plus Brewing Systems, as required by federal law.
Between 2010 and 2014, Keurig received about 200 reports of hot water, coffee, and coffee grounds spraying out of the brewers.In more than 100 of these incidents, consumers suffered burn-related injuries to their faces, hands, and bodies.Some of these injuries were severe and resulted in second and third-degree burns.
In addition to paying a penalty, Keurig has agreed to develop, implement and maintain a compliance program that is designed to ensure that the company complies with the Consumer Product Safety Act.
Keurigrecalledabout 6.6 million MINI Plus brewers inDecember 2014. The brewers were sold at Kmart, Kohl's, Target, Walmart and other stores nationwide and online atwww.keurig.com,www.greenmountaincoffee.com, andwww.keurig.cafromDecember 2009throughDecember 2014for about$100.
Keurig's settlement of this matter does not constitute an admission of CPSC staff's charges.
The penalty agreement has been accepted provisionally by the Commission by a 4 to 1 vote.
Statement by Commissioners Robert S. Adler, Elliot F. Kaye and Marietta S. Robinson:
"February 16, 2017
"On February 15, 2017, the Commission voted 4‐1 to provisionally accept a settlement with Keurig Green Mountain, Inc. to pay a civil penalty of $5.8 million to resolve CPSC staff allegations that Keurig knowingly failed to report a defect with its MINI Plus single‐serve brewing systems (“Brewers”) that caused hot water and coffee grounds to spray out and burn unsuspecting consumers. Staff alleged that Keurig knew of the defect but failed to timely report to CPSC. By the time of the recall, at least 100 consumers had suffered burn‐related injuries to their faces, hands, and bodies.
"While we have reluctantly voted to approve the settlement – an amount that now ranks as CPSC’s second‐highest penalty ever – we have serious reservations about whether the amount will have any meaningful deterrent effect on Keurig or other multi‐billion dollar companies who are well‐positioned to dismiss this size penalty as a small cost of doing business.
"Background
"Keurig is a $4.5 billion business with over 6,000 employees.1
"From December 2009 to December 2014, Keurig imported and sold 6.6 million Brewers for approximately $100 each. Beginning in February 2010 and over the next four years, Keurig received approximately 200 reports of hot water and coffee spewing out of the Brewers. For every two incidents reported, at least one resulted in injury to a consumer – an alarmingincident‐to‐injury rate of roughly fifty percent. Multiple consumers sought medical treatment and some of the injuries were severe, resulting in second and third‐degree burns.
"On November 25, 2014, Keurig informed the Commission about a problem with the Brewers but continued to import and sell them into December. 2 On December 23, 2014, CPSC and Keurig jointly announced a voluntary recall by the firm.
"Following the recall, CPSC staff conducted an investigation to determine whether Keurig had complied with the reporting requirements in sections 15(b)(3) and (4) of the CPSA. The investigation revealed that Keurig had accumulated significant information over a four‐year period that resulted in several missed opportunities to report, including receipt of detailed incident and injury data, insurance claim payments made to injured consumers, and notice of at least two requests by a retailer for Keurig to undertake a product safety investigation.3
"Unfortunately, we are not at liberty to provide any more specificity regarding Keurig’s violation of the reporting requirement because the restrictive and cumbersome information disclosure provisions in section 6(b) of the Consumer Product Safety Act4 prohibit us or anyone else at the agency from disclosing any facts beyond those set forth in the negotiated Settlement Agreement. For this reason, we cannot comment on the seriousness of the reporting delay because nowhere in the Agreement does it set forth the date by which staff alleges Keurig should have reported.5 Nor as a general matter do most Agreements disclose other pertinent facts because companies continue to strongly resist staff efforts to better inform the public by including more detail about the alleged violative conduct in the civil penalty agreements.
"Discussion
"A civil penalty in the amount of $5.8 million is not insignificant, and, as we noted at the outset, it is the second‐highest penalty ever obtained by CPSC. Our General Counsel staff is to be commended for resolving this matter expeditiously, without having to resort to costly litigation, and for settling at an amount that accurately reflects its valuation of the case at the time negotiations began. And while we voted to approve the settlement because we think it is in the best interest of the Commission, we believe the amount is not appropriate relative to the size of the business because it does little to deprive this multi‐billion dollar firm of its economic gain from noncompliance.
"1See Keurig Green Mountain Annual Report on Form 10‐K dated November 19, 2015. At the time of the recall andfor all the relevant years prior Keurig was a publicly traded company. On March 3, 2016, Keurig was acquired by an investment firm and is now a privately held company.
"2Settlement Agreement at ¶¶ 4, 12 setting forth dates of distribution and date Keurig reported to CPSC.
"3Settlement Agreement at ¶¶ 8, 9.
"4Section 6(b) generally bars the agency from releasing any information that would permit the public to identify a manufacturer unless the agency has obtained permission from the company to disclose such information or the Commission has followed a set of often lengthy procedures to clear the information disclosure. No other agency in the federal government must follow procedures like these.
"5We urge staff in future negotiated settlements to include the length of the firm’s delay in reporting."
About U.S. CPSC:
The U.S. Consumer Product Safety Commission is charged with protecting the public from unreasonable risks of injury or death associated with the use of thousands of types of consumer products under the agency's jurisdiction. Deaths, injuries, and property damage from consumer product incidents cost the nation more than$1 trillionannually. CPSC is committed to protecting consumers and families from products that pose a fire, electrical, chemical or mechanical hazard. CPSC's work to help ensure the safety of consumer products – such as toys, cribs, power tools, cigarette lighters and household chemicals – contributed to a decline in the rate of deaths and injuries associated with consumer products over the past 40 years.
Federal law bars any person from selling products subject to a publicly-announced voluntary recall by a manufacturer or a mandatory recall ordered by the Commission.
To report a dangerous product or a product-related injury go online towww.SaferProducts.govor call CPSC's Hotline at 800-638-2772 or teletypewriter at 301-595-7054 for the hearing impaired. Consumers can obtain news release and recall information atwww.cpsc.gov,on Twitter @USCPSC or by subscribing to CPSC's free e-mail newsletters.
SOURCE WASHINGTON,Feb. 21, 2017/PRNewswire-USNewswire/ -- USConsumer Product Safety Commissionwww.cpsc.gov
