Settlement Agreed in Defective Floor Cleaners Case
HMI Industries Inc., of Strongsville, Ohio, has agreed to pay $400,000 as a civil penalty to the U.S. Consumer Product Safety Commission.
The Consumer Product Safety Commission has published a settlement agreement that calls for HMI Industries Inc., of Strongsville, Ohio, to pay a $400,000 civil penalty for failing to inform the commission in a timely manner about defective pfroducts it had manufactured. The settlement has been provisionally accepted by the commission in a 2-1 vote, according to CPSC. The agreement says the civil penalty was set at $725,000 and HMI will pay $400,000, with $325,000 of the total amount suspended because the company is a small business and cannot pay a greater penalty "due to restrictions imposed by a tangible net worth covenant in an existing loan agreement."
The case involves about 44,000 Filter Queen Majestic 360 floor cleaners that were manufactured and distributed between September 2004 and August 2006. The units are defective because their wiring can overheat, causing electrical arcing and melting, and HMI was aware of this problem soon after distribution began, according to the agreement. The company received hundreds of reports of arcing, sparking, and fires from 2005 to 2008; it implemented four separate design changes to correct the problem and paid out claims filed by consumers who reported product failures had caused fires and/or property damage, the agreement states. But, although required to by federal law, HMI did not file a full report with the commission until February 2009. "By that date, HMI was aware of approximately 2,000 incidents of arcing involving the Floor Cleaners, approximately 120 reports of overheating and property damage, and injuries to two consumers. However, HMI advised [CPSC] staff that it knew of only 40 consumer complaints of overheating and damage to carpets, with no reports of injury," the agreement states.
HMI's agreement to the settlement does not constitute an admission that it violated the Consumer Product Safety Act.