Graco agrees to record fine in product safety case

Pennsylvania - New Jersey - New York - Nationwide

ASSOCIATED PRESS
March 23, 2005

WASHINGTON Graco Children's Products agreed Tuesday to pay a record $4 million to settle charges that it belatedly reported problems with car seats, highchairs, strollers and other products that resulted in hundreds of injuries and at least six deaths.

The company also is recalling 1.2 million Graco Toddler Beds sold in the United States from 1994 to 2001. The beds are linked to scores of injuries, including more than a dozen broken bones, caused when children's limbs were trapped in the bed's guardrails or footboard.

The U.S. civil penalty is the largest ever imposed by the Consumer Product Safety Commission, which announced the settlement and recall.

The penalty was sizable because of "the number of consumer products and the egregiousness of the failure to report," Hal Stratton, the chairman of the Consumer Product Safety Commission, said in an interview.

Under U.S. law, companies must immediately inform the commission after finding product defects that pose injury risks or violate federal safety standards. That time limit typically is interpreted as 24 hours.

But the safety agency said Graco and its subsidiary, Century Products, failed to immediately report defects in 16 products sold from 1991 to 2002. Stratton could not say when his agency first learned of possible reporting violations.

Graco denied knowingly violating reporting requirements. It said the penalty "pertains to a time prior to Newell's acquisition" of Graco, when the company was under different management, and before implementation of systems "that will ensure that this will not occur moving forward."

The products, more than 12 million in all, included car seats, infant carriers, highchairs, strollers, swings and beds.

The products have been subject to seven recalls since 1997, including the action Tuesday. The commission said it expected to announce two more Graco recalls soon.

The six deaths were linked to Graco Infant Swings, seven million of which were recalled in April 2000 after reports that babies could fall out of the seat's leg openings or get trapped in them.

More recently, 140,000 Graco Travel Lite Infant Swings were recalled in July after the company received 100 reports of children slipping out of faulty seat belts and sustaining injuries like bloody lips, bumps and bruises.

Acquired by Rubbermaid in 1996, Graco, based in Exton, Pennsylvania, is now a subsidiary of Newell Rubbermaid, formed in 1999.

Newell Rubbermaid shares were 9 cents higher at $21.17 in New York Stock Exchange trading Tuesday afternoon; they are down 13 percent so far this year