Verdict Survey: Tankless Water Heaters in Dorchester County

The May 2013 issue of Verdict Search included a South Carolina products liability case tried in Dorchester County.  The details of the case are set forth below.

Capsule Summary:   On March 1, 2013, a Dorchester County jury returned a verdict in favor of the plaintiff for $750,000 in a case involving tankless water heaters purchased by the plaintiff plumbing company.  Plaintiff alleged the tankless water heaters it purchased failed once temperatures began to drop in the winter, causing water pipes in the homes in which they were installed to burst. 

 

Case Information: Amo, LLC v. Eccotemp Systems, LLC, Greenwave Hot Water Heaters, LLC/Eccotemp Systems, LLC v. Hurricane Construction, Inc., C/A No. 2010-CP-18-01920, Dorchester County Court of Common Pleas.

 

Date of Verdict:  March 1, 2013

 

Venue: Dorchester County Court of Common Pleas

 

Judge: The Honorable Michael G. Nettles

 

Factual Background:  In 2008, Plaintiff Amo, LLC (“Amo”) (a plumbing company) purchased 75 tankless water heaters and installed them in various homes.  Amo purchased the units from Eccotemp Systems, LLC (“Eccotemp”).  The water heaters were supposed to produce warm water on demand and conserve energy.  They were also allegedly 30 to 40 percent less expensive than the price of competitor products that were similar.  Amo paid $498 per unit.  In the winter of 2008, and as temperatures began to fall, the units Amo purchased began to fail and caused water pipes in the homes in which they were installed to burst. 

 

Allegations and Procedure: Amo sued Eccotemp and claimed Eccotemp manufactured and sold a defective product.  Amo alleged causes of action for breach of warranty, breach of contract, and violation of the South Carolina Unfair Trade Practices Act.  Amo also named the retailer that sold the water heaters, but the retailer was dismissed later by Plaintiff’s counsel.  Eccotemp then impleaded Hurricane Construction, Inc. (the homebuilder) for whom Amo installed the units, but Hurricane was dismissed from the case prior to trial.

 

At trial, Amo's counsel argued Eccotemp’s products included broken thermostats, which caused water pipes to freeze.  The thermostats also caused the units to malfunction and not heat water inside the units if temperatures dropped below 37 degrees fahrenheit.   There was testimony at trial that 70 percent of units sold to Amo by Eccotemp failed.  Eccotemp replaced 40 of the units, and 14 of them froze again.  Amo's counsel argued that several homeowners experienced as many as three Eccotemp water heater failures in their homes during the cold months.  When Amo replaced the Eccotemp units with a competitor’s units, those units did not fail.  Amo introduced evidence of a pattern of behavior by Eccotemp, including evidence that homeowners in several states had similar problems with the water heaters.

 

Eccotemp argued that the products' failure was not the result of a product defect.  Instead, it argued Amo's employees installed the units in the homes incorrectly.  Eccotemp also claimed the homeowners contributed to failure of the units and frozen water pipes by not allowing their pipes to drip during cold weather.

 

Experts: Amo's expert was Gary Roland, a plumber in Lexington, South Carolina.  Defendant’s expert was Michael Richmond, a plumber in Charleston, South Carolina. 

 

Alleged Damages:  Amo's counsel sought a recovery of $158,000, as well as attorney’s fees and costs.  Amo's counsel requested that the damages be trebled pursuant to the South Carolina Unfair Trade Practices Act.  Defendant’s counsel disputed these damages.

 

Result: The jury returned a Plaintiff’s verdict, in favor of Amo and determined the damages for breach of warranty, breach of contract, and unfair trade practices totaled $750,000.  The jury apportioned $125,000 to breach of warranty, $158,000 to breach of contract, and $474,000 to the unfair trade practices claim.

 

Miscellaneous:  The last demand in the case was $85,000.  The last offer was $42,500, which the write-up indicates was withdrawn.  After the verdict, Eccotemp filed a motion for a mistrial, which was denied.  Eccotemp filed a Notice of Appeal with the South Carolina Court of Appeals and also filed for United States Bankruptcy Chapter 11 bankruptcy protection.  The write-up indicates the information contained therein was provided by Plaintiff’s counsel, and none of the Defendants’ counsel responded to inquiries.

 

Thanks to the May 2013, Volume 12, Issue 5 of Verdict Search for this information.  I also frequently use their verdict search engine, www.verdictsearch.com.

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Exclusive: Copy of Judge's "Penalty Order" in SC Risperdal Action

Well, maybe not "exclusive," but I did manage to obtain a copy of the Penalty Order in the South Carolina Attorney General's action against Johnson and Johnson and the award of $327 million in damages against the pharmaceutical company (which I have blogged about, including a post yesterday).  Since that post, I have obtained a copy of Judge Roger Couch's "Penalty Order" in which he sets damages and explains the rationale for them.  You can find a copy of the Penalty Order at this link. 

I have not had a chance to digest the Order yet, and I wanted to get it posted as I can tell from my site statistics that there is considerable interest about this case and the award of damages.  However, from my quick review, the high spots are as follows:

• The judge focuses on the "Credo of Johnson and Johnson" as published on its website and referred to in annual reports to tee up how he is approaching the case (p. 3).
• He recognizes the benefits of drug companies, medicine in general, and even Risperdal.  He also points out that they are a for-profit company...but he goes back to the Credo as the company's "first obligation" (pp. 3-4).
• He assesses the good/bad faith of the defendant and stresses that he is focused on what was known about the drug at the time statements were made (pp. 4-5).
• He reviews the labeling of the drug, what the company knew and when, and finds that the "Defendants exhibited a callous disregard to a patient's right to have all possible information available, and in the hands of their physician, before deciding to use or continue to use the drug" (p. 8). 
• He reviews the "Dear Doctor" letter from November of 2003 and describes it as an effort to "manipulate the message about Risperdal" (p. 9).  He also relies on some testimony from a Janssen executive about the "Dear Doctor" letter that is unfavorable (p. 10) and concludes that the actions of the company exhibited "extreme bad faith" (id.).
• He talks about "Injury to the Public" as a component of a South Carolina Unfair Trade Practices action, including reference to his charge on this component (pp. 10-12).  He notes that the jury found that the actions injured the public and were capable of repetition (p. 12).
• He assesses the "Desire to eliminate the benefits derived from a violation" and admits that this is "virtually impossible to accurately determine" (p. 13).  However, he points out the profit from the drug were "enormous," but also notes the releative small percentage of business conducted in South Carolina (id.).
• He assesses "The necessity of vindicating the authority of the agency involved" and notes that the South Carolina Attorney General is the one with the burden and duty to vindicate the public's interest in the case (pp. 13-14).
• He then goes into "The Defendant's ability to pay" at length (pp. 14-16), including the number of violations.  This includes a statement of Annual Sales of Risperdal worldwide (p. 15) and J&J's earnings.
• Finally, he assesses the number of times the label was published -- 509,499 sample boxes distributed -- and assesses $300 per violation, for a total of $152,849,700 (p.16-17).  He does similar analysis for the number of "Dear Doctor" letters mailed (7,184) and sales calles where the letter was published (36,372), for a total publication of 43,556, and assesses $4,000 per violation, for a total of $174,224,000 (id).
• Therefore, the total damages are $327,073,700 (p. 17).

An interesting order, and I welcome reader comments. 

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