Furnace recall may follow or precede legal action on behalf of homeowners seeking compensation for injuries and loss due to defective products. When a consumer files a lawsuit relating to a defective furnace, it is the lawyer’s job to prove that flaws in the furnaces or negligence on behalf of the manufacturers caused the accident. Often times, many consumers will join together in what is known as a class action lawsuit.
Class action lawsuits are an option for consumers seeking compensation for injuries and losses. These lawsuits involve hundreds or thousands of consumers who join together to sue a company. In this way, the numbers of cases can present a pattern of problems, often using information gathered by the CPSC, to gain refunds and a verdict in favor of consumers. These cases often stand a better chance of winning a judgment against companies, but usually result in a smaller amount awarded to each individual joining the case. Some examples of lawsuits and the judgments received, with statistics on the units and the issues involved, are detailed below.
High energy efficiency furnaces sold by Carrier, Bryant, Day & Night and Payne were found to be defective in a class action lawsuit involving approximately 3 million customers in North America. The judgment was worth over $300 million dollars based on a combination of cash refunds and the cost of extended warranties given to customers.
The design of the furnaces was executed with inadequate materials which lead to furnace failure in a shorter period of time than should be expected. The issue was one of convenience rather than fire or CO2 poisoning, and settled rather quickly. The crux of the argument which won consumers the case was proof that the heat exchangers had been made using a plastic material unsuitable for use in areas of high temperature.
This win resulted in a cash settlement for those with furnaces which had failed as well as the replacement or repair of existing units. Those with furnaces still running received extended 20 year warranties. No injuries or fatalities were experienced by customers who bought the furnaces manufactured from 1989.
Cases against Consolidated Inc. have been pursued since 1999 both in the courts and by the CPSC in an attempt to reach a settlement for the millions of customers who have experienced issues with Consolidated furnaces. The attempted settlement, brokered by the CPSC was hampered and delayed when the company declared bankruptcy. The present settlement offers consumers approximately $300 towards replacing or repairing faulty units.
It is not the first time a company involved in a pending court case has entered bankruptcy proceedings, since the costs of defending a class action lawsuit are very high. Additionally, when a recall is issued, sales of existing products drop, limiting a company’s sales and cash flow. The CPSC will work within the bankruptcy situation to try to reach a settlement in favor of the consumers it represents, but this process usually delays payments to customers while bankruptcy details are processed.
One of the cases against the company involves furnaces manufactured prior to 2001, sold by more than 20 companies which may include defective parts in the expansion joints, burner or heat exchanger.
Another case involves flaws in furnaces with metal bars installed to meet new emissions regulations for California. The CPSC alleges that this addition to existing products was not subjected to the necessary rigorous testing required of furnaces, but rather released for sale to customers, resulting in more than 50 complaints filed relating to fires started by faulty furnaces. The bars installed in Consolidated furnace products did not reduce the emissions, but rather overheated the furnace, leading to flames escaping through cracks in the furnaces, igniting flammable materials such as wood, into the area surrounding furnaces.
Consolidated came under criticism from consumers and fire-fighting agencies for not issuing a recall when the first reports of problems with these furnaces were received. The problem was first identified as early as 1990.
The major issues involving furnace manufacturers in legal proceedings may become lengthy since they involve hundreds of claims for injury and damage to property and may apply to millions of customers, not just the U.S., but Canada as well. The CPSC is committed to pursuing settlements in these cases, because of a rise in deaths associated with fires and carbon monoxide poisonings in the home.
The U.S. Centers for Disease Control and Prevention estimates that more than 500 Americans die each year in accidents related to exposure to carbon monoxide. The figures rise in the winter months when furnaces that have remained dormant for months are turned on. In many cases, the advised safety check by an accredited local contractor has not been carried out, so any leaks or other issues have not been identified.
Faulty furnaces may continue to work for years before presenting serious problems, and manufacturers may have gone out of business by the time issues are identified. These factors may delay the possibility of legal action. Some companies are attempting to inform and educate their customers about safety issues regarding their products, and actively cooperate with the CPSC to recall all damaged furnaces, while others seek to delay the process for as long as possible by entering lengthy negotiations or declaring bankruptcy, as was suggested in the Consolidated case.
One innovative solution offered by furnaces companies who have experienced a product recall, but are not currently involved in legal actions, is to offer customers home carbon monoxide monitors, which function much like smoke detectors, alerting homeowners to the presence of the dangerous gas. This aides in restoring the public’s confidence in their products and has been welcomed as a step in the right direction by the SPSC.