Heatway Systems lost a lengthy legal battle when a federal jury in Cleveland held Goodyear Tire & Rubber Co. blameless for its role in manufacturing the rubber hose the radiant company marketed as Entran II.
The jury reached its decision Feb. 3 after three days of deliberation and after three weeks of testimony.
"Frankly, the outcome of this trial was a surprise to everyone - including Goodyear, if they were honest," Heatway president Mike Chiles told us the day after the verdict.
Chiles had nothing but high praise for the evidence presented by his Cleveland legal team. During three days of testimony, for example, an expert witness from the Naval Research Laboratory pointed out that Goodyear used inadequate antioxidants, inappropriate volatile plasticizers and cheap clay fillers in making the hose. A second expert witness testified that Goodyear's failure to properly test the Entran II product for radiant heat purposes led to the present problems.
Meanwhile, mechanical contractors from Colorado and Alaska testified that they had employed exactly the same installation methods when installing Heatway's other radiant brands - yet only experienced problems with Entran II hose.
Goodyear argued that the failures were due to Heatway's radiant system design, as well as problems with installation and maintenance by contractors. It said that field inspection showed that leaks were caused by the wrong kind of hose connectors and that the hose was damaged by highly acidic fluid. In addition, Goodyear said it had been using the same 20-year-old formula to make hose for other applications, such as air and water hose, without any problems.
In a statement about the jury's decision, Goodyear says it is "obviously very gratified by the verdict. We always have believed that the Entran II hose was appropriate for use in radiant home heating systems when it was sold."
When everything was said and done, Chiles said the numbers just didn't add up for his side. "The jury looked at the fact that there had only been 658 cases of failure out of 10,000 installations," he explained, "and didn't think that was a high enough failure rate. After the verdict, Chiles said his lawyers interviewed the jury and many expressed "the sentiment that if there had been two or three times as many cases of failure, we would have won."
While Heatway lost this case, Goodyear's "win" may be far from solid. "They're not out of the woods at all," Chiles said. "We have unearthed some ugly internal memos as a result of our discovery process. It's our firm belief that Goodyear will pay for this problem - it's just going to take a couple of more years and more litigation."
Despite the verdict against Heatway, Denver attorney William Maywhort of Holland & Hart LLP has advised clients that the Ohio jury verdict for Goodyear does not prevent Colorado residents who have Entran II hose in their homes from suing Goodyear.
"In fact, suing Goodyear and Heatway directly now may be the homeowners only option for recovering for the damage caused by Entran II," said Maywhort, who represents more than a dozen Colorado homeowners who have experienced problems with the Entran II hose.
Chiles added that the courtroom was packed with plaintiff attorneys from across the country who are in line to sue Goodyear next. Heatway failed on its claim of a "breach of implied warranty of merchantability." However, Goodyear still faces a growing number of homeowner claims and will have to fight other legal theories of liability.
Heatway bought 25 million feet of the hose between 1989 and 1993. But the hose soon began to crack and leak, causing extensive damages. Entran II tubes started out orange and flexible, like garden hoses. Over time, the tube released plasticizers that hardened the tube, effectively dissolving in hot water, according to expert testimony. The first phase of the problem begins with leaks where the hose connects to the manifold, and continues until the tube spontaneously cracks and leaks elsewhere.
There are about 10,000 radiant heating systems in the Unites States that contain Entran II tubes, and Heatway has spent more than $6.5 million to settle more than 100 claims since 1992.
Lawsuits were filed by homeowners against both companies alleging breach of warranty and negligence against Heatway, and defective manufacturing and defective product design by Goodyear. Both companies denied the allegations, and countered with lawsuits against each other.
Though Heatway may appeal the verdict, the jury's decision means that Heatway will have to pay Goodyear the millions of dollars it withheld for the tubing that Goodyear delivered, industry sources say.
Based in Springfield, Mo., Heatway has 50 employees and about $12 million in sales a year, and could potentially become bankrupt if held liable for all damages.
Full Statement From GoodyearGoodyear is obviously very gratified by the verdict. We always have believed that the Entran II hose was appropriate for use in radiant home heating systems when it was sold and that if the Entran II hose is used in a system that is properly installed, operated and maintained, it will continue to provide many years of service.
Goodyear established an Internet Web site to provide homeowners with information about proper installation, operation and maintenance and we intend to continue to make the Web site available to homeowners.
Full Statement From Mike & Dan ChilesA jury in Northern Ohio yesterday decided that 25 million feet of Entran II hydronic radiant heating hose manufactured by Goodyear is not unfit for its ordinary use.
We are shocked and dismayed by this verdict.
Heatway offered extensive evidence that the Entran II failures have resulted from Goodyear's use of inadequate antioxidants, inappropriate volatile plasticizers and inexpensive clay fillers.
Heatway and its experts testified that the observed hose failures are not the fault of the homeowner, the installer or Heatway as Goodyear has alleged. Heatway's evidence was supported by extensive testimony from C. Michael Roland, Ph.D., head of the Polymer Research Division of the Naval Research Laboratory. Ray Hauser, Ph.D., a materials scientist and failure counselor from Boulder, Colo., also testified extensively that Goodyear's failure to properly test the Entran II product led to the present problem.
Well-respected mechanical contractors from Colorado and Alaska testified that they employed exactly the same installation methods when installing Heatway's Onix radiant heating hose, Entran 3 and Heatway PEX; yet remarkably, they have only experienced problems with leaking and hardening Entran II hose. Project owners from Utah, Alberta-Canada and Colorado testified to their experiences with failing Entran II.
Apparently, among other factors, the jury believed that the 658 homeowner claims of Goodyear-failed hose was not enough to conclude "by a preponderance of the evidence" that all 25 million feet of hose installed in an estimated 10,000 installations is "unsuitable for ordinary use as a radiant heating hose."
Heatway brought its claim of "breach of implied warranty of merchantability" against Goodyear in an effort to achieve a global solution to this problem, and thereby avoid further litigation throughout the country.
Unfortunately, this effort has failed. As a result, Goodyear will face a growing number of homeowner claims concerning their failed product in jurisdictions across North America where different theories of liability will be tested: implied warranties, breach of contract, fraud, tort claims and others.
We are confident that Goodyear will ultimately be held responsible for its corporate actions. And indeed, in the closing argument to the jury, Goodyear's counsel made a telling admission:
We disagree with Heatway about many things; there is one thing that we do agree very much with them about: A bad thing happened out there in the field and that a number of homeowners have Heatway Systems with hard and leaking hose in them.
As you know you are not being asked to decide anything about those individual homeowners cases or complaints. Those situations are for other days in other places when other parties and all the parties, Heatway, the installers, Goodyear, a given homeowner, can be present. But for now this case, the issue before you of course is whether Goodyear Entran II hose, at the time of the sale to Heatway, whether that hose was merchantable.
Heatway agrees that "a bad thing happened," but it didn't happen "in the field." Our evidence presented at trial showed that the bad thing happened at the Goodyear hose plant; the problem just showed up in the field.
More than ever, we believe that in "other days in other places," Goodyear will be forced to assume responsibility for its errors and omissions. Heatway may not be a party in all of these cases, but Heatway's legal efforts in Ohio have helped to ensure that the truth is known. This truth will be presented as a matter of legal record to juries in other state where homeowners are parties to the litigation.
Whether you are a customer or competitor, we at Heatway thank you for your continuing support during this lengthy legal battle. As further developments unfold, we will keep you informed.