WASHINGTON–Goodman Company L.P. has agreed to pay a $5.55 million civil penalty to settle allegations that it failed to timely inform the Consumer Product Safety Commission (CPSC) of a fire risk posed by certain air conditioning and heating units, many of which were installed in hotels, schools and hospitals, the Department of Justice and the CPSC jointly announced today. The settlement also resolves allegations that, when Goodman ultimately reported the fire risk to the CPSC, it misrepresented the number of fires that had occurred. Goodman is a Delaware corporation based in Houston, Texas.
The delay and misrepresentation violated the Consumer Product Safety Act, the government asserted in a complaint filed today in the U.S. District Court for the Southern District of Texas. To resolve the complaint, Goodman agreed to the $5.55 million civil penalty and other terms of a consent decree, which is subject to judicial approval.
“Goodman knew of a fire risk but waited roughly two years to inform the CPSC,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “Companies must report these safety issues immediately, as the law requires, to protect the public from an unnecessary risk of injury. The Department of Justice will continue to take enforcement action against companies that do not meet their consumer product safety obligations.”
“Goodman’s conduct was illegal, dangerous and unacceptable,” said CPSC Chairman Elliot F. Kaye. “Goodman’s decision to hide information about serious fires for years, while continuing to profit from sales, slowed down the announcement of a recall and put the safety of many families at real risk. CPSC will continue to work closely with the Department of Justice to enforce the law and hold violators accountable.”
The government’s complaint concerns through-the-wall air conditioning and heating products known as packaged terminal air conditioner/heaters, or PTACs. The United States alleged that Goodman knew in 2008 that certain PTACs it manufactured between January 2007 and April 2008 (Subject PTACs) had improperly-crimped power cords that could pose a fire risk.
Goodman had been receiving reports about the Subject PTACs catching fire, smoking and overheating. Among the reports, Goodman learned in May 2011 of a fire at a lodging facility in New York. At that hotel, the complaint alleged that Goodman replaced the control boards and power cords for over 100 Subject PTACs. Goodman made similar large-scale replacements in 2013, replacing the power cords and control boards for more than 335 Subject PTACs at seven hotels, following two hotel fires in Indiana and Idaho. But Goodman did not report the fire risk to the CPSC until Nov. 26, 2013, at least six months after it learned of these fires.
When it ultimately reported to the CPSC, Goodman identified only three reports of overheating. In fact, by that time, the complaint alleged that Goodman had received scores of additional reports of overheating, including reports of fire, potentially attributable to the Subject PTACs’ power cord.
After reporting to the CPSC, Goodman learned of additional fires involving the Subject PTACs, but failed to timely report six of them to the CPSC, as set forth in the complaint. At least 10 months passed between when Goodman learned of each of those fires and when the fire was reported to the CPSC.
The consent decree requires Goodman to maintain a compliance program to ensure that the company complies with the Consumer Product Safety Act and to maintain internal controls and procedures designed to ensure timely, truthful, complete, and accurate reporting to the CPSC as required by law. Goodman is subject to liquidated damages if the company is not in compliance with the consent decree.
In agreeing to settle the matter, Goodman has not admitted that it violated the law.