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WATER- HEATER MAKER SUED IN ALA. OVER PLASTIC PART IN ITS MACHINES

May 12, 1999

By Kelly Greene

Staff Reporter of THE WALL STREET JOURNAL

A Mobile law firm that has won class action claims against home-siding and roofing manufacturers is now taking on water heaters.

In a lawsuit filed April 15 in Mobile County Circuit Court, George Conway, a Baldwin County teacher, alleges that Rheem Manufacturing Co., New York, has been selling water heaters that it "knew or should have known" contained a defective part, and that the company has breached its customers' warranties.

The alleged culprit: The water heater's plastic "dip tube," which is supposed to channel cold water into the bottom of the water tank as the hot water rises to the top. Instead, according to Mr. Conway's claim, the tube slowly disintegrates, clogging water filters in a house's plumbing and other appliances. Plus, the water heaters eventually fail, the claim says.

The faulty parts were made by Madison, Ohio-based Perfection Corp., according to the claim. After Rheem became aware that the part would "prematurely fail, " it continued to sell the product "without correction," the claim continues.

Mr. Conway's lawyer, Richard Dorman, a partner with Cunningham, Bounds, Yance, Crowder & Brown in Mobile, is seeking class action status for the claim to include homeowners and businesses in Alabama, Florida, Georgia and Texas that bought Rheem water heaters starting in 1993.

"There has been a lot of construction in those areas, so we anticipate there are a lot of affected people there, " says Mr. Dorman, who represented plaintiffs in two class-action claims against exterior-siding makers, Masonite Corp., Chicago, and Georgia-Pacific Corp., Atlanta. Both cases ended in settlements.

Mr. Dorman hopes to force Rheem to replace the allegedly faulty water heaters.

The cost: $400 to $500 apiece, he says.

Rheem referred questions to Alan Hilburg, a McLean, Va., education consultant working with the company. Mr. Hilburg contends that the dip-tube problem "is a narrow problem" involving less than 1% of such parts made by Perfection from August 1993 through August 1996. And even though Rheem didn't cause the dip-tube problem, he continues, Rheern has set up a toll-free number and Web site to help customers get their water heaters fixed, Replacing the faulty part and having the plumbing system flushed costs $170 on average, he adds. "This is a plaintiff's attorney trying to go out and shop for a class," says Mr. Hilburg.

Also named as defendants are Perfection, whose spokesman didn't return calls seeking comment; and Baldwin County Electrical Membership Corp., which sold Mr. Conway his water heater, The company declined to comment through a spokesman.

Water-heater owners in a handful of Midwestern states have filed claims recently against Rheem and other manufacturers using Perfection's dip tubes, says Mr. Dorman. And Michigan Attorney General Jennifer M. Granholm filed a "notice of intended action" against Rheem and three other manufacturers last month alleging violations of the state's consumer protection law for failing to tell customers about the potential dip-tube defect.

SOUTHEAST JOURNAL welcomes your comments-by mail, electronic mail, phone or fax. Letters should be addressed to Ken Gepfert, Editor Southeast Journal, SunTrust Plaza, Suite 4200, 303 Peachtree St. NE., Atlanta, Ga., 30308. The phone number is 404-865-0170; the fax number is 404-865-4379; the E-mail address is ken.gepfert@news.wsj.com

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