By Pamela C. Maloney, J.D.
Preliminary approval of an agreement pursuant to which the manufacturer of a line of water supply connectors will establish a common fund of $14 million to settle allegations in two separate class actions brought by homeowners and leasees who complained that the connectors and water heater supply lines were defective and that the defect caused property damage has received preliminary approval by the federal district court in Nebraska. The court also granted class certification, finding that there were common questions of law and fact that predominated over questions affecting individual class members and that a class action was superior to other methods of litigation in these cases (Klug v. Watts Regulator Co. and Sharp v. Watts Regulator Co., December 7, 2016, Bataillon, J.).
Klug action. Representatives of a nationwide class of homeowners and leasees filed a class action lawsuit against Watts Regulator Company, seeking to recover damages caused by the installation of allegedly defective water supply connectors known as FloodSafe® Auto-Shutoff Connectors, which are used to supply water to common household fixtures and appliances including faucets, toilets, washing machines, dishwashers, and icemakers. These connectors incorporate a device that is intended to detect when water flow exceeds a preset flow rate (i.e. evidence of a leak) and, upon such detection, prevent water from passing through. The complaint alleged the FloodSafe Connectors were defective because they fractured and failed at the shut-off device, resulting in damages to the class members’ property. Of the $14 million common fund, $4 million has been designated for replacement and remedy claims in the Klug action.
Sharp action. The class representatives in the Sharp action alleged that Watts manufactured and marketed certain stainless steel braided water heater supply lines (the Water Heater Connectors) that are defective. The Water Heater Connectors were alleged to be defective because the inner-tubing is made from a thermoplastic polymer that degrades as it is exposed to metallic ions present in most water supplies causing the Water Heater Connectors to fail and begin to leak, eventually causing major water damage in class members’ homes. The complaint also alleged that Watts provided inadequate warnings to prevent the failure of the Water Heater Connectors. Of the $14 million common fund, $10 million has been designated for replacement and remedy claims in the Sharp action.
Remedies offered. Pursuant to the proposed settlement reached between the parties in May 2016, settlement class members and claimants in both actions will receive reimbursement in the amount of $10 for each replacement connector, not to exceed two replacement connectors per residence. Under the property damage remedy outlined in the agreement, class settlement members and claimants will receive a minimum payment of $25 up to a maximum payment of 25 percent of their reasonable, proven damage caused by or related to an alleged failure of the allegedly defective connector.
Claims process. Class settlement members or claimants will have one year from the final order and judgment to submit valid claims for the replacement remedy and for property damage remedy for claims that arose during the relevant time period (November 4, 2008 to November 4, 2014). For claims that arose after November 4, 2014, class settlement members have four years to submit their claims.
Claims administrator. Epiq Systems, was appointed to serve as settlement administrator and will provide notice to class members and claimants and will administer the settlement at a cost not to exceed $932,000, which will be paid from the gross settlement amount.
Payment of costs and remaining funds. Under the terms of the settlement, the manufacturer further agreed that after payments for notice, claims administration, plaintiff service awards, and attorney fees and expenses, it would pay 40 percent of the remaining amount of the total settlement into the fund within 15 days after the effective date of the settlement. Annually thereafter, the manufacturer will pay all amounts necessary to maintain in the fund 15 percent of the total settlement amount remaining. At the end of the damage claims period, the manufacturer agreed to deposit in the fund the entire amount remaining after payment of expenses, awards, fees, and costs. Any money remaining in the settlement fund after the end of the damage claims period and after all valid property damage had been paid would be distributed to class members and claimants in an amount proportionate to their initial claims.
Attorneys: Adam A. Edwards (Greg Coleman Law Firm) for Curtis Klug,Durwin Sharp and Joseph Ponzo. David S. MacCuish (Alston, Bird Law Firm) and Jodi D. Oley (Eckert Seamans Law Firm) for Watts Regulator Co.
Companies: Watts Regulator Co.
MainStory: TopStory SettlementAgreementsNews SCLIssuesNews DefensesLiabilityNews DamagesNews HouseholdProductsNews NebraskaNews
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