HOUSTON (CN) — A Houston air-conditioner manufacturer will pay the federal government $5.5 million to settle claims it delayed reporting that its wall units started fires in a dozen hotels.
Harold V. Goodman founded Goodman Manufacturing Company LP in 1975 in Houston on a simple, yet shrewd premise: Texas summers are too hot to live through without air conditioning.
As the city’s population grew with its reputation as the epicenter of the country’s oil and gas industry, Goodman’s business flourished, becoming one of the top selling air-conditioning and heating system makers in the United States.
Goodman, a longtime breeder of race horses who is in the Texas Horse Racing Hall of Fame, died in 1995. The company still uses a motto trademarked during his lifetime: “Thank Goodness for Goodman.”
But the company’s reputation for quality has been diminished in recent years by defects the federal government says it delayed reporting.
The United States sued Goodman Company LP on Thursday in Southern Texas Federal Court on behalf of the U.S. Consumer Product Safety Commission.
The feds claim in the lawsuit that Goodman received more than 90 reports that its wall-mounted air conditioner-heating units had overheated or caught fire in hotels and homes from May 2008 to May 2013.
Goodman manufactured more than 233,000 of the units and sold them wholesale for $700 to $1,000 under the brand names Goodman, Amana, Comfort-Aire, Century and York International, according to the lawsuit.
After replacing hundreds of the units at hotels across the country in response to fires, the company launched an internal investigation in May 2013 that concluded the units’ “improperly-crimped power cords” were to blame.
But Goodman waited until November 2013 to relay its findings to the government’s product safety commission, which issued a joint recall notice with the company in August 2014 advising consumers to request a replacement power cord for the units.
During the commission’s investigation to find out if the power cord did in fact start the fires, which the cord manufacturer disputed, the government said it learned that Goodman had grossly underreported the number of fires linked to its units, claiming it had received only five such reports.
Though the commission said in the Goodman recall notice that the power cord had also been recalled, a commission spokeswoman said if the agency didn’t list the name of the cord manufacturer in the notice, then that information is private. She suggested filing a Freedom of Information Act, or FOIA, request or contacting Goodman.
Goodman didn’t immediately respond Thursday to an email asking who made the cords.
“It sounds like we may have done an engineering analysis so you would probably want to file a FOIA for that, they may be named in there,” commission spokeswoman Patty Davis said.
Goodman settled the lawsuit the same day it was filed, agreeing in a consent decree to pay the government $5.5 million, but stopping short of admitting liability.
“Goodman does not admit that the law has been violated and believes settlement is appropriate to avoid the time and expense of litigation,” the decree states.
The company also agreed to a permanent injunction that requires it to set up a compliance program to facilitate its reporting of product-safety issues to the government.
Goodman is represented by Eric Rubel with Arnold Porter in Washington, D.C. Rubel was the Consumer Product Safety Commission’s general counsel from 1994 to 1997.
Rubel didn’t respond Friday to a request for comment on the settlement.
After Goodman’s founder died, his son, John B. Goodman, sold it for $1.43 billion to a New York private equity firm that took it public.
Goodman is now owned by Daikin Industries, a Japanese company that bought it for $3.7 billion in 2012.
John Goodman didn’t inherit his father’s interest in air conditioning, but he did inherit his affinity for horses. John Goodman’s love for polo led him to establish the International Polo Club Palm Beach in Florida, a frequent host of the U.S. Open Polo Championship.
In the early morning of Feb. 10, 2010, John Goodman ran a stop sign near the polo club and crashed his Bentley into Scott Patrick Wilson’s vehicle. Wilson’s car flipped wheels-up into a canal and he drowned. Wilson was 23.
Police determined Goodman’s blood-alcohol level was more than twice the legal limit three hours after the crash and a jury found him guilty of DUI manslaughter. He was sentenced to 16 years in prison in November 2014 after a retrial.
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