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Arvo Lake, a retired 71-year-old man, bought an air
conditioner in May. The unit was
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1. Arvo Lake, a retired 71-year-old man, bought an air conditioner in May. The unit
was installed and operated according to the manufacturer's specifications. Unbeknownst to
Lake, the unit contained a hole in the refrigeration system that allowed Freon, the coolant, to
escape from the unit. By August, the unit had ceased cooling, and Lake's residence reached
a temperature of at least 96 degrees Fahrenheit. The heat caused Lake to suffer from
hyperthermia, which caused circulatory failure and then death. The executor of Lake's Estate
sued the manufacturer of the air conditioner for damages resulting from breach of warranty.

Which warranties, if any, has the manufacturer of the air conditioner breached?

For a manufacturer to be liable for consequential damages caused by a breach of

warranty, the consequential damages must be foreseeable to the manufacturer. Was Lake's
death a foreseeable consequence of the air conditioner's failure to operate properly?
The case can be found in the DeVry Library DeVry Library: David B. GARAVALIA, as executor
of the Estate of Arvo Lake, a deceased person, Plaintiff-Appellant, v. HEAT CONTROLLER,
INC.; Addison Products Company, Inc.; O.G.F. Corporation, doing business as Giles Appliance
Center; and Odell Giles, individually, Defendants-Appellees. No. 5-89-0749. April 19, 1991.
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2.

Welcome to Week 3 of the class. Our TCO for this week is:

TCO C: Given an example of corporate liability arising from the sale of defective and
dangerous products, develop a business strategy that includes ethical considerations to
minimize liability for claims of product liability and breach of warranty.
This week we will be discussing the topics of negligence, product liability and warranties. I
believe that all of you will find the thread discussion quite interesting this week. Please feel
free to bring in your experiences and stories as they relate to the material this week.
IMPORTANT NOTE: I appreciate the hard work you all have done, particularly when it
comes to sharing links with the class. This week I need to ask a favor of you. The above
mentioned scenario is an actual case that can be located online. In order for us to debate the
issues in the case free of biased thoughts and opinions, PLEASE, do not post the case
opinion or decision or look at the final outcome. I will post the decision for these cases
towards the end of the week. Trust me, there is a method to this.
Now lets start with our first question. Which warranties, if any, has the manufacturer of the
air conditioner breached? Please provide support for your answers as always.
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3. In 1979, Paul and John Reardon purchased 16 acres of land located next to a
manufacturing plant in Massachusetts. In 1983, a state environmental agency, responding to
a citizen's report, tested soil samples from both properties and discovered extremely high
levels of polychlorinated biphenyls (PCBs) on the plant site, and on the Reardons' property

where it bordered the site. Shortly thereafter, the Environmental Protection Agency (EPA)
cleaned up the contaminated areas. In 1985, the EPA notified the Reardons that they might
be liable for clean-up costs. An EPA investigation of the property in 1987 revealed that some
soil was still contaminated. This time, the Reardons cleaned up the property themselves. In
March 1989, the EPA placed a lien for an unspecified amount on all of the Reardons'
property to secure payment for any clean-up costs for which the Reardons might be liable.
The EPA told the Reardons that they could settle the claims against them for $336,709, but
noted that this amount did not limit the Reardons potential liability. The Reardons filed a
motion for an injunction, arguing that filing a lien against their property without any prior
notice or hearing violated their due process rights under the Fifth Amendment, which states
that no person can be deprived of life, liberty, or property without due process of law.
Superfund (the Comprehensive Environmental Response, Compensation, and Liability Act,
or CERCLA, of 1980, as amended in 1986) gives the government several powerful tools to
use when attempting to collect clean-up costs from responsible parties. Among those tools is
the authority to place a lien on a responsible party's property without providing for a
reasonable hearing before placing the lien.

Is the power to place a lien on a piece of property without prior opportunity to be heard in
a court of law or administrative hearing constitutional? Why or why not?
The case can be found in the DeVry Library DeVry Library: Reardon v. U.S. 947 F.2d 1509
C.A.1 (Mass.),1991. Heard May 8, 1991.
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4. Our second thread has us looking at environmental issues and regulations, a very
timely subject. Most companies today realize the importance not only to the environment, but to
their bottom line financially and good public relations, of going green.
IMPORTANT NOTE: Again as was the case with Thread 1, the above mentioned scenario is an
actual case that can be located online. In order for us to debate the issues in the case free of
biased thoughts and opinions, PLEASE, do not post the case opinion or decision or look at the
final outcome. I will post the decision for these cases towards the end of the week.
Okay lets get started. Read the chapter on Environmental Regulation carefully and answer the
following:
1. Does the filing of the lien by the EPA (Environmental Protection Agency) under CERCLA
constitute a taking, violating the Reardons of their due process rights without a hearing?
2. Does CERCLA provide any safeguards regarding the wrongful filing of liens?