Allentown cryogenics company says reputation damaged by supplier of faulty equipment

By Jim Boyle | Oct 30, 2014

An Allentown, Pa., company that specializes in cryogenics technology says its reputation

An Allentown, Pa., company that specializes in cryogenics technology says its reputation

and involvement in a high-profile aerospace project in Colorado has been damaged by a third-party vendor that supplied faulty equipment, according to a product liability and fraud suit filed at the Lehigh County Court of Common Pleas.

Acme Cryogenics seeks repayment and damages from the purchase of 71 specialty valves from North Carolina-based Flo-Tite, Inc., which were installed during the construction of a $500 million space simulator facility in Littleton, Colo., contracted by Lockheed Martin.

According to the complaint, the valves failed almost immediately and were discovered to contain several defects that threatened to stall the project's timeline. Acme has been forced to incur expenses for the replacement of the valves, plus any damage to surrounding equipment caused by the defective items.

The claim says that Acme reached an agreement with the project's general contractor, Hansel Phelps, in 2013 to provide special piping systems that could transmit extreme low-temperature liquids for the use of space simulation exercises. The science involved with cryogenics equipment requires specifically designed materials that can withstand the cold liquids and gases without freezing or becoming damaged.

In order to fabricate the contracted pipes, Acme reached out to a third party supplier for the liquid nitrogen valves, signing with Flo-Tite based on recommendations and the company's response to a request for proposal. The complaint says that Flo-Tite represented its expertise in valve technology and could supply the necessary products that could perform according to the project's specifications.

Acme claims that Flo-Tite's response to the RFP and accompanying literature claiming the valves were specially designed and fabricated for cryogenic use showed that the defendants were well-aware of the planned use of the products. The plaintiffs completed 11 purchase orders for 71 valves, costing a total of $93,208.

The first shipment was delivered to Acme's Georgia factory in July 2013 and rejected for a number of defects. The rest of the valves were accepted and installed in the piping, then sent to Littleton, Colo., in July 2014.

The sub-contractor tasked with installing the piping system notified Acme two weeks later that four of the valves had failed to close properly under cryogenic temperatures. According to the complaint, the installer contacted representatives at Flo-Tite, who said that this type of issue was not uncommon with its ball valves operating under cryogenic temperatures.

The defendants recommended making modifications to the valves' seals, but the repair did not fix the problem. Hansel Phelps requested that Flo-Tite send a representative to address the problems, stressing the importance of getting the piping system operational as soon as possible to enable the testing of the simulation chambers. The company agreed, sending a rep from a local distributor to inspect the equipment; however, he was not qualified to make any of the necessary repairs, the claim says.

On July 31, 2014, another Flo-Tite valve was discovered to contain metal shavings and chipped materials, with a replacement valve also containing defective characteristics.

Hansel Phelps ordered Acme and Flo-Tite to develop a solution quickly, but when the plaintiffs contacted Flo-Tite, they were informed that the defendants did not have the necessary cryogenic materials for proper testing, including a supply of liquid nitrogen, according to the complaint.

Based on Flo-Tite's inability to fix the valves and test the replacements, Hansel Phelps and Lockheed Martin ordered all valves replaced by another vendor's product, at Acme's expense. The process will also cause damage to the surrounding piping, for which Acme will also be responsible.

Acme accuses Flo-Tite of making false and misleading statements about the quality of its products and the company's level of expertise to create and test the valves. The plaintiff relied on those misrepresentations to make the purchase orders and has suffered severe harm to its reputation after the equipment failed on a high-profile project ordered by an industry leader.

The plaintiffs are represented by attorneys from Drinker Biddle & Reath in Philadelphia.

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