Battle heating up between A.O. Smith, Rheem over top water heater label

Lawsuit alleges false advertising, unfair competition

Milwaukee-based A.O. Smith Corp. is suing one of its top competitors, arguing Georgia-based Rheem Manufacturing Co. is improperly claiming to be “America’s #1 Water Heating Brand.”

The lawsuit, filed Monday in the U.S. District Court for Eastern Wisconsin, claims Rheem’s claim is based on a “fundamentally-flawed TraQline report that bases its overall market share conclusions on a retail consumer survey only.”

“Because it entirely ignores the commercial water heater and wholesale market segments, the TraQline study provides information on only a portion of the water heater market and is insufficient to support Rheem’s broad claim,” the A.O. Smith lawsuit says.

A.O. Smith declined to comment on the case, citing the ongoing litigation. Rheem representatives did not respond to requests for comment.

In its complaint, A.O. Smith points to data from the Air-Conditioning, Heating & Refrigeration Institute showing 56 percent of all water heater sales in the U.S. go through wholesale distribution channels. A.O. Smith says a significant portion of its sales go through wholesale and argues the AHRI data suggests it is actually the top selling brand in the country.

A.O. Smith, Rheem’s parent company Paloma, and Bradford White make up about 88 percent of the water heater market, according to the complaint. A.O. Smith claims that the launch of its brand at Lowe’s Home Improvement stores and a “competitive but mature market” promoted Rheem to resort to “false advertising to unfairly entice consumers.”

“Even more damaging, Rheem makes the claim at the point-of-sale, where a consumer may rely on it to infer superior product characteristics like reliability, efficiency, and safety, without the ability to easily conduct further research on the claim,” the lawsuit says.

A.O. Smith alleges Rheem engaged in false advertising, deceptive trade practices and unfair competition. The company is seeking an order blocking Rheem from making the “America’s #1 Water Heating Brand” claim and requiring the company to issue “appropriate corrective advertisements.” A.O. Smith is also seeking an award including any profits Rheem has made from the advertising, any damages sustained by A.O. Smith and additional exemplary and punitive damages to be determined by the court.

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Arthur covers banking and finance and the economy at BizTimes while also leading special projects as an associate editor. He also spent five years covering manufacturing at BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.

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