After Winning Against Toshiba Castel Is Now Suing Whirlpool Over Dodgy Appliances
Castel Electronics, the Melbourne based distributor who took Toshiba to Court and won back in 2010, is now suing Whirlpool who it has accused of dumping 3,000 faulty products in Australia, including ovens, refrigerators and washing machines.
Some of the products had a failure rate of 84%. Castel took on the distribution of the Whirlpool business after losing the Toshiba CE and appliance business.
No stranger to high profile court cases Castel sued the Japanese Company, after being dumped as the distributor of Toshiba consumer electronics products in 2010. Castel sued and was awarded millions in damages. This time Castel is looking to get $13M in damages plus a whole lot more in damages.
Whirlpool claim, that Castel made misleading statements about its ability to move the brand up-market and breached the distribution deal.
Castel claims that Whirlpool lied about the failure rate of their products when they first commenced negotiations.
In October 2012, Whirlpool formed a Project Phoenix committee comprising some of its most senior executives, which chose Castel as the distributor. But emails tendered to the court show the committee became alarmed when Castel demanded details about Whirlpool failure rates.
“We are well aware that sharing historical fault rates as is will be a deal breaker,” Whirlpool Australia’s Saurabh Agarwal said in an email. Whirlpool fiddled the books to “withhold from Castel damaging costs experienced by Whirlpool in relation to its faulty products”, it is alleged.
Whirlpool claims that the Cabrio washing machines were transferred for “storage” to Castel, which sold about 1000 “without authorisation”. The sides deny each other’s claims.
Federal Court documents claim that poor-quality goods were transferred to Castel after it became Whirlpool’s Australian distributor three years ago.
Whirlpool claims that the Cabrio washing machines were transferred for “storage” to Castel and were not meant to be sold.
Whirlpool claim that Castel sold around 1000 of the units “without authorisation”. The sides deny each other’s claims.
According to Castel the Company was also having to handle complaints about faulty Whirlpool ovens and fridges.
Castel claims that Whirlpool lies were part of a plan, Project Phoenix, to revitalise Whirlpool’s ailing Oceania division, which was losing $1 million a month, the Federal Court heard.
The Australian claims that despite consumer anger, no safety issues have been raised and Whirlpool has not conducted a product recall since 1998, according to Australian Competition & Consumer Commission records, although subsidiary Indesit recalled a line of dryers in January because they can catch fire.
An ACCC spokesman said the consumer watchdog had not investigated Whirlpool failure rates.
Choice also has no reference to the failure of Whirlpool products in Australia.
Whirlpool USA spokeswoman Kristine Sherman said the company could not comment on allegations before the court, but said it would dispute them.
Whirlpool last year sold goods worth more than $US20 billion globally under its own brand, as well as under Maytag, Indesit, KitchenAid, Consul, Brastemp, Jenn-Air, Amana and Bauknecht.
Court documents show it struggled in Australia in 2012. It hired consultants McKinsey to review local operations.
In April 2012 McKinsey reported “a high service and return rate”, with 13.2 per cent of goods sold in 2011 needing service and 7.6 per cent exchanged or returned.
In its Federal Court claim, Castel says the episode cost it almost $13m. It wants that back, plus unspecified damages for conspiracy and exemplary damages to punish Whirlpool.