Supreme Court denies Amana appeal of $10 million judgement

Supreme Court denies Amana appeal of $10 million judgement
 
Date February 23, 2005
Section(s) Business
Brief  
 
By DAVID PITT

Associated Press Writer

DES MOINES — The U.S. Supreme Court has declined to review a $10 million judgment against Amana Appliances in a lawsuit alleging the company defrauded a distributor.

The justices, without comment, on Tuesday let stand a lower court ruling in favor of Eden Electrical, Ltd., a family owned company in Israel with a chain of 27 appliance stores.

Eden struck a deal in 1998 to become Amana’s exclusive distributor of refrigerators in Israel. As part of the deal, Eden had to put up $2.4 million for inventory, court records said.

Eden representatives personally delivered a check for $1.2 million and a letter of credit in the same amount to Amana executives in Iowa when the deal was signed, documents said.

Amana secretly struck another deal with another Israeli distributor on the same day, Kevin Collins, the Cedar Rapids attorney representing Eden, has said.

He said Amana had sought out a company with cash and planned to unload obsolete inventory then quickly terminate the relationship.

According to court records, Amana executives ignored further communications and sent a letter terminating the relationship 77 days later.

Itzhak Eden and other company owners sued in U.S. District Court, accusing Amana of fraud.

Amana argued in court that the cancellation was a business decision made after the relationship began to unravel.

After a 13-day trial, a jury awarded Eden $2.1 million in compensation and nearly $18 million in punitive damages. The court reduced the punitive award to $10 million, more in line with other cases that have resulted in economic harm but not personal injury.

Amana appealed, arguing it was excessive and Eden appealed, saying it wasn’t enough.

A three-judge panel of the 8th U.S. Circuit Court of Appeals ruled in May that the $10 million award was not out of line.

“This was an extraordinarily reprehensible scheme to defraud,” the court wrote, noting that top executives, including a company vice president, were in on the plan.

Amana was purchased by Newton-based Maytag Corp. in 2001 and is now a division of Maytag.

“While we were disappointed with the results we will comply with the ruling,” said Maytag spokeswoman Karen Lynn. “This is not expected to have a material impact on our long-term financial condition.”

Amana attorney Edward Mansfield, of Des Moines, was in depositions Tuesday and unavailable for comment, his secretary said.

Eden’s attorney Kevin Collins, of Cedar Rapids, said he talked to Itzhak Eden on Tuesday. He said Eden trusted the American justice system.

“He never doubted that an American jury would agree that Amana’s actions were deplorable,” Collins said. “It’s the end of the road and it’s time to pay up.”

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