Whirlpool paid $580 million in punitive damages making it if not the biggest settlement in US history, one of the biggest. The story is indicative of Whirlpool’s corrupt culture and why a whistleblower like Pinkney can’t be tolerated.
As the movie Casablanca so memorably illustrated, anytime someone expresses “shock, shock,” there’s a good chance they are full of it.
As are major corporate wrongdoers, who without hesitation or embarrassment, routinely express “shock” any time the people, through the shredded remnants of our democracy, stand up and slap them with a hefty sanction.
Take the case of Whirlpool Corporation. May ’99, an Alabama jury hit a recently spun off Whirlpool subsidiary, Whirlpool Financial, and one of its dealers with a $581 million verdict for targeting illiterate and poor people in a sales scheme involving satellite television dishes.
Lawyers representing the victims said that Whirlpool had dealers all over the state going door-to-door soliciting poor, unsophisticated and elderly customers to purchase satellite television dishes for $1,100 plus 22 percent interest. The same equipment could be bought at an electronics store for $199.
The purchases were financed on Whirlpool “credit cards,” which allowed Whirlpool to avoid having to disclose the actual number of payments that would be required, which Whirlpool then misrepresented to its customers. Some customers were never even issued actual credit cards.
The jury awarded the plaintiffs, Barbara Carlisle, and her parents, George and Velma Merriweather, $975,000 in compensatory damages and $580 million in punitive damages. The finding of liability was based on an allegation that a salesperson for the satellite dish retailer, Gulf Coast Electronics, misled the plaintiffs regarding financing terms of the credit card loans.
One witness who was sold a satellite dish had less than a fifth grade education. One plaintiff in the case had a tenth grade education and had never owned a credit card.
A former agent testified that Whirlpool specifically targeted illiterate and unsophisticated people, and that he had trained others to lie about the terms of the financing.
A juror who spoke with plaintiff’s attorney Tom Methvin of Montgomery after the case said the jury was “sick” at how Whirlpool treated poor, uneducated people. The juror also said that the jury was “inflamed” that there are still “thousands of people out there” who are victims of the scheme, but that Whirlpool had not helped these victims. The jurors felt that their verdict was important to “get Whirlpool’s attention.”
When the verdict hit, the Benton Harbor, Michigan-based Whirlpool Corporation said that its former subsidiary, Whirlpool Financial National Bank, now known as Transamerica Bank, N.A., planned to appeal the verdict.
“The company strongly believes that it did nothing to warrant any finding of liability in this litigation, much less $581 million,” Whirlpool said in a statement. “The company is confident that it will ultimately prevail through the post-trial and appeal processes as the verdicts are totally without merit and represent a gross miscarriage of justice. The damage awards in this case are terribly unfair and contrary to sound constitutional protections established by the Alabama Supreme Court and the United States Supreme Court.”
So, Whirlpool appealed the verdict.
A couple of months later, an Alabama appeals court denied the Bank’s post-trial motion to set aside a $581 million jury verdict and instead reduced the jury’s verdict to $301 million.
The company expressed “shock” that the appeals court didn’t conform to the corporate agenda and throw out the entire award.
“The fact that the judge reduced the verdict to $301 million in no way corrects this miscarriage of justice,” the company said in a statement. “The Bank believes the jury verdict was clearly erroneous and that it will ultimately prevail on appeal.”
But Methvin, the attorney representing the victims of the scam, said that the court allowed the verdict to stand because the actions of Whirlpool represent “the worst conduct by corporate America ever to be exposed in the Alabama judicial system.”
“Whirlpool bilked thousands of vulnerable consumers out of millions of dollars,” Methvin said. “Eight other major out-of-state banks were engaged in similar conduct in Alabama. As a result of our lawsuits against them, those banks stopped doing this in Alabama. In spite of the lawsuits, Whirlpool refused to quit their activities. The jury’s verdict and the trial judge’s very strong ruling should make Whirlpool put a stop to this type of conduct.”
“Alabama has the weakest consumer protection laws in the entire country and this is well known by companies such as Whirlpool,” Methvin said last week. “Judgments like this one are particularly important in Alabama and are the only form of consumer protection that we have.”