Whirlpool sues lawyer for malpractice after company hit with federal 'antidumping' penalties over Chinese door handle imports

By Jonathan Bilyk | Jul 29, 2015

A partner in the Chicago office of Drinker Biddle & Reath is facing legal malpractice allegations, as appliance maker Whirlpool has blamed him for bad legal advice that led the company to continue to import aluminum appliance door handles from China – a decision the company says has left it open to potentially large additional trade duties ordered by federal regulators.

On July 28, Benton Harbor, Mich.-based Whirlpool filed suit in Cook County Circuit Court against the Drinker Biddle law firm and attorney William Randolph “Randy” Rucker, who serves as a partner based at the firm’s Chicago office.

The complaint includes a single count of professional malpractice against the firm and Rucker.

In its lawsuit, Whirlpool states it has for years imported large numbers of “aluminum extruded products” from China, particularly aluminum door handles the company installs on its appliances.

In 2010, Whirlpool said it became aware of the findings of an investigation conducted by federal regulators from the U.S. Commerce Department into allegations of “dumping” – or selling imported products for less than they are actually worth - by Chinese extruded aluminum product makers and distributors.

At that time, Whirlpool said, it contacted Rucker and Drinker Biddle to ask whether the results of the investigation, including potential antidumping penalties and so-called “countervailing duties” – additional payments due to offset the allegedly anticompetitive practices.

“Commerce Department orders regarding countervailing and antidumping duties tend to be detailed, complex, densely worded and difficult for non-experts to understand,” the Whirlpool complaint states. “Thus Whirlpool and others who import goods typically rely upon outside legal experts for advice in such matters.”

Whirlpool asserts “Rucker and Drinker Biddle hold themselves out to be experts in the field of U.S. customs and trade law,” so Whirlpool said it had no reason to doubt Rucker’s opinion when he told the appliance maker that Commerce Department notices regarding the alleged dumping practices surrounding the imported Chinese extruded aluminum products did not apply to Whirlpool’s door handles.

Whirlpool’s complaint cites a Sept. 9, 2010, email from Rucker to a Whirlpool customs analyst, who had asked two days earlier “whether Whirlpool should begin to deposit the estimated countervailing duties required for goods subject to the Sept. 7, 2010, Commerce Department notice.”

In the email, Rucker purportedly “advised Whirlpool that Whirlpool’s ‘final finished door handles that are made from extruded aluminum would not be covered by the scope of the investigation,’ and thus were not subject to countervailing or antidumping duties.”

However, two years later, after other similar repeated assurances from Rucker and continued importation of those door handles from China, Whirlpool said the Commerce Department notified the company in May 2012 the door handles were, in fact, “subject to the antidumping and countervailing duty notices and orders” and regulators would seek to order Whirlpool to pay “substantial cash deposits of estimated antidumping and countervailing duties on future” imports and the goods the company had imported after Sept. 7, 2010.

Whirlpool said it then moved to find new door handle suppliers outside of China and “other actions to reduce Whirlpool’s exposure … (and) mitigate Whirlpool’s damages caused by defendants’ conduct.”

Whirlpool said these actions have led to the company being “required to pay premium prices” for the new door handles, in addition to “significant legal fees, interest charges, tooling costs, lost sales, extra shipping expenses and other costs.”

“In addition, as a result of defendants’ conduct, Whirlpool will almost certainly incur substantial antidumping and countervailing duties and customs penalties,” Whirlpool’s complaint asserts.

The company does not specify in its complaint how much those penalties might cost, or the actual added costs resulting from the change in suppliers.

Whirlpool only specifies it is requesting the court award damages of more than $50,000.

Whirlpool has requested a jury trial.

The company is represented in the action by attorneys C. Barry Montgomery, of the firm of Williams Montgomery & John, of Chicago, and Janet Ramsey, of Warner Norcross & Judd, of Grand Rapids, Mich.

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