Company Sued Lands’ End For Fraud Retailer Moved Business Overseas

From the January 06, 2003 Missouri Lawyers Weekly.

An apparel manufacturer sued Land’s End for fraud, claiming that the clothing retailer’s failure to fully disclose its decision to move business overseas resulted in Plaintiff’s bankruptcy.

Founded in the early 1960s, Plaintiff grew into a successful business, eventually operating 11 plants and employing 1,700 people. In 1986 Lands’ End began buying apparel from Plaintiff and by 1998 accounted for 72 percent of Plaintiff’s revenue. In 1998, Gary Comer, the founder and chairman of Lands’ End, hired a new president and CEO, Dave Dyer. Plaintiff claimed that Dyer, hoping to reverse a decline in the company’s stock price, decided to cut costs by shifting to foreign manufacturers. However, Plaintiff charged, Lands’ End concealed the move until 1999 when production by the new overseas vendors was in place. Due to the long times involved in the apparel industry, Plaintiff said it was unable to make a transition from Lands’ End to other customers. It started closing plants in November 1999 and entered bankruptcy in January 2001. Plaintiff, which filed a federal complaint for fraudulent concealment in October 2000, was out of business when trial started in December 2002. After eight days a jury awarded Plaintiff $4.5 million in actual damages and $33.458 in punitives.

Lands’ End was acquired by Sears in June 2002.

Facts of the case

Type of Action: Fraud
Type of Injuries: Economic loss
Verdict or Settlement: $38 million verdict
Special Damages: $6 million value of business
Attorney for Plaintiffs: Jim Burt, The Strong-Garner-Bauer, Springfield