Sears Gets New Hearing in Bid to Stop Moldy-Washer Suit

Sears Holdings Corp. (SHLD) won a round in a legal clash over moldy washing machines, as the U.S. Supreme Court ordered reconsideration of a decision letting consumers in six states press a class-action suit against the retailer.

The justices today told a federal appeals court to revisit the case in light of a Supreme Court opinion issued in March that threw out a class-action case against Comcast Corp. (CMCSA)

A Chicago-based federal appeals court let the claims against Sears go forward, saying a class action would be the most efficient way to resolve the dispute.

The suing consumers say their front-loading Kenmore washers, made by Whirlpool Corp. (WHR) starting in 2001, didn’t clean themselves adequately, causing a smelly buildup of mold. The customers also say many of the washers had a defective control unit that caused the machines to shut down.

Sears, controlled by hedge fund manager Edward Lampert, contends a class action is inappropriate under the rules governing federal lawsuits because the mold problem affected only a small fraction of the washers.

The lawsuit covers breach-of-warranty complaints by consumers in six states -- California, Indiana, Illinois, Kentucky, Minnesota and Texas.

Sears, based in the Chicago suburb of Hoffman Estates, Illinois, is one of at least eight sellers or manufacturers of front-loading washers to be sued. Together the lawsuits involve tens of millions of consumers and virtually every front-loading machine sold for more than a decade, Sears said in its Supreme Court appeal.

Comcast Case

In the Comcast case decided in March, the Philadelphia-based cable provider was accused of monopolizing its hometown market. The customers who sued said Comcast swapped territories and subscribers with competitors to ensure that it could control the market and charge higher prices. Comcast, the largest U.S. cable company, has denied the allegations.

The high court, ruling 5-4, said the customers didn’t meet requirements for outlining a common method that could be used to set financial damages for each of the thousands of individual parties to the lawsuit.

The case is Sears, Roebuck & Co. v. Butler, 12-1067.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net

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