Argos insurer issue lawsuit against leather company

26 July 2010

Insurers acting for UK retailer Argos have launched a £13 million ($19.4 million) lawsuit against a Northamptonshire leather company in a dispute over the so-called toxic sofas imported from China.
It emerged on July 21 that Argos have mounted a compensation battle against Leather Trade House Ltd, based in Kings Park Road, Moulton Park.
According to a High Court writ, the Northampton firm claimed to be a leading independent leather technology centre with expertise in restricted substances and chemicals. Argos paid it £750 ($1100) in October 2004 to become a member of Leather Trade House and allegedly gave the company two orders for compliance costing £10,000 ($14,900) each as well as discussing problems with mould and fat on leather furniture imported from China.

The retailer then used packs of an anti-mould agent, dimethyl fumarate (DMF) stapled into the wooden frames of the furniture to prevent them going moldy during shipment to the UK.

The writ states Argos forwarded samples of the DMF sachets to Leather Trade House in November 2005, but claims a Leather Trade House analyst failed to carry out proper checks, and allegedly claimed the substance was safe and used in the food industry as a preservative.

But it is alleged the analyst had looked at a website which was not a scientific or research site, but an internet trading site which has since been taken down. Argos says Leather Trade House should not have advised it to continue using the sachets, nor advised that it was safe to use.

Customers who subsequently bought the leather sofas from Argos suffered severe allergic reactions to toxic sachets containing dimethyl fumarate concealed within the furniture. About 4,475 people are now suing a number of furniture retailers, with around 1,840 claims against Argos, in a consolidated legal action worth up to £20m ($30 million) and believed to be the biggest consumer litigation in British legal history. Many claim they have suffered skin and severe eye irritation.

Argos is suing Leather Trade House for £12.98 million for breach of contract and duty, and an indemnity against the costs of the court action by the individual customers affected in the UK and Ireland. It is also seeking damages for the cost of contacting customers, picking up and disposing of the contaminated furniture, investigation costs including trips to China, damages to its reputation, and loss of profits.

Paul Pearson, company secretary, Leather Trade House, told Leather International that they had been advised by their legal team not to discuss the lawsuit at the moment.

In a statement on the BLC website it says the following. ‘It should be noted that BLC Leather Technology Centre Ltd is not subject to the litigation action brought by Argos Insurers against Leather Trade House Ltd recently reported in the media.’

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