Chinese Manufacturer Files $33M Countersuit Against Redman

Sales Chief, a Chinese toy manufacturer, has filed a $33 million countersuit in response to a Bentonville businessman’s $20 million lawsuit filed in September.

Mel Redman, through his family-owned business Redman & Associates LLC, sued Sales Chief alleging Sales Chief changed contract terms and improperly interfered with his company’s business contracts and relationships, resulting in layoffs and significant financial loss. Specifically, the cancellation of a signed purchase commitment from Wal-Mart Stores Inc., a contract valued at more than $70 million.

Sales Chief claims that R&A fell behind on payment for products, and attorneys for the manufacturer have cited Redman’ past business failures in subsequent filings, claims Redman’s attorney disputes.

In its counterclaim against R&A filed April 2, Sales Chief is alleging damages due to defamatory statements made by Redman in articles published in the Northwest Arkansas Business Journal and Arkansas Business, a weekly publication headquartered in Little Rock.

In addition to the counterclaim, Sales Chief also filed a third-party claim against Redman and his son, Rodney Redman, the president and COO of the company.

In the combined claims, attorneys for Sales Chief are seeking up to $33 million in damages.

“Since filing its initial complaint in this action on September 5, 2014, R&A and Mr. [Mel] Redman have shamelessly attempted to try this case in the media and to turn public opinion against Sales Chief and its president, Ellen Liu,” the countersuit claims.

Attorneys representing Sales Chief — David Lackowitz of Moses & Singer LLP in New York and Vincent Chadwick with Bassett Law Firm in Fayetteville— filed the counterclaim and third-party claim in the U.S. District Court for the Western District of Arkansas. On the same day, Fayetteville attorney Mark Henry, who is representing Redman, filed paperwork denying the allegations, and asked U.S. District Judge Timothy Brooks to dismiss the defamation claims, claiming all such free speech is protected under law.

In a statement, Mel Redman said: “The countersuit filed by the Chinese company this week makes one thing clear: their legal strategy relies heavily upon the unfair assassination of my character. They failed twice in trying to get my case dismissed and have now sued my son and me as well. I believe a United States judge and a fair-minded jury will decide this case based on evidence.

“I look forward to our day in court and appreciate the support I have received.”

Judge Brooks issued an order March 17 denying Sales Chief’s second motion to dismiss the case, allowing the lawsuit to continue. A trial date has been set to begin May 16, 2016.

Sales Chief and R&A had previously worked together since 2012 to supply ride-on toys to Walmart. Initial terms stipulated that Sales Chief did not require R&A to pay for the products until 60 days after they shipped from China.

In October 2013, R&A announced an $8 million investment to open a 275,000-SF manufacturing and distribution facility in Rogers, and Redman had developed a three-year plan to eventually move all production of its popular Disney and Marvel ride-on toys from China to the Rogers facility.

In May 2014, Sales Chief unexpectedly wanted up-front payment on a substantial shipment of goods that already had shipped to ports in California, with the threat that supply (during the holiday shopping season) would be disrupted if terms weren’t met, according to court documents.

Sales Chief claimed that as of Aug. 15, 2014, R&A owed $10.2 million.