Hoverboard Suit Goes Up In Flames

Also contributed by William Schoof*

Should an e-commerce firm be held liable for the defects of every item it sells on its global internet marketplace?  In Fox v. Amazon.com, Inc., No. 3:16-cv-03013, 2018 BL 191355 (M.D. Tenn. May 30, 2018), plaintiffs argued exactly that, and the district court answered with a resounding “no”.

The popularity of self-balancing scooters, commonly known as hoverboards, exploded in late 2015, slowing only when the hoverboards, themselves, started exploding due to an alleged battery defect.  Plaintiffs in Fox allegedly bought a hoverboard from a retailer on the Amazon.com marketplace and, after the hoverboard’s battery caught fire, they obtained a default judgement against that retailer.

Perhaps looking for deeper pockets, plaintiffs sought to hold Amazon liable for the product’s alleged defect, too.  But Amazon did not design or manufacture the product.  It did not produce or develop any information on the product.  It did not set the price of the product, it did not ship the product, and it never held title to the product.  Yet, because the purchase receipt was sent by “amazon.com” and the product was shipped in a box with the Amazon logo, plaintiffs argued Amazon could be considered a “seller” under the Tennessee Products Liability Act of 1978 (“the TPLA”).  Tenn. Code Ann. SS 29-28-101 (2018).  Amazon, per the plaintiffs’ theory, “exercised complete control over the sale.”

Per the TPLA, a “[s]eller includes a retailer, wholesaler, or distributor.”  Tenn. Code Ann. SS 29-28-102(7).  When Amazon moved for summary judgment – contending it could not be a “seller” under the statute – the district court defined those terms under their plain meaning.  It found a “seller” is “one that markets a commodity”; a “retailer” is a “person or entity engaged in the business of selling personal property to the public or to consumers”; and a “distributor” is a “wholesaler, jobber, or other manufacturer of supplier that sells chiefly to retailers and commercial users.”

Granting Amazon’s motion, the district court determined the company, as a matter of law, could not be considered a “seller,” “retailer” or “distributor.”  In fact, the district court found “Amazon’s role in the transaction was [simply] to provide a mechanism to facilitate the interchange between the entity seeking to sell the product and the individual who sought to buy it.”  Fox, 2018 BL 191355 at *8.  The court noted its decision was consistent with others addressing Amazon’s liability, including Oberdorf v. Amazon.com, Inc., 295 F.Supp.3d 496 (M.D. Pa. 2017) and McDonald v. LG Electronics USA, Inc., 219 F.Supp.3d 533 (D. Md. 2016).

The district court also rejected plaintiffs’ other theories of liability.  First, plaintiffs argued Amazon had a post-sale duty to warn its customers of the hoverboards’ alleged dangers.  Even though this theory of liability had never been adopted by Tennessee courts, plaintiffs claimed it was viable because the state Supreme Court probably would recognize such a claim, if given the chance.  The district court swatted this away, pointing to numerous state intermediate appellate courts specifically declining to adopt the theory and highlighting the plaintiffs’ inability to show why the highest court would hold otherwise.

Second, plaintiffs argued Amazon assumed a post-sale duty to warn when it sent an email cautioning customers of the hoverboard’s alleged dangers.  In other words, plaintiffs claimed that once Amazon chose to warn its customers, it needed to exercise reasonable care in doing so.  The district court found plaintiffs were unable to point to relevant Tennessee case law supporting such a claim based on voluntarily assuming a duty to warn and granted Amazon summary judgement on this claim, too.

Overall, the court in Fox showed great understanding and restraint applying a products liability statute in the internet age.  To hold otherwise would have the potential of stifling (and making more costly) online exchanges that connect buyers and sellers in a convenient electronic marketplace.

Editors’ note:  William Schoof is a summer associate at Weil.