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Fox v. Amazon.Com, Inc.

United States District Court, M.D. Tennessee, Nashville Division

May 30, 2018

CHARLES BRIAN FOX, et al., Plaintiffs,
v.
AMAZON.COM, INC., et al., Defendants.

          FRENSLEY MAGISTRATE JUDGE

          MEMORANDUM

          WILLIAM L. CAMPBELL, JR. UNITED STATES DISTRICT JUDGE.

         I. Introduction

         Pending before the Court are Defendant Amazon's Motion For Summary Judgment (Doc. No. 119), and Plaintiffs' Motion For Partial Summary Judgment (Doc. No. 136). For the reasons set forth below, Defendant Amazon's Motion For Summary Judgment (Doc. No. 119) is GRANTED, Plaintiffs' Motion For Partial Summary Judgment (Doc. No. 136) is DENIED, and this action is DISMISSED.

         Also pending before the Court is Plaintiffs' Motion To Exclude Evidence Regarding Reasonableness Of Defendant Amazon.com, Inc.'s Decisions Made During December 10, 2015 Meeting (Doc. No. 106). Through the Motion, Plaintiffs request the Court prohibit Defendant Amazon from introducing certain evidence at trial. Given the Court's disposition of this action, the Motion is DENIED, as moot.

         II. Factual and Procedural Background

         Plaintiffs Charles Brian Fox and Megan Fox originally brought this action in the Circuit Court for Davidson County, Tennessee, individually and on behalf of their four minor children, Hailey, Matthew, Rebecca, and Sarah, to recover for injuries and other damages they sustained as a result of a fire at their home allegedly caused by a hoverboard purchased through the Amazon.com website. (Doc. No. 1-2). Plaintiffs named Amazon.com, W2M Trading Corporation, and various Amazon entities as defendants. (Id.) The Amazon defendants removed the case to federal court based on diversity of citizenship jurisdiction. (Doc. No. 1). Plaintiffs subsequently filed a Second Amended Complaint, naming Defendants Amazon.com, Inc. and W2M Trading Corporation, and raising the following claims: violation of the Tennessee Products Liability Act, 29-28-101, et seq., negligent failure to warn, intentional and/or negligent misrepresentation, and violation of the Tennessee Consumer Protection Act, 47-18-101, et seq (Doc. No. 94). Plaintiffs seek compensatory damages, punitive damages, and treble damages. (Id.) Plaintiffs have obtained an Entry of Default as to Defendant W2M Trading Corporation. (Doc. No. 88).

         Plaintiffs allege that Plaintiff Megan Fox purchased a self-balancing scooter, more commonly known as a hoverboard, from the Amazon.com website on November 3, 2015 to give to her son, Matthew, for Christmas 2015. (Doc. No. 94, at ¶¶ 6, 9, 10). Plaintiffs further allege that on January 9, 2016, Matthew used the hoverboard, then left it next to a couch on the first floor of their home. (Id., at ¶¶ 11, 12, 13). Later that day, the hoverboard allegedly triggered a fire that consumed the house, and caused physical and psychological injuries to Plaintiffs. (Id.¸ at ¶¶ 11-28). The parties do not dispute the hoverboard, specifically the lithium-ion battery pack, was the cause of the fire. (Id., at ¶¶ 102-105).

         The parties' statements of undisputed material facts supporting their respective motions for summary judgment include several statements that are more in the nature of argument than fact. Setting aside the argumentative statements, the undisputed material facts are as follows.

         Purchase of the Hoverboard

         Amazon.com (“Amazon”) is an information service and system designed so multiple users across the world can access its servers and browse its marketplace at the same time. (Doc. No. 147, at ¶ 15). Defendant W2M Trading Corporation, also known as “W-Deals, ” was a seller that listed and sold products on Amazon.com. (Id., at ¶ 1).[1] On November 3, 2015, Plaintiff Megan Fox used her existing account with Amazon to purchase the hoverboard at issue here, the FITURBO F1. (Doc. No. 150, at ¶ 2). It is Plaintiffs' position that she bought the hoverboard from Amazon. (Doc. No. 147 at ¶ 2). It is Amazon's position that, although it retails some products on its marketplace, it did not sell the hoverboard at issue here. (Id.) Rather, Amazon contends Mrs. Fox purchased the hoverboard from Defendant W2M Trading Corporation, or “W-Deals, ” through the Amazon marketplace. (Id.; Doc. No. 120, at 9).

         Prior to Mrs. Fox's purchase, Mr. Fox had investigated hoverboards, which included visiting Amazon's website and reading hoverboard reviews and comparing the component parts. (Doc. No. 150, at ¶ 5). The hoverboard was described on the webpage as having an “original Samsung advanced battery pack.” (Id., at ¶ 3). Amazon made no statements or representations about the hoverboard, nor did it develop the product detail page content, on the webpage. (Doc. No. 147, at ¶¶ 10, 11). Amazon did not make any representations to Mrs. Fox about the hoverboard before or at the time she purchased it. (Id., at ¶ 12). Amazon did not design or manufacture the hoverboard. (Id., at ¶¶ 4-5).

         After providing her credit card information, Amazon charged Mrs. Fox the entirety of the hoverboard purchase price of $274.79. (Doc. No. 150, at ¶ 4). W-Deals set the price for the hoverboard. (Doc. No. 147, at ¶ 9).

         The purchase receipt was sent by “amazon.com, ” and contained Mrs. Fox's billing address, the shipping address, the order date, shipment date, the detailed description, the purchase price, tax, and receipt number. (Doc. No. 150, at ¶ 6). The purchase receipt also contained the phrase “Sold by: -DEAL-“. (Id., at ¶ 7). Amazon permitted sellers to use a “friendly name” by which it would be identified as a seller of its products. (Id., at ¶ 8). Amazon contends that Defendant W2M Trading Corporation or “W-Deals” used “-DEAL-” as its “friendly name” when selling items on the Amazon website. (Id., at ¶ 9). Both Mr. and Mrs. Fox believed the hoverboard was purchased directly from Amazon. (Id., at ¶ 10).

         The parties disagree as to whether the hoverboard was shipped by Defendant W2M Trading Corporation or by Amazon. (Doc. No. 147, at ¶¶ 3, 6). They appear to agree the hoverboard was shipped via Federal Express from China. (Doc. No. 150, at ¶ 11). When Plaintiffs received the hoverboard, the shipping box contained the trademark “Amazon” on the outside. (Id., at ¶ 12). The product box containing the hoverboard was labeled “Smart Balance Wheel” and had no information about the seller, or about the identity of the manufacturer. (Id., at ¶¶ 37, 38). The identity of the manufacturer is still unknown. (Id., at ¶ 39).

         Amazon operates a program known as “Fulfillment by Amazon” or “FBA” in which sellers can place products in Amazon's possession and control in an Amazon Fulfillment Center until the products are purchased. (Id., at ¶ 13). Once a product is purchased, Amazon ships the product using Amazon-labeled boxes. (Id., at ¶¶ 13-14) In 2015, Amazon's FBA program shipped items using Federal Express, and it had FBA centers in China. (Id., at ¶¶ 15-16). Amazon contends, however, that Defendant W2M Trading did not use this service. (Id., at ¶¶ 13, 31).

         The presence of sellers on Amazon's website has steadily grown over the years. (Id., at ¶ 32). Approximately 40% of Amazon's gross revenue comes from co-sales. (Id., at ¶ 33). Amazon has a “merchant integration team” specifically for the purpose of encouraging and enhancing co-sales. (Id., at ¶ 34). The purpose of the merchant integration team is to help new sellers learn how to list products, how to describe their products on Amazon's website, and how to handle order fulfillment. (Id., at ¶ 35). The merchant integration team acts as the “dedicated account manager” for sellers by being the point of contact for sellers and answering questions or offering other assistance such as creating sample entries on the Amazon spreadsheet. (Id., at ¶ 36).

         Plaintiffs never communicated with any person or entity other than Amazon regarding the purchase of the hoverboard. (Id., at ¶ 40). Amazon does not permit any direct communication between a seller and Amazon customers, and did not permit sellers to have access to the contact information of Amazon's customers. (Id., at ¶¶ 41-42).

         Amazon's Business Solutions Agreement (“BSA”) with all of its sellers provides in part, “We will provide order information to you for each order of your products through the applicable Amazon site.” (Id., at ¶ 43). Pursuant to the BSA, Amazon had complete control over all the money from co-sales, including the right to impose a 90-day hold on the payment of funds. (Id., at ¶ 98). The BSA outlines Amazon's general intention to remit payments to sellers every 14 days. (Id., at ¶ 99). The BSA also provides sellers “will not have the ability to initiate or cause payments to be remitted to you.” (Id., at ¶ 100). In December 2015, Amazon imposed a 90-day hold on remitting payment for hoverboard sales because Amazon was worried it would “see a higher return rate and [there would be] a potential [for sellers] to run off with this money.” (Id., at ¶ 101; Doc. No. 117-10).

         Facts Relating to Post-Sale Events

         In 2015, Amazon had a product safety team in the U.S. and Europe. (Doc. No. 150, at ¶¶ 17, 18). The product safety team engaged in the proactive monitoring of customer electronic and telephone contacts, including social media, to look for product safety problems. (Id., at ¶ 19). Amazon's product safety team also reviewed news reports and notifications from governmental agencies to stay attuned to any potential product safety issue. (Id., at ¶ 20). Amazon's customer service employees were instructed to direct any “safety-related contact” to the product safety team, regardless of whether it was a direct sale or a co-sale. (Id., at ¶ 21).

         In December 2015, Amazon's product safety team demanded sellers provide legal compliance documentation for the hoverboards offered for sale. (Id., at ¶ 22). This demand included documentation that the hoverboards complied with Underwriters Laboratory requirements and United Nations transportation regulations. (Id.) Very few sellers responded to Amazon's demand for compliance documentation or attempted to satisfy these requirements. (Id., at ¶ 23). Amazon had no safety certifications from any of the sellers placing hoverboards for sale on the Amazon website. (Id., at ¶ 67).

         Amazon has a “HazMat” (more recently renamed, “Dangerous Goods”) team to ensure any potentially dangerous products in an Amazon Fulfillment Center were properly identified and labeled. (Id., at ¶¶ 24-26). The Dangerous Goods team had no role with products that had not reached an Amazon Fulfillment Center. (Id.) Any product with a lithium-ion battery - including hoverboards - fell within the jurisdiction of the Dangerous Goods team if stored or shipped by Amazon. (Id., at ¶ 27).

         Co-sales constituted nearly all of Amazon's hoverboard sales. (Id., at ¶ 66). Amazon received over $200 million in sales for hoverboards purchased from its website from September 2015 through November 2015. (Id., at ¶ 68).

         In November 2015, Amazon began an internal investigation into the dangers of hoverboards sold from the Amazon website. (Id., at ¶ 45). Damon Jones, an Amazon employee, worked “almost non-stop” from November 2015 through January 2016 on this investigation. (Id., at ¶ 46). The product safety team prepared a written report, dated December 10, 2015, outlining its investigation. (Id., at ¶¶ 47, 48). The report was completed just before a meeting on December 10, 2015, which involved approximately twenty Amazon employees, including “a broad set of senior decision-makers.” (Id., at ¶ 49). These decision-makers included the leadership of the product safety, product quality, and legal teams. (Id., at ¶ 50).

         On November 30, 2015, an Amazon customer sent an email to Amazon's CEO Jeff Bezos informing him a hoverboard from “W-Deals” (i.e. Defendant W2M Trading) had burst into flames while his daughter was riding it with “fireworks-like explosions, ” and had caused substantial damage to his home. (Id., at ¶¶ 50a, 51a).[2] The customer also reported that his three children had narrowly escaped physical harm when the hoverboard burst into flames. (Id., at ¶ 52). Plaintiffs contend the ASIN [Amazon Standard Identification Number] identified in the email to Mr. Bezos on November 30, 2015 was the same as the ASIN for the hoverboard they purchased. (Id., at ¶ 53). The manufacturer of the hoverboard purchased by the man who sent the November 30, 2015 email could not be identified. (Id., at ¶ 54).

         The product safety team's December 10, 2015 report identified at least 17 complaints of hoverboard fires or explosions in the United States alone from hoverboards sold on Amazon's website. (Id., at ¶ 55). Only four of the 17 customers reported that fires occurred during the process of charging the products. (Id., at ¶ 56). Amazon's North American Consumer Leadership team was concerned the reports of fires and explosions may be indicative of a safety issue across all Chinese manufacturers, which constituted the vast majority of the hoverboards being offered for sale. (Id., at ¶ 58). Damon Jones - the leader of Amazon's product safety team - was concerned the entire hoverboard product category was “bad” because the dangers of fires and explosions were spread across many manufacturers, many brands, and many component parts. (Id., at ¶ 59).

         Amazon knew nearly 250, 000 units had been sold in the 30 days before the December 10 report. (Id., at ¶ 60). By December 10, 2015, Amazon knew approximately 25 percent of the units sold in the preceding 30 days had not been delivered. (Id., at ¶ 61). On December 10, 2015, Amazon knew it was likely the majority of hoverboards sold during the preceding 30 days were unused and would be opened during the holiday season. (Id., at ¶ 62). Mr. Jones testified he expected to see more complaints about hoverboard fires, smoke, and overheating. (Id., at ¶ 63; Doc. No. 117-5, at 245, 312-13). As a result, Amazon made “contingency plans” in anticipation of more fires and explosions. (Id., at ¶ 64). This contingency plan included having Amazon employees work on Saturday, December 26, 2015, to monitor any news reports or customer complaints regarding hoverboard fires or explosions. (Id., at ¶ 65).

         During a meeting on December 10, 2015, Amazon decided to recommend the international sales team suspend all hoverboard sales. (Id., at ¶ 73). During that meeting, Amazon also decided to send a “non-alarmist” email to United States hoverboard purchasers. (Id., at ¶ 74). After being told of the decision to suspend all hoverboard sales worldwide, the third highest Amazon executive sent an email on December 10, 2015, cautioning other Amazon employees that the email to customers would be “headline news.” (Id., at ¶ 91). Amazon stopped selling hoverboards in the United States and worldwide starting on December 11, 2015. (Id., at ¶ 75).

         On December 12, 2015, Amazon sent the “non-alarmist” email to customers who had purchased hoverboards. (Id., at ¶ 76). The subject line of the email stated: “Important Product Safety Notification Regarding your Amazon.com Order.” (Id., at ¶ 13). The email stated the following: “There have been news reports of safety issues involving products like the one you purchased that contain rechargeable lithium-ion batteries.” (Id., at ¶ 77). Mrs. Fox was one of the Amazon customers who received the “non-alarmist” email. (Id., at ¶ 78).

         Mrs. Fox had a habit of reading emails sent to her email address, meganfox@comcast.net, and occasionally received emails from Amazon to that email account. (Doc. No. 157, at ¶ 9). She has no recollection of the December 12, 2015 email from Amazon relating to hoverboards, but she does not deny receiving it. (Id.; Doc. No. 147, at ¶ 14). Mrs. Fox testified during her deposition that had she heard “there was one fire caused by the particular board that I bought, I would not have let it be in my house.” (Id., at ¶ 92).

         Plaintiffs argue that the email should have informed customers of the actions Amazon had already taken in response to hoverboard safety concerns. Plaintiffs also argue that the email should have informed customers that: the “safety issues” were the risks of “fire” and “explosion, ” or that some hoverboards had burst into flames while in use; some of the 17 fire and explosion incidents involving hoverboards had caused significant damage to customers' homes; Amazon was very concerned about a possible “uptick” or “large spike” in fire and explosion incidents as hoverboards purchased in the last 30 to 45 days were put into use for the first time on or about December 25, 2015; Amazon had decided to stop selling hoverboards worldwide on December 10, 2015, because of the risk of fire and explosion; Amazon had decided to stop selling certain ASINs, including the exact same product purchased by Mrs. Fox, on December 2, 2015, because of the risk of fire; Amazon's product safety manager was concerned that the entire hoverboard product category was bad; the dangers of fires and explosions were spread across many manufacturers, many brands, and many component parts; Amazon was specifically concerned that the hoverboard fires and explosions might have been indicative of a problem across Chinese manufacturing; Amazon's source of concern was a “deep dive” internal investigation; and Amazon had multiple additional sources of information other than news reports. (Doc. No. 150, at ¶¶ 79-89). Hoverboard refunds were limited to nineteen percent (19%) despite the risk of fires and explosions. (Id., at ¶ 90).

         III. Analysis

         A. The Standards Governing Motions ...


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