Fox v. Amazon.Com, Inc.

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

NO. 3:16-cv-03013

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF TENNESSEE NASHVILLE DIVISION

May 30, 2018

JUDGE CAMPBELL

MAGISTRATE JUDGE FRENSLEY

MEMORANDUM

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 ahigher 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....