Cole Law Group Blog
Analysis of Recent 6th Circuit Court Opinion in Fox v. Amazon
The Sixth Circuit Court of Appeals recently decided a case involving an Amazon hoverboard that caused a fire resulting in various injuries and the destruction of the Plaintiffs’ home in Fox v. Amazon, Inc. (6th Cir. 2019).1 Plaintiffs claimed in their complaint that Amazon sold an unreasonably dangerous product in violation of the Tennessee Products Liability Act of 1978, T.C.A. § 29-28-101; breached a duty to warn about a defective or unreasonably dangerous product; and caused Plaintiffs’ misunderstanding about the source of the product in violation of the Tennessee Consumer Protection Act.
Relevant Facts
The case involved a business program that Amazon has successfully operated known as Fulfillment by Amazon. This means that Amazon did not manufacture or directly sell the hovercraft. Instead, a third-party manufacturer sold it to a seller of record known as W2M, which owned and sold the hoverboard through Amazon’s webpage. When third-party sellers participate in Fulfillment by Amazon, they store their products in an Amazon fulfillment center until the products are purchased, at which point, Amazon ships the product to buyers.
Around the same time that the Plaintiffs in this case purchased the hoverboard, in November 2015, Amazon became aware of safety concerns regarding hoverboards and conducted a thorough internal investigation. That investigation identified at least 17 complaints of hoverboard fires or explosions in the United States. On November 30, 2015, an Amazon customer sent an email to Amazon CEO Jeff Bezos about how a hoverboard the customer purchased on Amazon burst into flames while his daughter was riding it. Amazon eventually became so concerned about the safety of the hoverboards that Amazon ceased all hoverboard sales worldwide on December 11, 2015. The next day Amazon sent a warning email to all customers that had purchased hoverboards.
On January 9, 2016, an avoidable tragedy struck when Matthew Fox finished playing with his new hoverboard. At some point the Plaintiffs’ house caught on fire, caused by the lithium-ion battery in the hoverboard. As a result of the fire, several members of the Fox family suffered various injuries, and their home and all personal property inside were destroyed by the fire.
Plaintiffs sued W2M and Amazon in the United States District Court for the Middle District of Tennessee. After discovery, Plaintiffs filed a motion for partial summary judgment and the Defendant (Amazon) filed a motion for summary judgment. The District Court granted the Defendant’s motion, reasoning all of Plaintiffs’ claims failed as a matter of law. Plaintiffs then appealed that ruling to the 6th Circuit Court of Appeals.
The Tennessee Product Liability Act Claim
The Court analyzed the Tennessee Products Liability Act (“TPLA”) claim by honing in on the question of whether, in the circumstances of this case, Amazon should be considered a “seller” within the definition of Tennessee law. Seller is defined as “any individual or entity engaged in the business of selling a product.”2 Amazon claimed it was impossible for them to sell the hoverboard, because under the Amazon business model involved here, W2M always owned title to the hoverboard. In contrast, the Plaintiffs claimed that Amazon controlled all aspects of the sales transaction and thus effectively sold it. The Sixth Circuit Court relied on a Tennessee Supreme Court case involving a TPLA claim against a lessor or bailor to determine that seller should be defined broadly.3 The Court held that “the TPLA’s definition of ‘seller’ means any individual regularly engaged in exercising sufficient control over a product in connection with its sale, lease, or bailment, for livelihood or gain.”
Despite the definitional victory, the 6th Circuit Court still threw Plaintiffs’ TPLA claims out, because the Court determined there was not sufficient evidence in the record that Amazon exercised a high enough degree of control to be deemed a seller under the TPLA. It seems to me that evidence that the Defendant stored and shipped the hoverboard, made payment in exchange for the hoverboard, retained payment made in exchange for the hoverboard, and handled communications with Plaintiffs regarding the hoverboard is more than enough to hold that Amazon exercised sufficient control to be seen as a seller under the TPLA. The Court’s reasoning here seems to show that Amazon will be shielded from liability under their third-party sales business model. This is problematic. The remedial purpose of the TPLA is to “ensure an injured consumer may maintain a strict liability action against whomever is most likely to compensate him for his injuries.”4
Survival of the Common Law Tort Claim
The Plaintiffs’ common law tort claim survived. These common law doctrines were discussed under the framework of the Restatement of Torts.5 This is because the Court reasoned that Amazon, through the email they sent on December 12, 2015, to Plaintiffs and other purchasers of hovercrafts showed that the Defendant assumed a duty to act. Thus, there were questions of fact remaining regarding whether Amazon breached its duty and whether this breach caused harm to the Plaintiffs. Another question remaining is if the Plaintiffs Fox read the email and relied on it. Reliance on the negligent warning is required. Since the Court determined there were genuine disputes of material fact, they reversed the grant of summary judgment on this claim. A close read of this section shows that the Plaintiffs will have a difficult time prevailing on this claim if the case goes to trial.
Failure of the Tennessee Consumer Protection Act Claim Due to Causation
Plaintiffs’ TCPA claim was also thrown out. Plaintiffs’ claim was simply that Amazon’s business model deceived them into believing that Amazon was the seller of the hoverboard, and that Plaintiffs purchased the hoverboard from Amazon. Plaintiffs’ problem with this argument was causation. The Sixth Circuit spent little time analyzing this issue, as it must have seemed obvious to them that what caused Plaintiffs’ damages here was that the hoverboard was dangerous and caught on fire. The source of the hoverboard was irrelevant. The court summarized a point of TCPA law by declaring, “the alleged unfair or deceptive act or practice must in fact cause the damages of which the plaintiff complains.”6
Implications and the Importance of Fox v. Amazon and Similar Cases
At the core of Fox v. Amazon is the question of whether Amazon or other innovative new business models should be shielded from liability or should be forced to compensate those injured by products purchased through Amazon. Such is a tale as old as time, the behemoth industry v. the suffering individual. It is a question of law that legislatures and judges have grappled with for generations.
Overall, the fact that Plaintiffs could purchase a defective product from Amazon with a battery that could catch fire and not be compensated for damages shows holes in the Tennessee products liability law. The facts of this case do not reveal to me any persuasive reasons why the Plaintiffs should not be compensated. As a society we have to ask ourselves: What do we value? Should those injured by what they purchase through online shopping be compensated? Why are online purchases any different from department store purchases? Online shoppers likely have no idea whether Amazon owns title to the goods sold, nor are they likely to understand when making a purchase decision that this could mean they would not be compensated if injured. Certainly, the average consumer never dreams that what they purchase may lead to serious injuries or death.
Analyzing the Fox v. Amazon case leaves a question in my mind about the extent of coverage the TPLA provides. I hope that the Tennessee Supreme Court will notice this gap in the law and ensure that future purchasers of online products be compensated even if they purchase a product from Amazon’s fulfillment services. However, understanding the current influence of Amazon, such a hope cannot burn nearly as bright as the fire from the dangerous hoverboard that destroyed the Plaintiffs’ home.
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2 T.C.A. § 29-28-102(7).
3 Citing Baker v. Promark Products West, Inc., 692 S.W.2d 844 (Tenn. 1985).
4 Citing Owens v. Truckstops of Am., 915 S.W.2d 420, 432 (Tenn. 1996).
5 Citing Restatement (Second) of Torts §§323, 324A.
6 Citing White v. Early, 211 S.W.3d 723, 743 (Tenn. Ct. App. 2006).