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Sunday, September 22, 2019

Judge OKs insurer's lawsuit vs Amazon over housefire caused by defective counterfeit hoverboard battery

Federal Court

By Scott Holland | Aug 26, 2019


CHICAGO — A federal judge is allowing an insurance company to continue part of its lawsuit against Amazon regarding claims the insurer paid following a 2016 house fire linked to a faulty hoverboard battery the homeowners' purchased on Amazon.

Great Northern Insurance Company sued Amazon in Lake County Circuit Court to pursue subrogated claims for product liability, negligent failure to warn, negligent misrepresentation, and violation of the Illinois Consumer Fraud and Deceptive Business Practices Act. After Amazon removed the complaint to the U.S. District Court Northern District of Illinois, it asked Judge Gary Feinerman to dismiss everything but the product liability claim.

According to an opinion Feinerman issued Aug. 20, the root of the dispute is the Amazon product listing indicating the “Smart Unicycle 2 Wheel Self Balancing Electric Scooter Balance Hoverboard color black” had a “genuine Samsung battery package,” when, in reality, it had a counterfeit Samsung battery that came from a Chinese manufacturer.


U.S. District Judge Gary Feinerman

Great Northern said it paid more than $3.8 million to the couple after the fire, which started when the battery spontaneously combusted a few months after the family bought the device.

Feinerman rejected the negligent failure to warn claim because Great Northern argued Amazon should have said something to the couple after they owned the hoverboard, whereas Illinois law allows only time-of-sale claims. However, the judge ruled the company had solid ground for its negligent misrepresentation claim, pointing to detailed claims on the Amazon website about the quality of the battery. The insurer claimed customers can reasonably infer Amazon made those statements.

Feinerman also noted Amazon’s reply brief argued the initial complaint doesn’t allege carelessness or negligent or that it had a duty to communicate accurate information to buyers.

“Those arguments, made for the first time in Amazon’s reply brief, are forfeited for purposes of the present motion,” Feinerman wrote.

Great Northern’s initial ICFA claim alleged both deception and an unfair practice but its brief opposing the motion to dismiss only defended the deception claim, which Feinerman said constitutes a forfeiture of the unfair practice claim.

In its motion to dismiss, Amazon said the ICFA claim should fail because the complaint lacks specificity in that it doesn’t identify a statement made by Amazon. But Feinerman said the same facts supporting the negligent misrepresentation claim work in Great Northern’s favor.

“It can be reasonably inferred from the complaint that Amazon falsely stated that the hoverboard had a genuine Samsung battery,” Feinerman wrote. He further said the complaint alleged “Amazon was engaged in an ‘aggressive sales campaign’ to sell hoverboards. Those allegations yield the reasonable inference that Amazon knew that it was conveying false information and that it did so in order to increase its sales volume.”

Amazon also argued that state law bars Great Northern from seeking compensation for damages to anything aside from the actual hoverboard, but Feinerman said it based that position on a public act found to be entirely unconstitutional in a 1997 Supreme Court of Illinois opinion in Best v. Taylor Machine Works.

In other lawsuits concerning combustible hoverboards, Amazon has invoked liability shields available to resellers under the Communications Decency Act, but didn’t do so in moving to dismiss and forfeits that protection in this action, Feinerman said.

Feinerman gave Great Northern until Sept. 10 to amend its negligent failure to warn claim and allowed the rest of its complaint to survive.

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Organizations in this Story

Amazon.com Great Northern Insurance Agency U.S. District Court for the Northern District of Illinois Chicago Division

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