Fox v. Amazon.com, Inc.

          Argued: March 14, 2019

          Appeal from the United States District Court for the Middle District of Tennessee at Nashville. No. 3:16-cv-03013-William Lynn Campbell, Jr., District Judge.

         ARGUED:

          Steven E. Anderson, ANDERSON & REYNOLDS, PLC, Nashville, Tennessee, for Appellants.

          Brendan Murphy, PERKINS COIE LLP, Seattle, Washington, for Appellee.

         ON BRIEF:

          Steven E. Anderson, ANDERSON & REYNOLDS, PLC, Nashville, Tennessee, Mark E. Spear, Kaylin L. Hart, SPEAR, SPEAR & HAMBY, P.C., Mobile, Alabama, Donald Capparella, DODSON PARKER BEHM & CAPPARELLA, P.C., Nashville, Tennessee, for Appellants.

          Brendan Murphy, Eric D. Miller, Rachel Constantino-Wallace, PERKINS COIE LLP, Seattle, Washington, Lela M. Hollabaugh, Scott Burnett Smith, BRADLEY ARANT BOULT CUMMINGS LLP, Nashville, Tennessee, for Appellee.

          Before: CLAY and STRANCH, Circuit Judges; PEARSON, District Judge. ^[*]

          OPINION

          CLAY, CIRCUIT JUDGE.

         Plaintiffs Charles Brian and Megan Fox, individually and as parents and next friends of their minor children Hailey, Matthew, Rebecca, and Sarah Fox, appeal the district court's May 30, 2018 order granting summary judgment in favor of Defendant Amazon.com, Inc. Plaintiffs' complaint alleges that Defendant (1) sold Plaintiff Megan Fox a defective or unreasonably dangerous product, in violation of the Tennessee Products Liability Act of 1978, Tenn. Code Ann. § 29-28-101 et seq., (2) breached a duty to warn Plaintiff Megan Fox about the defective or unreasonably dangerous nature of that product, in violation of Tennessee tort law, and (3) caused Plaintiff Megan Fox confusion or misunderstanding about the source of that product, in violation of the Tennessee Consumer Protection Act of 1977, Tenn. Code Ann. § 47-18-101 et seq. For the reasons set forth below, we AFFIRM IN PART and REVERSE IN PART the district court's summary judgment order.

         BACKGROUND

         Factual Background

         Plaintiffs are a family of six that resides in Davidson County, Tennessee. Defendant is a corporation that operates a worldwide online marketplace. Defendant's marketplace facilitates the sale of products from sellers, including both Defendant and third-party sellers, to buyers.^[1]W2M Trading Corp. ("W2M") is a corporation that at one time was a third-party seller that utilized Defendant's marketplace to sell hoverboards.

         In November 2015, Defendant's marketplace contained a webpage offering for sale a FITURBO F1 hoverboard. The webpage contained, among other things, the purchase price, $274.79, and a detailed product description, including that the hoverboard was equipped with an "original Samsung advanced battery pack." (RE 150, PageID # 2117.)^[2] Defendant did not set the purchase price or develop any of the product-related content that appeared on the webpage.

         On November 3, 2015, Plaintiff Megan Fox accessed the webpage and purchased a FITURBO F1 hoverboard. At that time, Plaintiff believed that Defendant owned the hoverboard, and that she purchased the hoverboard from Defendant. However, Defendant's records show that W2M owned the hoverboard, and that Plaintiff purchased the hoverboard from W2M. For instance, Plaintiff's order history lists the hoverboard's "[s]eller of record" as "W2M Trading Corp."^[3] (RE 120, PageID # 1566.) Neither Defendant nor W2M manufactured the hoverboard; the manufacturer remains unknown.

         Plaintiff Megan Fox paid the purchase price to Defendant, and the purchase receipt was sent from "amazon.com" to Plaintiff's email address. (RE 161, PageID # 2205.) The receipt contained various details about the purchase, including the order date, the shipment date, the shipping address, and the billing address. The receipt also contained the phrase, "Sold by: -DEAL-." (Id.)

         Defendant operates a program known as "Fulfillment by Amazon" ("FBA"), through which third-party sellers can opt to use storage and shipping services offered by Defendant. If a third-party seller participates in FBA, its products are stored in an Amazon Fulfillment Center until they are purchased, at which point Defendant ships the products to the buyers. Participants in FBA pay a fee to Defendant for these services, but retain title to their products.

         The parties disagree over whether W2M participated in FBA, and accordingly over whether W2M or Defendant stored and shipped the hoverboard purchased by Plaintiff Megan Fox. Defendant's records show that, in 2015, W2M participated in FBA for some of the products it sold on Defendant's marketplace. Additionally, the hoverboard purchased by Plaintiff was shipped from China via Federal Express, arrived in an Amazon-labeled box, and its Amazon Standard Identification Number ("ASIN") was B00WGX04YM. And Defendant's records show that, in 2015, Defendant had Amazon Fulfillment Centers in China, shipped items via Federal Express in Amazon-labeled boxes, and stored a hoverboard with the ASIN B00WGX04YM. However, Defendant's records also show that multiple third-party sellers sold hoverboards with the ASIN B00WGX04YM, and that Plaintiff's hoverboard was "[f]ulfilled by: W-Deals." (RE 120, PageID # 1566.) Plaintiff received the hoverboard sometime between November 10, 2015 and November 17, 2015.

         Defendant requires all third-party sellers that utilize its marketplace to sign Defendant's Business Solutions Agreement ("BSA"). The BSA provides in part that third-party sellers are prohibited from direct communication with buyers. Rather, all communication with buyers comes from Defendant. The BSA also provides that Defendant retains initial control over customer payments. Generally, customers pay Defendant, and Defendant then remits those payments to third-party sellers every 14 days. However, Defendant retains the right to impose a 90-day hold on those payments.

         The parties disagree over whether Defendant remitted Plaintiff Megan Fox's payment to W2M. Defendant's records show that from January 1, 2015 through December 31, 2016, Defendant remitted approximately $1.4 million in customer payments to W2M. However, Defendant's records do not show that Plaintiff's payment specifically was remitted to W2M.

         Sometime in November 2015, following news reports of hoverboard fires and explosions, Defendant began a thorough internal investigation into the dangers posed by hoverboards. That investigation identified at least 17 complaints of hoverboard fires or explosions in the United States that involved hoverboards purchased on Defendant's marketplace. For instance, on November 30, 2015, a customer sent an email to Defendant's CEO, Jeff Bezos, informing Bezos that a hoverboard the customer had purchased had burst into flames while his daughter was riding it.

         Based on the results of the investigation, Damon Jones, Defendant's product safety manager, was concerned that the entire product category of hoverboards was "bad." (RE 117-5, PageID # 1265.) In his view, "there was no precedent for this kind of event in the product safety community," in part because of the "widespread nature of the problem." (Id. at PageID # 1264- 65.) On December 10, 2015, the results were presented to "a broad set of senior decision-makers" at Defendant. (Id. at PageID # 1258.) By that time, Damon Jones had removed his own hoverboard from his home.

         On December 11, 2015, Defendant ceased all hoverboard sales worldwide. At that time, Defendant knew that approximately 250, 000 hoverboards had been sold on its marketplace in the previous 30 days. At that time, Defendant knew that approximately 25% of those hoverboards had not yet been delivered. Also at that time, Defendant knew that it was likely that a majority of those hoverboards would remain unopened until the holiday season in late December. As a result, Defendant made "contingency plans" in anticipation of more fires and explosions, including scheduling employees to work on December 26, 2015 in order to monitor news reports and customer complaints about hoverboard fires and explosions. (RE 161, PageID # 2209.)

         On December 12, 2015, Defendant sent an email to hoverboard purchasers that Defendant described as intended to be "non-alarmist" because it would likely be "headline news." (Id. at PageID # 2210.) The subject line of the email stated: "Important Product Safety Notification Regarding your Amazon.com Order." (RE 117-17, PageID # 1402.) The body of the email stated: "There have been news reports of safety issues involving products like the one you purchased that contain rechargeable lithium-ion batteries. As a precaution, we want to share with you some additional information about lithium-ion batteries and safety tips for using products that contain them." (Id.) The email included a link for the "information and safety tips," a link "to initiate a return," and a request that the recipient "pass along this information" to the proper person if the hoverboard was purchased for someone else. (Id.) The email did not inform hoverboard purchasers of any of the actions Defendant had taken to evaluate the dangers posed by hoverboards, including the findings and results of its internal investigation. The email did not inform hoverboard purchasers that the reported safety issues included a risk of fire and explosion. And the email did not inform hoverboard purchasers that Defendant had ceased all hoverboard sales worldwide.

         The December 12, 2015 email was sent to Plaintiff Megan Fox. Plaintiff does not recall receiving or reading the email. However, Plaintiff "had a habit" of reading emails sent to her email address. (RE 161, PageID # 2210.) Plaintiff testified that she would not have let the hoverboard enter or remain in her home had she known that there had been 17 complaints of hoverboard fires or explosions in the United States that involved hoverboards purchased on Defendant's marketplace, that Defendant anticipated additional complaints during the holiday season in late December, or that Defendant had ceased all hoverboard sales worldwide.

         On January 9, 2015, Matthew Fox was playing with his new hoverboard while the rest of the family was away from the home. Eventually, he stopped playing with the hoverboard and left it on the first floor of the family's two-story home. When Hailey Fox returned to the home, she sent a text message to Plaintiff Megan Fox stating that she thought that someone had broken into the home. Plaintiff Megan Fox alerted Plaintiff Charles Brian Fox of Hailey's message, and he drove home immediately, accompanied by Sarah and Rebecca Fox. By the time he arrived, Matthew and Hailey had hidden on the second floor of the home, fearing an intruder.

         When Plaintiff Charles Brian Fox arrived, the home was on fire, and Matthew and Hailey were trapped on the second floor. He frantically searched for a way to enter the home, but the intensity of the fire prevented him from getting inside. He then heard Hailey banging on a second-floor window. At his instruction, Hailey broke the window, and jumped out. He attempted to break her fall. He then heard Matthew banging on another second-floor window. Again, at his instruction, Matthew broke the window, and jumped out. Plaintiff Megan Fox arrived shortly thereafter to find that everyone had escaped from the home, but that the fire was still raging. As a result of the fire, the ...