Products Liability Law Daily ‘Inkling’ not enough to sustain liability suit against e-cigarette manufacturers
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Thursday, November 16, 2017

‘Inkling’ not enough to sustain liability suit against e-cigarette manufacturers

By Leah S. Poniatowski, J.D.

A products liability lawsuit filed against several e-cigarette manufacturers, based on an "inkling" that one of the manufacturers was liable for a fire that caused extensive damage to a convenience store, was dismissed by a federal district court in Kentucky because the complaint did not identify the manufacturer of the allegedly defective e-cigarette, the nature of the alleged defect, or how the fire started (Red Hed Oil, Inc. v. H.T. Hackney Co., November 14, 2017, Hood, J.).

Red Hed Oil, Inc. sold e-cigarettes as part of its convenience store business. Red Hed purchased these e-cigarette products from The H.T. Hackney Co. They had been manufactured by Swisher International, Inc., Logic Technology Development LLC, Spark Industries LLC, R.J. Reynolds Vapor Company, NJoy Inc., and Fontem Ventures B.V. Red Hed and Hackney also had an arrangement in which Hackney would pick up expired e-cigarettes bi-weekly. According to Red Hed, it had placed expired e-cigarettes in its storeroom when a fire broke out, causing over $250,000 in damages to the building, equipment, and land. Red Hed and its insurer, Federated Mutual Insurance Company (collectively, the store), filed a multi-count liability lawsuit in a state court against Hackney and all of the e-cigarette manufacturers, alleging manufacturing and design defects, negligence, and breaches of warranties.

Pleading standard. The matter was removed to federal court for diversity jurisdiction, prompting the debate between the parties as to what pleading standard applied. The court explained that the federal procedural rules applied when it sat in a diversity case and, thus, the store’s pleadings must contain sufficient factual matter that states a plausible claim of relief on its face. The court distinguished the precedent provided by the store, noting that state pleading standards apply in the case of fraudulent joinder, which was not at issue in the case at bar.

Products liability. The court determined that the store’s complaint did not allege sufficient facts to support the claims under the Kentucky Product Liability Act. The store asserted that the fire originated in the storeroom "due to a defect in the electronic cigarettes and/or because of improper design of the electronic cigarettes." Additionally, the store contended that it suffered damages "[a]s a direct and proximate result of the electronic cigarettes as manufactured, designed, sold, supplied and introduced into the stream of commerce" by the manufacturers. These allegations fell short of the federal pleading standard, chiefly by failing to identify the manufacturer of the purportedly defective e-cigarette, how the fire started, or how the e-cigarettes were defective.

Moreover, the store did not satisfy the causation requirement because, under federal case law, the damages must be traced to a single manufacturer when only one could be responsible. Nor could the store salvage its claim under the concert of action doctrine because no facts were alleged to show that the manufacturers acted in tandem. The assertion that the manufacturers acted with each other "pursuant to a common design" was not an allegation that the manufacturers acted with "concerted effort." Additionally, Kentucky does not recognize the "alternative liability" theory and, thus, the store could not escape the causation requirement. Because the store’s pleadings only reflected an "inkling" of liability without more, its lawsuit was dismissed against the manufacturers.

The case is No. 5:17-cv-180-JMH.

Attorneys: Jonathan Phelps Saxton (Rendigs, Fry, Kiely & Dennis, LLP) for Red Hed Oil, Inc. d/b/a Redi Mart No. 9 and Federated Mutual Insurance Co. Daniel E. Murner (Landrum & Shouse LLP) for The H.T. Hackney Co. Michael G. Busenkell (Gellert Scali Busenkell and Brown LLC) for NJoy Inc. David J. Guarnieri (McBrayer, McGinnis, Leslie & Kirkland, PLLC) for Swisher International, Inc. Jacinta F. Porter (Frost Brown Todd LLC) for Logic Technology Development, LLC. Bradly Edward Moore (Boehl, Stopher & Graves, LLP) for Spark Industries LLC. Elisabeth S. Gray (Middleton & Reutlinger) for R. J. Reynolds Vapor Co. George B. Hocker (Ward, Hocker & Thornton, PLLC) for Fontem Ventures B.V.

Companies: Red Hed Oil, Inc. d/b/a Redi Mart No. 9; Federated Mutual Insurance Co.; Swisher International, Inc.; Logic Technology Development LLC; Spark Industries LLC; R.J. Reynolds Vapor Company; NJoy Inc.; Fontem Ventures B.V.

MainStory: TopStory CausationNews SCLIssuesNews DesignManufacturingNews TobaccoProductsNews ElectronicProductsNews KentuckyNews

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