American Family Mutual Insurance Company, S.I. v. Amazon.com, Inc.

Background

The Niharts insured their home through American Family Insurance Company, S.I. They purchased an Aeiusny 400W Solar Generator Portable Power Station from Amazon’s online store in November 2019. In January 2021, the generator was plugged in and charging in a detached shed when a fire began. The shed and property inside it were heavily damaged. American Family paid the covered insurance claim and became the Niharts’ subrogee, meaning it acquired their claims relating to the cause of the fire.

American Family’s fire investigator concluded that the fire originated near the generator and was caused by the generator while it was plugged in and charging. An electrical engineer, Luke Choudek, found that some battery cells from the generator had ruptured and partially ejected their contents. He identified a possible battery-pack or charging-component failure that could have caused a thermal runaway, in which a battery failure produces rapidly increasing heat and may cause a fire. Components in an exemplar generator were labeled “Pecron.”

American Family initially sued Amazon. Amazon later certified Pecron as the product manufacturer under Minnesota law, and American Family amended its complaint to add Pecron. Amazon was eventually dismissed. Pecron continued to argue that it should not have been identified as the manufacturer. The court noted that this issue might present factual disputes that could prevent summary judgment, but it did not resolve the issue because Pecron prevailed on other grounds.

Summary-judgment standard

The court applied the summary-judgment standard under Federal Rule of Civil Procedure 56. Summary judgment is proper when the evidence presents no genuine dispute about a fact that could affect the result and the moving party is entitled to judgment as a matter of law. The party opposing the motion must identify admissible evidence showing a real issue for trial; it cannot rely only on allegations or promises that evidence will be presented later.

Design-defect claims

Under Minnesota law, a design-defect claim requires proof that the product was unreasonably dangerous for its intended use, that the defect existed when the product left the manufacturer’s control, and that the defect caused the injury. The plaintiff ordinarily must identify a feasible, safer alternative design and provide evidence allowing the court to balance the costs and benefits of the existing and proposed designs.

American Family relied on Choudek’s statements that a battery charger and pack with “charge and discharge monitoring” might detect cell failures and that nickel-based or lead-acid-based batteries might pose fewer fire risks. The court found that these statements did not adequately identify a workable alternative design. Choudek did not define the proposed monitoring system or explain how it would operate in a similar generator. His report also did not address the costs, benefits, usefulness, feasibility, or possible safety problems associated with either the monitoring system or different battery technologies.

The court also rejected American Family’s suggestion that Choudek could provide additional support through trial testimony. A party cannot avoid summary judgment by promising to produce evidence at trial when the existing record does not show a genuine issue for trial. The court therefore granted Pecron summary judgment on the design-defect claims. The opinion also states that Minnesota treats negligence and strict-liability theories in this products-liability context under the same reasonable-care balancing approach, so the court’s design-defect analysis applied to those theories as well.

Manufacturing-defect claims

A manufacturing-defect claim concerns a product that departed from its intended design because of a flaw in manufacturing, assembly, inspection, packaging, or testing. The plaintiff must show that the product departed from its intended design, that it was defective when it left the defendant’s control, and that the defect caused the damages.

The court found that Choudek’s observations of ruptured cells and his citation to research stating that many thermal-runaway events involve cell manufacturing defects did not establish that the cells in this generator departed from their intended design. Choudek did not identify the type of manufacturing defect, connect the research’s general statement to a specific defect in this generator, describe Pecron’s manufacturing processes, or state that a manufacturing defect caused the fire. American Family identified no other evidence proving a manufacturing defect or causation.

The court also considered whether circumstantial evidence could support the claim without identifying a specific defect. It concluded that American Family had not reasonably eliminated improper handling or misuse after the generator left Pecron’s control. More than a year passed between the purchase and the fire, and the generator had been stored in an outbuilding. American Family did not take discovery from the Niharts about how the generator was handled during that period. A brief, equivocal statement that the generator might not have been charged since a fishing trip was insufficient. The court therefore granted Pecron summary judgment on the manufacturing-defect claims.

Disposition

The court granted Pecron, LLC’s motion for summary judgment and dismissed the matter with prejudice. It ordered that judgment be entered accordingly. Judge Katherine Menendez signed the order on December 14, 2023.