Subrogating E-Cigarette Explosions

E-cigarettes are advertised and sold as a safer alternative to traditional cigarettes. They literally burst onto the scene back in 2007 and are now a $7 billion global industry made up of roughly 500 brands. Some of the most popular brands include V2, Halo, VaporFi, and blu. By some projections, e-cigarette sales could surpass conventional cigarettes by 2022. E-cigarettes provide a flavorful and “smoke free” alternative to tobacco products. The jury is still out on the relative safety of inhaling e-cigarette vapors, but it is becoming increasingly clear that these products come with some unanticipated risks. Specifically, the need for more power in smaller packaged batteries, coupled with questionable supply chain practices marked by non-existent or inadequate quality assurance testing, can lead to the unintended consequence of battery cell explosions.

In early 2017, a house fire resulted from an exploding e-cigarette. A similar explosion in a New Hampshire restaurant burned the hands and face of its owner and hit another customer in a nearby booth in the chest, burning part of his shirt and pants. Shortly thereafter, an e-cigarette exploded in a Kentucky man’s pocket while he waited in line at a Shell gas station. The man was rushed to the hospital with second-degree burns. Around the same time, a Naples (Florida) woman’s car burst into flames after her e-cigarette exploded. She too was rushed to the nearest hospital for burn treatment. Between January 2009 and December 2016, 195 incidents of explosion and fire involving e-cigarettes were reported by the U.S. media. These incidents resulted in 133 acute injuries and dozens of property damage cases. Subrogating potential against the manufacturers of these products is a subject that claims professionals must become familiar with.

The Product

An e-cigarette is a simple device. A heating element vaporizes the liquid solution (the “juice”) in the atomizing cartridge. Some have an on/off switch and others TURN ON automatically when the user takes a drag. It is an electrical device and must, therefore, require a source of power—a battery.

E-Cigarette Parts

Many e-cigarettes use lithium batteries due to their ability to store large amounts of energy in a compact amount of space. The lithium-ion batteries used to power e-cigarette vaporizers are small and powerful. The electrolyte inside the battery is basically the equivalent of gasoline, and when these batteries short out, there’s a surge of heat that causes this flammable electrolyte to combust and explode, with disastrous results.

Since their introduction, e-cigarettes have rapidly grown in popularity, with an estimated 10.8 million users and nearly $3.5 billion in sales in 2015. The U.S. government did not charge the U.S. Food and Drug Administration (“USDA”) with regulating e-cigarettes until May 2016. Upon its involvement, the USDA discovered that since 2009, at least 92 people were injured by exploding e-cigarettes. Anecdotal evidence suggests the numbers are under-reported and may be much higher. For example, one hospital in Seattle claims to have recorded at least 23 e-cigarette burn injuries since they informally started keeping track in 2009.

Causes of Explosions

There is no single reason for e-cigarette explosions. Lack of industry-wide manufacturing standards and testing programs hasn’t helped. According to the Tobacco Vapor, Electronic Cigarette Association (TVECA), coins in a person’s pocket can short circuit the battery when they brush up against them, causing an explosion. Extreme temperatures — below 50 °F degrees or above 115 °F — can cause some lithium-ion batteries to malfunction. Well-made lithium-ion cells have a very small risk of failure. But, the cheaper cells “have a much greater chance of having a manufacturing defect.” The risk is exacerbated when a cell is overcharged or charged too quickly. Some people assume that just because a charger plugs into an e-cigarette that it is safe to use, but that is not necessarily the case.

Injuries from e-cigarette battery explosions can be heinous and the property damage resulting from their explosions can be extensive. Users frequently keep the product in their pockets, hands, or near their face. Explosions have resulted in devastating groin, leg, hand, and facial burns, and the loss of fingers. In addition to personal injuries, e-cigarette battery explosions have caused untold property damage, the number of e-cigarette property damage subrogation claims seen in our office has rapidly increased over the past few years, and we expect the same is true across the subrogation industry.

Until recently, neither the U.S. Consumer Product Safety Commission (CPSC) nor the Food and Drug Administration (FDA) regulated these devices. It wasn’t until August 8, 2016, that the FDA finalized a rule regulating e-cigarettes. In the personal injury context, the “good-ole days” may be behind e-cigarette peddlers. In addition to the relatively new FDA oversight, several class actions have been filed and discovery in those matters will be revealing.

Subrogation Obstacles

Holding e-cigarette battery manufacturers accountable for resulting property damage has several obstacles. Claims for property damage caused by e-cigarettes are liquidated claims without the non-economic pain and suffering component. Facing limited exposure may present problems of proceeding cost-effectively.

Manufacturers of e-cigarette batteries are frequently Chinese corporations with few or no ties to any state in the U.S. It can be difficult to achieve proper service of process on these companies, given the costs of translating the complaint to Mandarin Chinese, a necessary step under the Hague Convention. It can also be difficult to convince clients to incur the costs to attempt service (usually $5,000-$10,000) when there is no way to assure them upfront that (1) the target is viable, (2) service will be accomplished, and (3) personal jurisdiction can be obtained. Even if all of this is accomplished, there is still no guarantee of winning. Therefore, pursuing such claims can become economically impractical.

Understanding State Law

In evaluating any e-cigarette explosion claim, it is critical to become familiar with the applicable state law. In Michigan, for example, e-cigarette battery failure claims are basically dead on arrival if the manufacturer is a foreign company with no ties to the state. Michigan has a rigid “innocent seller” statute (a/k/a “distributor statute”), M.C.L.A. § 600.2946, that is extremely unfriendly to consumers. Unless the damages warrant hiring a foreign investigator and pursuing a lawsuit in China or Taiwan, subrogation efforts beyond a bomb-throwing demand are usually impractical. In California, however, tracking down the actual manufacturer of the battery is completely unnecessary if there is a viable retailer, distributor, or wholesaler. Unlike Michigan, California has no innocent seller statute, allowing plaintiffs to pursue any entity along the supply chain, so long as there is jurisdiction.

In states that have not enacted “innocent seller” statutes, plaintiffs have been more successful in pursuing e-cigarette claims. A California woman who suffered second-degree burns on her legs, buttocks, and hand was awarded a $1.9 million verdict in 2015 by a Riverside County, California jury. She sued the retailer, distributor, and wholesaler of the battery. She did not pursue the actual manufacturer. In Michigan, this plaintiff might not have even been able to find an attorney to take her case, because she cannot pursue an “innocent” seller in that state, even if the manufacturer of the product is not subject to jurisdiction or is not viable. In California, the plaintiff knew which store she purchased the battery from, and her attorney was able to hold that entity, its distributor, and the wholesaler liable. As a result, those entities and their competitors likely tightened up their purchasing and sourcing requirements, a benefit to the public at large.

Conclusion

While proper claim investigation and the right experts are critical to prove a battery failure, the viability of a subrogation claim involving e-cigarettes often comes down to legal practicalities, including the state involved and the size of the damages. Consult MWL when faced with such a claim to obtain the information necessary to evaluate the recovery potential. Our Product Liability in All 50 States Chart, available HERE, includes a column detailing which states have enacted innocent seller statutes, and it is a good starting point for e-cigarette battery claims. For more information on subrogating medical expenses, workers’ compensation claims, and/or property damages losses caused by e-cigarettes, contact Richard Schuster at rschuster@mwl-law.com.

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Richard A. Schuster
Partner

Richard A. Schuster 蘇世達, a Wisconsin native, is a partner at Matthiesen, Wickert & Lehrer, S.C. Richard joined the firm in 2012 after years in Asia helping the industry’s leading international manufacturers with product liability and other business challenges. Richard is a trial attorney and a national and international speaker and lecturer on product liability defense and insurance litigation-related topics.