Norris v. Shenzhen IVPS Technology Company Limited

1 WO [6] 7 IN THE UNITED STATES DISTRICT COURT 8 FOR THE DISTRICT OF ARIZONA [9] 10 Ronald Norris, No. CV-20-01212-PHX-DWL 11 Plaintiff, ORDER 12 v. 13 Shenzhen IVPS Technology Company Limited, et al., [14] Defendants. [15] 16 Pending before the Court is Plaintiff’s motion for default judgment. (Doc. 39.) For 17 the following reasons, the Court concludes that Plaintiff is entitled to default judgment in 18 an amount to be determined following an evidentiary hearing on damages. 19 BACKGROUND 20 This is an action against Defendant Shenzhen IVPS Technology Company Ltd. 21 (“Shenzhen IVPS”),1 a Chinese corporation that, according to its website, “specializes in 22 electronic cigarette research and development, production, and sale in all markets 23 worldwide.” (Doc. 22-1 at 2.) Shenzhen IVPS’s “leading brand” is SMOK®. (Id. at 4.) [24] 25 1 The complaint also names Shenzhen Smok Technology Company Ltd. (“Shenzhen Smok”) as a defendant. (Doc. 1.) Plaintiff asserts that he has since “learned that Shenzhen 26 Smok no longer exists, if it ever did.” (Doc. 22 at 4.) Cf. Sarieddine v. D&A Distribution, LLC, 2018 WL 5094937 , *1 (C.D. Cal. 2018) (indicating that Shenzhen IVPS was 27 formerly known as Shenzhen Smok and referring to Shenzhen IVPS as “Smok.”). The complaint also lists various unknown defendants (XYZ Corporations I-III; ABC 28 Partnerships I-III; John and Jane Does I-III). All of the defendants other than Shenzhen IVPS have been dismissed. (Doc. 31.) 1 In spring 2018, Plaintiff’s aunt placed an online order for an e-cigarette from 2 Shenzhen IVPS. (Doc. 1 ¶ 10.) The online order was placed in Arizona, and the e-cigarette 3 was delivered to Arizona. (Id.) Plaintiff’s aunt then gave the e-cigarette to Plaintiff as a 4 gift. (Id.) Two months later, on or about June 19, 2018, while Plaintiff was sleeping in his 5 home with the e-cigarette charging, the e-cigarette exploded, “causing a substantial fire” 6 in which Plaintiff “was severely injured.” (Id. ¶ 13.) 7 On June 17, 2020, Plaintiff filed the complaint, which asserts claims of strict 8 liability and negligence. (Doc. 1.) Afterward, Plaintiff sought and received several 9 extensions of the service deadline due to the complexity of effecting service in China 10 pursuant to the Hague Service Convention. (Docs. 6-11.) 11 On April 28, 2021, Shenzhen IVPS was served. (Doc. 18-1 at 2.) 12 Shenzhen IVPS’s deadline to file an answer was May 19, 2021. Fed. R. Civ. P. 13 12(a)(1)(A)(i). Shenzhen IVPS failed to file an answer by the deadline. 14 On October 12, 2021, Plaintiff filed an application for entry of default against 15 Shenzhen IVPS (Doc. 12) and a certificate of service (Doc. 12-1), which was in Chinese. 16 On October 18, 2021, the Court issued an order requiring Plaintiff to submit an 17 English translation of the certificate of service. (Doc. 13.) The Court explained that 18 without an English translation, “the Court has no way of verifying that service has, in fact, 19 been effected,” and without adequate proof of service, the Clerk could not enter default. 20 (Id. at 2.) The Court further stated that “after Plaintiff obtain[ed] a translation of the 21 certificate of service and applie[d] for and obtain[ed] entry of default from the Clerk,” 22 Plaintiff could file a motion for default judgment. (Id. at 2-3.) 23 In April 2022, the Court ordered Plaintiff to provide a status update, as he had not 24 yet filed the English translation. (Docs. 14, 15.) On April 27, 2022, Plaintiff filed a status 25 update in which he stated that he was “in the process of having the proof of service 26 translated fully into English” and expected to have a translation and affidavit in the first 27 week of May 2022. (Doc. 16.) 28 On May 24, 2022, Plaintiff filed a renewed application for entry of default against 1 Shenzhen IVPS, this time attaching an English translation of the certificate of service. 2 (Docs. 18, 18-1.) 3 On June 1, 2022, the Clerk entered default. (Doc. 19.) 4 On June 21, 2022, Shenzhen IVPS filed a motion to set aside the default. (Doc. 5 21.)2 6 On November 1, 2022, the Court denied the motion to set aside default. (Doc. 37.)3 7 On November 23, 2022, Shenzhen IVPS filed a motion to reconsider the Court’s 8 November 1, 2022 order. (Doc. 38.) 9 On December 20, 2022, the Court denied the motion to reconsider. (Doc. 40.) 10 On December 8, 2022, Plaintiff filed the pending motion for default judgment. 11 (Doc. 39.) 12 On December 20, 2022, Shenzhen IVPS filed a response. (Doc. 41.) Plaintiff did 13 not file a reply. 14 DISCUSSION 15 I. Default Judgment Standard 16 The “decision whether to enter a default judgment is a discretionary one.” Aldabe 17 v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). The following factors, known as the Eitel 18 factors, may be considered when deciding whether default judgment is appropriate: (1) the 19 possibility of prejudice to the plaintiff, (2) the merits of the claims, (3) the sufficiency of 20 the complaint, (4) the amount of money at stake, (5) the possibility of factual disputes, (6) 21 whether the default was due to excusable neglect, and (7) the policy favoring decisions on 22 the merits. Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). “[D]efault judgments 23 are ordinarily disfavored,” such that “[c]ases should be decided upon their merits whenever 24 reasonably possible.” Id. at 1472 . [25] 2 The motion to set aside default was originally combined with a motion to dismiss 26 for lack of jurisdiction and, alternatively, a motion for a more definite statement. (Doc. 21.) These motions, and two supporting declarations, were subsequently withdrawn. (Doc. 27 35.) 28 3 The November 1, 2022 order contains a more detailed procedural history. Norris v. Shenzhen IVPS Tech. Co. Ltd., 2022 WL 16571694 , *1-2 (D. Ariz. 2022). 1 “[T]he general rule” for default judgment purposes “is that well-pled allegations in 2 the complaint regarding liability are deemed true.” Fair Housing of Marin v. Combs, 285 3 F.3d 899, 906 (9th Cir. 2002). “The district court is not required to make detailed findings 4 of fact.” Id. “However, necessary facts not contained in the pleadings, and claims which 5 are legally insufficient, are not established by default.” Cripps v. Life Ins. Co. of N. Am., [6] 980 F.2d 1261, 1267 (9th Cir. 1992). 7 II. The First, Fifth, Sixth, And Seventh Eitel Factors 8 In the order denying Shenzhen IVPS’s motion to set aside the default, the Court 9 found that Shenzhen IVPS chose not to participate in this litigation until after default was 10 entered in a manner that “evinces bad faith, such as an intention to take advantage of the 11 opposing party, interfere with judicial decisionmaking, or otherwise manipulate the legal 12 process,” as Shenzhen IVPS—“a sophisticated party with its own in-house counsel, 13 established relationships with American litigation counsel, and experience litigating in 14 American federal court”—unconvincingly claimed to believe a response to the complaint 15 was not yet due and then “essentially sat back and enjoyed a 13-month delay in this 16 litigation while watching Plaintiff’s efforts [to obtain entry of default against Shenzhen 17 IVPS] play out on the docket.” (Doc. 37 at 7-8, internal quotation marks omitted.) 18 The Court further found that Plaintiff had been prejudiced by the delay, as Shenzhen 19 IVPS failed “to substantively address Plaintiff’s specific assertions regarding prejudice, 20 including the allegation that ‘[o]ne of Defendant’s social media accounts, Smok_Tech, has 21 been taken down and no longer exists,’” and, more broadly, because the lengthy and 22 unnecessary delay increased the risk that witnesses’ memories had faded and evidence 23 grown stale. (Id. at 11.) Additionally, the Court found that Shenzhen IVPS did not meet 24 its burden of demonstrating it had a meritorious defense. (Id. See also Doc. 40 [denying 25 reconsideration].) As such, the November 1, 2022 order stated as follows: 26 In light of the findings and conclusions in this order, it is clear that the first, fifth, and sixth factors can be resolved in favor of granting default judgment. 27 This order establishes that Plaintiff would be prejudiced in the absence of default judgment. There can be no factual dispute because the facts in the 28 complaint are deemed true. The default was due to Shenzhen IVPS’s culpable conduct, not to excusable neglect. [1] The seventh factor always weighs against granting default judgment but “is 2 not dispositive.” PepsiCo, Inc. v. Cal. Sec. Cans., 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002). [3] Thus, Plaintiff’s motion for default judgment should focus on the second, 4 third, and fourth factors. Plaintiff’s motion also should demonstrate “entitlement to the sought amount of damages” by providing detailed 5 affidavits and supporting exhibits. (Doc. 13 at 4.) Shenzhen IVPS’s response may not challenge the truth of the well-pleaded allegations in the 6 complaint, which are taken as true due to the default, but it may challenge whether those allegations, taken as true, entitle Plaintiff to relief. Cripps v. 7 Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992). Shenzhen IVPS may also challenge Plaintiff’s evidence as to damages. Either side may 8 request a hearing. Any such request may or may not be granted, at the Court’s discretion. [9] 10 (Doc. 37 at 12-13.) 11 In accordance with these instructions, Plaintiff’s motion for default judgment 12 focuses on the second, third, and fourth Eitel factors and presents evidence as to damages. 13 III. The Merits Of The Claims And Sufficiency Of The Complaint 14 The merits of the claims and the sufficiency of the complaint “are often analyzed 15 together and require courts to consider whether a plaintiff has stated a claim on which it 16 may recover.” Vietnam Reform Party v. Viet Tan - Vietnam Reform Party, 416 F. Supp. 17 3d 948, 962 (N.D. Cal. 2019) (internal quotation marks omitted). “Of all the Eitel factors, 18 courts often consider the second and third factors to be the most important.” Id. 19 A. Facts Established By The Complaint 20 As noted, “the general rule” for default judgment purposes “is that well-pled 21 allegations in the complaint regarding liability are deemed true.” Fair Housing of Marin, 22 285 F.3d at 906. Therefore, the Court accepts as true the following facts alleged in the 23 complaint: 24 1. In spring 2018, Plaintiff’s aunt purchased an e-cigarette from Shenzhen IVPS. 25 (Doc. 1 ¶ 10.) 26 2. Shenzhen IVPS designed and/or manufactured the e-cigarette. (Id. ¶ 12.) 27 3. Once it was delivered, Plaintiff’s aunt gave Plaintiff the e-cigarette as a present. (Id. 28 ¶ 10.) 1 4. On June 19, 2018, Plaintiff was sleeping in his residence while the e-cigarette was 2 charging. (Id. ¶ 13.) 3 5. While charging, the e-cigarette exploded, causing a fire in which Plaintiff was 4 injured. (Id.) 5 B. Strict Liability 6 The complaint asserts two claims—Count One is “Product Liability—Strict 7 Liability” and Count Two is “Negligence.” (Doc. 1 at 4-6.) However, Plaintiff’s motion 8 for default judgment focuses almost exclusively on strict liability. (Doc. 39 at 9-10.) 9 Accordingly, this order will consider only Plaintiff’s strict liability claim. 10 “Strict liability is a public policy device to spread the risk from one to whom a 11 defective product may be a catastrophe, to those who marketed the product, profit from its 12 sale, and have the know-how to remove its defects before placing it in the chain of 13 distribution.” Tucson Indus., Inc. v. Schwartz, 501 P.2d 936, 939-40 (Ariz. 1972). 14 “[T]hose persons who are in the chain of placing defective goods on the market” “should 15 bear the loss,” rather than the “injured member of the public,” because “those involved in 16 the chain of marketing can distribute the risk between themselves by means of insurance 17 and indemnity agreements.” Id. at 939 . “[P]ublic policy demands that responsibility be 18 fixed wherever it will most effectively reduce the hazards to life and health inherent in 19 defective products that reach the market,” “[e]ven if there is no negligence.” Id. Arizona’s 20 strict liability policy rests on the following justification: 21 [T]he seller, by marketing his product for use and consumption, has undertaken and assumed a special responsibility toward any member of the 22 consuming public who may be injured by it. . . . [T]he public has the right to and does expect, in the case of products which it needs and for which it is 23 forced to rely upon the seller, that reputable sellers will stand behind their goods. . . . [P]ublic policy demands that the burden of accidental injuries 24 caused by products intended for consumption be placed upon those who market them, and be treated as a cost of production against which liability 25 insurance can be obtained. . . . [T]he consumer of such products is entitled to the maximum of protection at the hands of someone, and the proper 26 persons to afford it are those who market the products. [27] Id. (quoting comment (c) of the Restatement (Second) of Torts § 402A). 28 A “product liability action” under Arizona law is “any action brought against a 1 manufacturer or seller of a product for damages for bodily injury, death or property damage 2 caused by or resulting from the manufacture, construction, design, formula, installation, 3 preparation, assembly, testing, packaging, labeling, sale, use or consumption of any 4 product, the failure to warn or protect against a danger or hazard in the use or misuse of 5 the product or the failure to provide proper instructions for the use or consumption of any 6 product.” A.R.S. § 12-681(5). A “seller” is defined as “a person or entity, including a 7 wholesaler, distributor, retailer or lessor, that is engaged in the business of leasing any 8 product or selling any product for resale, use or consumption,” and a “manufacturer” is 9 defined as “a person or entity that designs, assembles, fabricates, produces, constructs or 10 otherwise prepares a product or component part of a product before its sale to a user or 11 consumer, including a seller owned in whole or significant part by the manufacturer or a 12 seller owning the manufacturer in whole or significant part.” Id. § 12-681(3), (9). 13 “[I]n Arizona the application of strict liability does not hinge on the technical 14 limitations of the term seller or manufacturer.” Torres v. Goodyear Tire & Rubber Co., [15] 786 P.2d 939, 943 (Ariz. 1990). Rather, “the term ‘seller’ is a term designating a class 16 (one in the business of placing products in the stream of commerce) rather than a 17 designation of limitation.” Id. “[T]he terms ‘manufacturer’ and ‘seller’ [are used] almost 18 interchangeably in applying the [strict liability] doctrine.” Id. at 942 . The term “seller” 19 “has been interpreted expansively when it serves the policies underlying strict liability.” 20 Antone v. Greater Arizona Auto Auction, 155 P.3d 1074, 1077 (Ariz. Ct. App. 2007). See 21 also Jordan v. Sunnyslope Appliance Propane & Plumbing Supplies Co., 660 P.2d 1236 , 22 1242 (Ariz. Ct. App. 1983) (“It is enough that [a seller] is anywhere in the chain of 23 supplying goods to the public, that he is in the business of supplying the goods and that the 24 item reaches the consumer without substantial change in its condition.”). “Liability for a 25 defective product extends to all those involved in its distribution, including manufacturers 26 of component parts, dealers, distributers, or retail sellers.” State Farm Ins. Cos. v. Premier 27 Manufactured Sys., Inc., 142 P.3d 1232, 1235 (Ariz. Ct. App. 2006). 28 “A prima facie case of strict products liability is established by showing that when 1 the product left the defendant’s control, it was in a defective condition that made it 2 unreasonably dangerous and the defect was a proximate cause of plaintiff’s injuries.” 3 Jimenez v. Sears, Roebuck & Co., 904 P.2d 861, 864 (Ariz. 1995) (emphasis omitted). 4 Affirmative defenses include, inter alia, state of the art, product modification, and product 5 misuse. A.R.S. § 12-683.4 6 Here, Plaintiff asserts that Shenzhen IVPS is “strictly liable for a manufacture and/or 7 a design defect as the product did not behave as it should because the e-cigarette ignited, 8 causing a fire.” (Doc. 39 at 9.) Plaintiff further asserts that an e-cigarette, “in order to be 9 used, must be charged via electricity,” and if charging the device “causes it to 10 spontaneously ignite, of course it should be considered a defective and unreasonably 11 dangerous.” (Id.) Finally, Plaintiff asserts that “it is obvious the defect, the spontaneous 12 ignition, is the proximate cause of Plaintiff’s injuries” as he suffered burns “as a direct 13 result of the subject e-cigarette igniting.” (Id. at 10.) 14 Shenzhen IVPS responds that the allegations in the complaint, taken as true, are 15 inadequate to establish that Shenzhen IVPS is strictly liable. (Doc. 41.) 16 First, Shenzhen IVPS argues that the allegations in the complaint do not establish 17 that the e-cigarette that injured Plaintiff “was manufactured, sold or otherwise connected 18 in any way with Shenzehn [sic].” (Id. at 4.) 19 This contention lacks merit. The complaint alleges that Plaintiff’s aunt “ordered 20 online” an e-cigarette “from” Shenzhen IVPS (Doc. 1 ¶ 10) and that Shenzhen IVPS 21 designed and/or manufactured the e-cigarette (id. ¶ 12). Taking these allegations as true, 22 Shenzhen IVPS was both a “seller” and a “manufacturer” under Arizona law and was 23 indisputably in the chain of production and sales for the e-cigarette at issue. Arizona’s 24 broad definition of “manufacturer” includes the entity that designs a product as well as the 25 entity that fabricates/assembles it. A.R.S. § 12-681(3). The facts alleged in the complaint 26 establish that Shenzhen IVPS is an entity that did one or both of these things, such that it 27 is a “manufacturer.” Furthermore, the Court has already found that the allegation that [28] 4 Shenzhen IVPS did not timely raise any of these defenses. (Doc. 40 at 11.) 1 Plaintiff’s aunt purchased the e-cigarette “from” Shenzhen IVPS is sufficient to establish 2 that “Plaintiff’s claim arises out of Shenzhen IVPS’s direct sale” of the e-cigarette to 3 Plaintiff’s aunt. (Doc. 40 at 10.) Thus, Shenzhen IVPS is also a “seller.” A.R.S. § 124 681(9).5 5 Next, Shenzhen IVPS suggests that the e-cigarette was not described well enough 6 in the complaint. (Doc. 41 at 4 [“Plaintiff did not allege the product model, identification 7 number, or any other identifying factors of the subject e-cigarette.”].) But Shenzhen IVPS 8 cites no law for its contention that a complaint must allege such details to avoid dismissal. 9 Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a “short and plain 10 statement of the claim showing that the pleader is entitled to relief.” This pleading standard 11 requires “factual content that allows the court to draw the reasonable inference that the 12 defendant is liable for the misconduct alleged,” such that a mere “formulaic recitation of 13 the elements of a cause of action will not do,” but it “does not require detailed factual 14 allegations.” Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009). Plaintiff’s factual allegations 15 establish that Shenzhen IVPS sold an e-cigarette that exploded while charging, starting a 16 fire that injured Plaintiff. This is sufficient factual content to establish liability.6 17 Shenzhen IVPS further asserts that the allegations in the complaint fail to establish 18 that the e-cigarette was in a defective condition that made it unreasonably dangerous. (Doc. 19 41 at 5-7.) According to Shenzhen IVPS, “Plaintiff alleges only that at some point while 20 he was sleeping, the subject product[,] which was charging, exploded causing a fire and 21 injuries to his person.” (Id. at 6, emphasis added.) Shenzhen IVPS appears to argue that 22 5 Shenzhen IVPS asserted, in its withdrawn-then-reasserted motion to dismiss for lack of personal jurisdiction, that it sells goods to distributors, rather than directly to consumers. 23 (Doc. 40 at 7.) Uncontroverted evidence demonstrates that this is false. (Id. at 7-10.) Nevertheless, even assuming that Shenzhen IVPS is a wholesaler that does not sell directly 24 to consumers, it would still be a “seller” under Arizona law. A.R.S. § 12-681(9). 25 6 If Shenzhen IVPS had not defaulted, it could have disputed whether it had anything to do with the subject e-cigarette, and details regarding the e-cigarette would have been 26 discoverable and would have been relevant to whether Shenzhen IVPS was in the chain of distribution. However, Shenzhen IVPS’s default conclusively establishes as fact that the 27 e-cigarette in question was purchased “from” Shenzhen IVPS. With that established, it is not necessary to know which kind of e-cigarette, from Shenzhen IVPS’s line of various e28 cigarettes, injured Plaintiff. Whether it was this model, that model, or another, liability is established. 1 an electronic device that explodes into flame while charging does not have a defect that 2 makes it unreasonably dangerous. This is an unpersuasive argument. 3 There are “[t]wo models of inquiry” available to decide whether a product is “in a 4 defective condition and unreasonably dangerous”7—the “consumer expectation test” and 5 the “risk/benefit analysis.” Brethauer v. Gen. Motors Corp., 211 P.3d 1176, 1182 (Ariz. 6 Ct. App. 2009). “[B]oth the consumer expectation test and the risk/benefit analysis test 7 can embody strict liability because the manufacturer-designer may be held liable in 8 situations where due or even utmost care would not have prevented the design hazard.” 9 Dart v. Wiebe Mfg., Inc., 709 P.2d 876, 880 (Ariz. 1985). 10 “Under the ‘consumer expectation test,’ the fact-finder determines whether the 11 product ‘failed to perform as safely as an ordinary consumer would expect when used in 12 an intended or reasonable manner.’” Golonka v. Gen. Motors Corp., 65 P.3d 956 , 962 13 (Ariz. Ct. App. 2003). “If so, the product was in a defective condition and unreasonably 14 dangerous.” Id. Alternatively, if “the ordinary consumer would not form an expectation,” 15 an “alternative method of determining unreasonable danger” is a “risk/benefit analysis” in 16 which various factors are considered “to decide whether the benefits of the challenged 17 design outweigh the risk of danger inherent in such design.” Dart, 709 P.2d at 879 -81 18 (internal quotation marks omitted). The risk/benefit factors include “(1) the usefulness and 19 desirability of the product, (2) the availability of other and safer products to meet the same 20 need, (3) the likelihood of injury and its probable seriousness, (4) the obviousness of the 21 danger, (5) common knowledge and normal public expectation of the danger (particularly 22 for established products), (6) the avoidability of injury by care in use of the product 23 (including the effect of instructions or warnings), and (7) the ability to eliminate the danger 24 without seriously impairing the usefulness of the product or making it unduly expensive.” [25] Id. at 879-80 . [26] 7 Whether a product “is in a defective condition” and whether it is “unreasonably 27 dangerous” are different concepts, but “the defectiveness and unreasonable danger assessments are often intertwined. Sw. Pet Prod., Inc. v. Koch Indus., Inc., 273 F. Supp. 28 2d 1041, 1054 (D. Ariz. 2003). “Accordingly, Arizona courts often collapse the [defectiveness and unreasonable danger assessments] into one inquiry.” Id. 1 Here, the Court has no trouble concluding that the complaint alleges sufficient facts 2 to establish liability under the consumer expectation test. An e-cigarette is an electronic 3 device that must be charged before it can be used. Today’s consumers own many such 4 devices: cell phones, laptops, portable audio speakers, power tools, plug-in hybrid cars— 5 the list goes on and on. Some of these devices are more dangerous than others while being 6 used. But consumers expect that all of these devices are safe while being charged. An 7 electronic device, including an e-cigarette, that explodes while charging fails “to perform 8 as safely as an ordinary consumer would expect when used in an intended or reasonable 9 manner.” Golonka, 65 P.3d at 962 . 10 Moreover, even if the consumer expectation test were not satisfied, the Court would 11 have no trouble concluding that an e-cigarette that explodes while charging fails the 12 risk/benefit analysis. The usefulness and desirability of the product is relatively low, as 13 the general purpose of an e-cigarette is to inhale nicotine, a harmful substance. Other e14 cigarettes (that do not explode when charging) are available to meet the same need. The 15 likelihood of injury from an e-cigarette that explodes into flame when charging is very 16 high, as is the probable seriousness of injury. The danger is not obvious, as nothing about 17 an e-cigarette suggests to a user that charging it might cause an explosion, and no one 18 expects an e-cigarette to explode while charging. There is no way to use an e-cigarette 19 without charging it, so it is impossible to avoid the danger while using the product via 20 heightened “care.” Finally, the presence of other e-cigarettes in commerce that do not 21 explode while charging suggests that it is possible to eliminate the danger without seriously 22 impairing the usefulness of the product or making it unduly expensive. In sum, no 23 reasonable seller or manufacturer would put an e-cigarette on the market with the 24 knowledge that it explodes while charging. 25 Thus, both models of inquiry lead to the same conclusion. The facts established by 26 default establish that the subject e-cigarette was defective and unreasonably dangerous. 27 Shenzhen IVPS also notes that the complaint does not allege “whether the subject 28 product was damaged prior to the incident; the manner in which Plaintiff was charging the 1 device; or whether he was charging the device with a compatible charger.” (Doc. 41 at 6.) 2 In making this observation, Shenzhen IVPS is effectively attempting to assert affirmative 3 defenses—alteration and misuse, A.R.S. § 12-683(2), (3)—and insisting that Plaintiff 4 should have pleaded facts negating these affirmative defenses. But Plaintiff was not 5 required to do so. “A complaint need not anticipate an affirmative defense.” Shepherd v. 6 Costco Wholesale Corp., 482 P.3d 390 , 393 (Ariz. 2021) (cleaned up). See also Perry v. 7 Merit Sys. Prot. Bd., 137 S. Ct. 1975 , 1987 n.9 (2017) (“[A]n affirmative defense to a 8 plaintiff’s claim for relief [is] not something the plaintiff must anticipate and negate in her 9 pleading.”); Foremost-McKesson Corp. v. Allied Chem. Co., 680 P.2d 818, 822 (Ariz. Ct. 10 App. 1983 ) (“A plaintiff in a negligence action cannot be required to affirmatively plead 11 and prove the negative of an affirmative defense, e.g., that it was not contributorily 12 negligent.”). By defaulting, Shenzhen IVPS forfeited its opportunity to plead and prove 13 alteration, misuse, or any other affirmative defense. The complaint is not deficient for 14 failing to plead facts intended to negate these potential defenses.8 15 Nor are alteration and misuse evident from the facts alleged in the complaint and 16 established as true by the default. The complaint alleges that Plaintiff was charging the 17 device. (Doc. 1 ¶ 13.) This is an appropriate and indeed necessary “use” of the device. 18 The complaint also alleges that Plaintiff’s aunt ordered the e-cigarette “[a]pproximately 19 two months prior” to the incident and gave him the e-cigarette “[o]nce it was delivered.” 20 (Id. ¶ 10.) The word “once,” when used as a conjunction, means “as soon as.” Merriam21 Webster Dictionary, available at https://www.merriam-webster.com/dictionary/once. The 22 relatively short amount of time between the e-cigarette’s delivery and its explosion 23 supports the inference that the defect existed before it left Shenzhen IVPS’s control. 24 “Arizona courts have allowed plaintiffs to rely on circumstantial evidence to establish a [25] 8 For what it’s worth, Plaintiff explicitly alleges that the defect existed “at the time of 26 [the e-cigarette’s] design and/or manufacture.” (Doc. 1 ¶ 19.) Shenzhen IVPS asserts that this “is not a factual allegation that the Court must deem admitted on default.” (Doc. 41 at 27 7.) This illustrates the difficulty of pleading a negative—there is often no way to plead negation of an anticipated affirmative defense with factual allegations that are not 28 conclusory, as it is inherently difficult to provide specific facts regarding what did not happen. 1 defect that existed at the time the product left the defendant’s control caused the injuries.” 2 Philadelphia Indem. Ins. Co. v. BMW of N. Am. LLC, 2015 WL 5693525 , *15 (D. Ariz. 3 2015). See, e.g., Reader v. Gen. Motors Corp., 483 P.2d 1388, 1393-94 (Ariz. 1971) 4 (“There will seldom be a case based upon strict liability where a person will be able to 5 testify from his personal knowledge that a particular product was sold in a certain defective 6 condition. A requirement of direct evidence would effectively deny the theory of [strict 7 liability].”); Dietz v. Waller, 685 P.2d 744, 747-48 (Ariz. 1984) (“Plaintiffs, we have held, 8 must be permitted to rely upon circumstantial evidence alone in strict liability cases, 9 because it is unrealistic to expect them to otherwise be able to prove that a particular 10 product was sold in a defective condition. . . . This would be especially true in cases such 11 as this one where the product has disintegrated or burned up. . . . [N]o specific defect need 12 be shown if the evidence, direct or circumstantial, permits the inference that the accident 13 was caused by a defect.”). The facts alleged do not demonstrate misuse or alteration and 14 indeed support the inference that there was none. 15 Shenzhen IVPS next argues that the complaint “does not establish that an 16 informational defect was a proximate cause of” Plaintiff’s injuries. (Doc. 41 at 8, emphasis 17 added.) But informational defects (failure to warn) are simply one kind of defect. “There 18 are three categories of defects in strict products liability actions: manufacturing defects; 19 design defects; and informational defects in regard to instructions and warnings.” Sw. Pet 20 Prod., 273 F. Supp. 2d at 1051. The complaint alleges that the subject e-cigarette “was in 21 an unreasonably dangerous condition at the time of its design and/or manufacture and 22 [Shenzhen IVPS] failed to give a proper warning or notice of its dangerous condition to 23 consumers and others who encounter the products in the stream of commerce, specifically 24 including Plaintiff.” (Doc. 1 ¶ 19, emphasis added.) In other words, the complaint alleges 25 that there was both a physical defect (either a design flaw or manufacturing mishap)9 and [26] 9 Under the facts of this case, it is not important whether the defect was caused by the 27 e-cigarette’s design or manufacture because Shenzhen IVPS was also the seller. Thus, whether the defect arose during the design process or the manufacturing process, the e28 cigarette was “in a defective condition that made it unreasonably dangerous” at the time it left Shenzhen IVPS’s control. Jimenez, 904 P.2d at 864 . 1 an informational defect. Even if the allegations regarding the informational defect are 2 deficient, the allegations regarding the design/manufacturing defect are sufficient. The 3 design/manufacturing defect was obviously a proximate cause of Plaintiff’s injuries, and 4 Shenzhen IVPS does not present any argument to the contrary. Mather v. Caterpillar 5 Tractor Corp., 533 P.2d 717, 719-20 (Ariz. 1975) (“In this case . . . , the failure to warn of 6 a defective design is mere surplusage since once appellant proved a right to recover for the 7 design defect . . . the failure to warn of the design defect did not add to her right to 8 recover.”). 9 The Court concludes that the complaint is sufficient and the second and third Eitel 10 factors—the merits of the claims and the sufficiency of the complaint—favor granting 11 default judgment. 12 IV. The Amount Of Money At Stake Relative To The Injury Suffered 13 Under the fourth Eitel factor, the court generally considers “the amount of money 14 at stake in relation to the seriousness of the defendant’s conduct.” Doe v. United States, [15] 2018 WL 2431774 , *5 (D. Ariz. 2018). “If the sum of money at stake is completely 16 disproportionate or inappropriate, default judgment is disfavored.” Id. When the damages 17 request is large but proportionate to the harm suffered, the request “does not weigh against 18 awarding default judgment.” Id. at *6 (requested default judgment award of $10 million 19 was “not overly excessive” relative to the seriousness of the defendant’s conduct and the 20 plaintiff’s injuries). 21 Plaintiff seeks $1 million in total damages—$229,649.09 for medical expenses and 22 the balance for pain and suffering, including physical pain and self-consciousness 23 regarding the permanent scarring of his body. (Doc. 39 at 8-9.) In support of his asserted 24 damages, Plaintiff includes photographs taken by hospital staff documenting some of the 25 burns on his body (id. at 5-6) and also provides some of his medical records10 (Doc. 39-1 26 at 6-26) and medical bills (id. at 28-61). Records from Maricopa Integrated Health System [27] 28 10 Plaintiff states that his medical records “are extremely voluminous (totaling over 2,200) [pages].” (Doc. 39 at 8.) 1 indicate that Plaintiff suffered a third-degree burn of his right upper arm, a second-degree 2 burn of his face, a second-degree burn of his chest wall, a burn of his left forearm, acute 3 pain, and impaired mobility. (Id. at 14.) Plaintiff states that after his initial treatment, he 4 had follow-up surgeries (“skin grafts”) that required additional hospital stays and follow5 up. (Doc. 39 at 7-8.) Plaintiff’s motion summarizes: 6 Plaintiff has incurred a great deal of pain and suffering as a result of this incident. Due the severity of his injuries, he was required to be in the hospital 7 for almost two weeks. Not only were the initial injuries painful, it was necessary for Plaintiff to undergo two skin graft procedures, which require a 8 lengthy recovery time. Even after the wounds have heal[ed], Plaintiff has been scarred. The scars not only serve as reminder of the traumatic event 9 itself, but the pain he long endured. Plaintiff is also extremely self-conscious regarding the scars he now bears as a result of the incident. [10] (Id. at 8-9.) [11] Shenzhen IVPS states that “[w]hen the amount which Plaintiff seeks to recover is [12] disproportionate, inappropriate, or otherwise unreasonable given the nature of the [13] allegations brought against a defendant, default judgment is disfavored.” (Doc. 41 at 914 10.) The Court agrees with this general proposition but notes that Shenzhen IVPS makes [15] no attempt to argue that the amount of damages sought here is, in fact, “disproportionate, [16] inappropriate, or otherwise unreasonable.” [17] One million dollars is a sizeable sum of money, but given the nature of the [18] allegations, the requested amount is not disproportionate, inappropriate, or unreasonable. [19] Indeed, juries have awarded much higher sums in similar cases. For example, in Snelling [20] v. Tribal Vapors et al, 2:19-cv-00686-JB-GJF (D.N.M.), the plaintiff suffered burns on his [21] hands and his left leg when an e-cigarette battery exploded in his pants pocket. (Snelling, [22] Doc. 1 ¶¶ 39-42.) The defendants defaulted, and the court granted the plaintiff’s motion [23] for default judgment as to Tribal Vapors, the shop that sold the e-cigarette, establishing the [24] shop’s liability, and then set a jury trial as to damages. (Snelling, Docs. 17, 36.) The [25] plaintiff’s medical bills amounted to $176,924.45, and he sought an additional $750,000 [26] for pain, disability, emotional distress, disfigurement, future medical expense, and loss of [27] earnings. (Snelling, Doc. 17 at 20.) Nevertheless, the jury determined that the amount of [28] money that “fairly and adequately compensate[d]” the plaintiff was $2.5 million. (Snelling, 1 Doc. 51.) Similarly, in Ries v. Zolghadr et al., No. RIC 1306769 (Cal. Super. Ct. 2015), a 2 jury awarded nearly $1.9 million to a woman whose e-cigarette battery exploded in her lap 3 while being charged, causing second-degree burns on her thighs, buttocks, and hand. Jury 4 Awards Woman $1.9 Million for Injuries from Exploding E-Cig Battery, 31 Westlaw 5 Journal Tobacco Industry 4 (2015). 6 Shenzhen IVPS mainly focuses its damages arguments on challenging the 7 admissibility of the evidence Plaintiff has presented, stating that the medical bills Plaintiff 8 submitted are “unauthenticated” and lack a “proper foundation,” such that they are 9 “inadmissible.” (Doc. 41 at 10.) However, Shenzhen IVPS has requested an evidentiary 10 hearing on damages, and the Court will grant that request. (Id.) Any challenges to the 11 admissibility of evidence can be raised at the evidentiary hearing.11 12 Shenzhen IVPS further states that Plaintiff has not provided “a shred of 13 documentary evidence” in support of his request for damages for pain and suffering and 14 emotional distress. (Id.) This contention is difficult to square with the Court’s review of 15 Plaintiff’s medical records, which establish that Plaintiff was diagnosed with “acute pain” 16 and “impaired mobility” and include photographs of serious burns that clearly depict a 17 painful condition. (Doc. 39-1 at 6-26.) Although it is true that Plaintiff did not submit a 18 declaration establishing “how his life was impacted by the incident” (Doc. 41 at 10), some 19 degree of impact can be inferred from the medical records Plaintiff submitted, and at any 20 rate, more evidence may be adduced at the evidentiary hearing Shenzhen IVPS has 21 requested. 22 The Court concludes that the fourth Eitel factor—the amount of money at stake— 23 does not weigh strongly in favor of or against default judgment. The damages sought here 24 are certainly significant, but Shenzhen IVPS has not established they are unreasonable or 25 disproportionate. At any rate, the amount can be determined after an evidentiary hearing. 26 Where the Court has the discretion to reduce the monetary award to a less substantial sum [27] 28 11 The Court expresses no opinion, at this time, as to whether Plaintiff’s exhibits are admissible. 1 that the Court considers reasonable, if necessary, the fourth Eitel factor becomes neutral. 2 Twitch Interactive, Inc. v. Johnston, 2018 WL 1449525 , *8 (N.D. Cal. 2018). 3 V. Weighing The Eitel Factors 4 The Court has considered all of the Eitel factors and concludes that default judgment 5 is warranted. The fourth factor is neutral, the seventh factor (as always) weighs against 6 default judgment, and all of the other factors strongly weigh in favor of default judgment. 7 Thus, default judgment will be entered, following an evidentiary hearing on 8 damages. 9 VI. Damages 10 An evidentiary hearing pursuant to 55(b)(2) of the Federal Rules of Civil Procedure 11 would be helpful in resolving the issue of damages. Evidence will be admissible only as 12 it relates to damages. Shenzhen IVPS’s liability is conclusively established by this order 13 and shall not be relitigated. Adriana Int’l Corp. v. Thoeren, 913 F.2d 1406 , 1414 (9th Cir. 14 1990) (district court properly excluded evidence related to liability, “an issue that became 15 irrelevant once the default judgment was entered”); Henry v. Sneiders, 490 F.2d 315 , 318 16 (9th Cir. 1974) (“Appellant argues that she was precluded from offering evidence at the 17 hearing to determine damages. Although some evidence was excluded, it would have been 18 relevant only as to liability and, since liability was not then an issue, the evidence was 19 properly excluded as irrelevant.”). 20 … 21 … 22 … 23 … 24 … 25 … 26 … 27 … 28 … 1 Accordingly, 2 IT IS ORDERED that Plaintiff's motion for default judgment (Doc. 39) is granted. 3 || Judgment shall issue following an evidentiary hearing on damages. 4 IT IS FURTHER ORDERED that the parties shall meet and confer and then, 5 || within 14 days of the issuance of this order, identify three days in September 2023 in which || they are available for an evidentiary hearing. 7 IT IS FURTHER ORDERED that the parties shall engage in good-faith settlement 8 || discussions on the issue of damages and shall file a status report no later than June 12, 2023. 10 Dated this 15th day of May, 2023. [11] 12 om ee 13 } t _ Dominic W. Lanza 14 United States District Judge [28] -18-