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Graham v. Wal-Mart Stores, Inc.

United States District Court, E.D. California

August 29, 2017

TYRA GRAHAM, Plaintiff,
v.
WAL-MART STORES, INC. and GENERAL ELECTRIC COMPANY, Defendants.

          MEMORANDUM AND ORDER

          MORRISON C. ENGLAND, JR UNITED STATES DISTRICT JUDGE

         Through the present lawsuit, Plaintiff Tyra Graham (“Plaintiff”) seeks damages for injuries suffered while operating a food processor purchased at a facility operated by Defendant Wal-Mart Stores, Inc. (“Wal-Mart”) in Linda, California. Plaintiff alleges the food processor was defective in its design and/or manufacture at the time it left Wal-Mart's possession, that Wal-Mart was aware of these defects, and that these defects proximately caused her injuries. Plaintiff further asserts causes of action for strict liability, negligence, breach of warranty, and fraudulent concealment and seeks compensatory as well as punitive damages. Federal jurisdiction is predicated on diversity of citizenship pursuant to 28 U.S.C. § 1332 inasmuch as Plaintiff is a resident of the State of California and Wal-Mart is a corporation organized under the laws of the State of Delaware with its principal place of business in Arkansas. Pl.'s Compl., ¶¶ 1-2.

         Presently before the Court is Wal-Mart's Motion for Partial Summary Judgment (ECF No. 56) on Plaintiff's claims for fraudulent concealment and punitive damages. Plaintiff filed a timely opposition on November 28, 2016 (ECF No. 62), which included Plaintiff's own Statement of Undisputed Facts. Wal-Mart neither filed a reply nor objected to the undisputed facts advanced by Plaintiff. For the reasons set forth below, Wal-Mart's Motion is DENIED.[1]

         BACKGROUND

         On November 5, 2010, Plaintiff purchased a General Electric-branded 14-cup Food Processor Model #169203 (“food processor”) which was designed, imported, and sold exclusively by Wal-Mart. Plaintiff's Statement of Undisputed Facts (“PUF”) Nos. 1, 24. After using the food processor for nearly four years, it suddenly stopped while Plaintiff was chopping mushrooms on September 14, 2014. Plaintiff took the lid off and attempted to twist the blade to unjam the machine. Despite being equipped with a safety interlock designed to prevent the blade from spinning while the lid was dislodged, the blade re-engaged and sliced Plaintiff's fingers. Id. at 31.

         Wal-Mart moves for summary adjudication as to Plaintiff's fraudulent concealment claim on grounds that it voluntarily pulled the food processor from its shelves in February 2011, and also voluntarily recalled the machine on May 25, 2011, over three years before Plaintiff's injury, and therefore cannot show any intent to conceal. See Tackett Aff., Ex. A. Wal-Mart further claims there is no basis for punitive damages in the absence of any clear and convincing evidence of “oppression, fraud, or malice” on the part of any Wal-Mart managing agent. See Cal Civ. Code § 3294(a), (b).

         Wal-Mart began selling this model of food processor in September 2009. PUF No. 3. As indicated above, it contained a safety interlock feature designed to prevent rotation of the blades if the lid was not properly locked on; this feature was advertised on the box. Id. at No. 2. The safety interlock feature as advertised by Wal-Mart on the food processor's box was one of the reasons Plaintiff purchased the food processor. Graham Dep. at 70-72. Pl.'s Ex. 24. Plaintiff claims she purchased the product in reliance of Wal-Mart's assurances that the interlock feature would work as advertised. Id.

         Wal-Mart knew the safety interlock feature was defective as early as March 2009, well before Plaintiff purchased her food processor in November 2010. PUF at No. 4. In September 2010, the third-party testing results supplied to Wal-Mart showed that the safety interlock had failed on 6% of examined food processors. Id. at No. 15. Wal-Mart voluntarily decided to stop selling the machine in February 2011 by pulling the processor off its shelves. After the Consumer Product Safety Commission asked that Wal-Mart provide a report on incidents involving the food processor, on May 25, 2011, it finally issued a recall for all food processors sold on grounds that “the safety interlock system on the recalled food processor can fail allowing operation without the lid secured, posing a laceration hazard.” Id. at No. 27-28. By this time, some 21 consumers had been injured. Id. at No. 28.

         The undisputed facts also show that Wal-Mart knew that injuries had occurred from use of the food processor prior to Plaintiff's November 2010 purchase. In March and April of 2010, Wal-Mart learned that two California consumers had been injured when the safety interlock on the machine failed and its blades began to spontaneously spin. Id. at Nos. 12-13.

         In September 2010, in order to address the issue, the Chinese manufacturer of the food processor suggested shortening the drive shaft. Id. at No. 16. While Wal-Mart decided that food processors would no longer be shipped until the design correction was addressed, it apparently did nothing to stop the sale of food processors already in the United States, or to recall the 170, 861 machines that had already been sold at profits to Wal-Mart ultimately totaling some $3.8 million. Id. at Nos. 19, 32. In the meantime, prior to the time Plaintiff bought her food processor from Wal-Mart on November 5, 2010, Wal-Mart had learned that at least two other consumers had been injured between September and November of 2010 by the machine's safety interlock failure. Id. at 21, 23.

         It is undisputed that Wal-Mart had the ability to remove the food processor from store shelves at any point it wished. Id. at No. 29. Cara Rose (“Rose”), a Wal-Mart Senior Manager for Product Safety and Compliance whose responsibilities included deciding whether to pull a product for quality or safety reasons, had the authority to remove offending items from store shelves. Rose Dep. at 18:2-9; 24:2-9; 29:9-19. Ex. 23 to Pl.'s Opp. According to Plaintiff, Ms. Rose “did not issue a pull-and-hold[2] on the Food Processor until after the Plaintiff purchased it, despite being kept informed of the number of injuries caused by the defect and the 3rd party test results showing there was a defect with the safety interlock.” Pl.'s Opp., ECF No. 62, p. 13.

         After Wal-Mart issued the recall of the subject food processor in May 2011, notice of the recall was posted in Wal-Mart stores on a bulletin board next to the back bathroom, a bulletin board at the service desk, and on their recall webpage. Id. at No. 30.

         In now requesting summary judgment on Plaintiff's fraudulent concealment cause of action, Wal-Mart argues that the voluntary recall and notices of the recall posted three years prior to Plaintiff's injury were sufficient to inform Plaintiff of the defect, and that there is accordingly no evidence of fraudulent concealment. Plaintiff, on the other hand, claims that despite the recall, Wal-Mart knew at the time she purchased the food processor that its safety interlock feature was dysfunctional yet continued to induce consumers to purchase the machine. In addition, as to Plaintiff's punitive damages claim, Wal-Mart argues there is no clear and convincing evidence that Rose, as a managing agent for Wal-Mart, acted with “oppression, fraud, or malice, ” and thereby subjected Wal-Mart to exemplary damages, when she decided not to pull the food processor from store shelves ...


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