Allstate Ins. Co. v. Electrolux Home Prods., Inc., Civil Action No.: 4:16-cv-03666-RBH

• Decision Date: 19 May 2017
• Docket Number: Civil Action No.: 4:16-cv-03666-RBH
• Court: U.S. District Court — District of South Carolina
• Parties: Allstate Insurance Company, Allstate Property & Casualty Insurance Company, Allstate Indemnity Company, and Allstate Vehicle and Property Insurance Company, Plaintiffs, v. Electrolux Home Products, Inc., Defendant.

Allstate Insurance Company, Allstate Property & Casualty Insurance Company,
Allstate Indemnity Company, and Allstate Vehicle and Property Insurance Company, Plaintiffs,
v.
Electrolux Home Products, Inc., Defendant.

Civil Action No.: 4:16-cv-03666-RBH

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF SOUTH CAROLINA FLORENCE DIVISION

May 19, 2017

ORDER

This is an insurance subrogation action. The matter is before the Court for a ruling on Defendant's Motion to Sever, to Dismiss, and to Transfer Divisions. See ECF No. 6. The Court denies in part and grants in part Defendant's motion for the reasons herein.¹

Background

Plaintiffs provided insurance coverage to five different property owners in South Carolina who suffered losses in fires allegedly caused by a defective design in clothes dryers manufactured by Defendant. Plaintiffs, as subrogees of their insureds, filed this products liability action against Defendant alleging causes of action for strict liability and negligence and seeking both actual and punitive damages. See Complaint [ECF No. 1]. The Court has diversity jurisdiction over this matter pursuant to 28 U.S.C. § 1332.

In their complaint, Plaintiffs allege Defendant designs, manufactures, and sells gas and electric "ball-hitch" style clothes dryers. Id. at ¶ 3. The ball-hitch design includes the following features: (1)

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a dryer drum that rotates around a fixed rear axis and contains a void space located directly behind the dryer drum, (2) a blower motor encased in a blower housing, and (3) a trap duct with a mesh lint trap located in front of the dryer cabinet. Id. at ¶¶ 12-13. In 1995 and 1996, Defendant changed the materials used in certain components—including the blower housing and trap duct—from steel to combustible plastics. Id. at ¶¶ 14-16. During testing, a dryer lit on fire: the fire ignited in the dryer cabinet and spread to the plastic trap duct. Id. at ¶ 18. Further testing showed a fire that started in the dryer cabinet could spread to the blower housing and trap duct, where the plastic components could melt and spread fire outside the dryer cabinet. Id. at ¶¶ 19-20. Additionally, Defendant received consumer complaints and warranty claims about fires in the dryers, and one of Defendant's product engineers acknowledged during an investigation by the Japanese government that lint could travel from the dryer drum and ignite either the contents of the drum or lint accumulated in the lint trap. Id. at ¶¶ 21-22, 24-25. The Japanese government forced a recall of Defendant's ball-hitch dryers in 2005, but Defendant never issued a similar recall in the United States and never informed the Consumer Product Safety Commission of the fire risks associated with the dryers. Id. at ¶¶ 25-28.

Plaintiffs further allege that their insureds/subrogors had Defendant's ball-hitch dryers installed on their properties and that the dryers ignited and caused significant fire-related property damage. Id. at ¶¶ 31-34. Plaintiffs' complaint includes the following chart summarizing the five separate losses:

	Subrogors	Dates of; Loss	Loss Locations	[Plaintiffs] Paid; Out in Excess of
a.	Lewis Mark & Erin Bryant	7/26/2015	117 Elrod Place Drive; Piedmont, South Carolina	$23,917.81
b.	Mark W. & Erika Chapman	11/18/2013	1112 South Edisto Drive; Florence, South Carolina	$33,208.77
c.	James M. & Laura Jennings	11/19/2014	1115 Flint Hill Street; Rock Hill, South Carolina	$226,806.16

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d.	Carrie C. Samuel	11/29/2013	103 Manning Court; Greenwood, South Carolina	$15,138.28
e.	Cynthia Tipler	2/15/2014	26 War Admiral Way; Greenville, South Carolina	$12,971.92

Id. at ¶ 4. As a result of the losses caused by the fires, Plaintiffs' insureds/subrogors made claims on their respective insurance policies, and Plaintiffs duly paid these claims. Id. at ¶ 35. Plaintiffs then brought this subrogation action against Defendant, and Defendant filed the instant Motion to Sever, to Dismiss, and to Transfer Divisions. See ECF No. 6. Plaintiffs filed a response in opposition, and Defendant filed a reply. See ECF Nos. 8 & 9.

Discussion

In its motion, Defendant requests that the Court (1) sever the five claims asserted in Plaintiffs' complaint, (2) dismiss four of the severed claims for lack of subject matter jurisdiction, (3) transfer the remaining claim to the Rock Hill Division of this Court, and (4) dismiss Plaintiffs' claim for punitive damages. See ECF No. 6.

I. Severance

Defendant asserts Plaintiffs' complaint asserts "five improperly consolidated claims," and Defendant asks the Court to sever these claims pursuant to Federal Rule of Civil Procedure 21. ECF No. 6 at 1; ECF No. 6-1 at pp. 3-10. Defendant argues severance is necessary to avoid unfairness, prejudice, and jury confusion. ECF No. 6-1 at p. 3. As explained below, the Court finds severance is not warranted.

A. Applicable Law

"Under the Rules [of Civil Procedure], the impulse is toward entertaining the broadest possible scope of action consistent with fairness to the parties; joinder of claims, parties and remedies is strongly

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encouraged." United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 724 (1966). Rule 18 permits a party to join "as many claims as it has against an opposing party." Fed. R. Civ. P. 18(a). Rule 20 governs permissive joinder of parties and allows plaintiffs to join in one action if "(A) they assert any right to relief jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences; and (B) any question of law or fact common to all plaintiffs will arise in the action." Fed. R. Civ. P. 20(a)(1).

Rule 21 allows a district court to "sever any claim against a party," even when that claim has been properly joined. Fed. R. Civ. P. 21; see Tinsley v. Streich, 143 F. Supp. 3d 450, 462 (W.D. Va. 2015). "Courts typically use Federal Rule of Civil Procedure 20(a)(1)'s preconditions for permissive joinder to evaluate whether severance is appropriate." Allstate Ins. Co. v. Electrolux Home Prod., Inc., No. 1:16CV1946, 2016 WL 6995271, at *1 (N.D. Ohio Nov. 30, 2016). There is a presumption against severance, and the party seeking severance must "show that (1) it will be severely prejudiced without a separate trial; and (2) the issue to be severed is so 'distinct and separable' from the others that a trial of that issue alone may proceed without injustice." Equal Rights Ctr. v. Equity Residential, 483 F. Supp. 2d 482, 489 (D. Md. 2007). To determine whether severance of claims is proper, courts consider: (1) whether the issues sought to be tried separately are significantly different from one another; (2) whether the separable issues require different witnesses and different documentary proof; (3) whether the party opposing severance will be prejudiced if it is granted; and (4) whether the party requesting severance will be prejudiced if the claims are not severed. Grayson Consulting, Inc. v. Cathcart, No. 2:07-CV-02992-DCN, 2014 WL 1512029, at *2 (D.S.C. Apr. 8, 2014) (quoting Equal Rights Ctr., 483 F. Supp. 2d at 489).

B. Analysis

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Initially, the Court notes that similar consolidated cases involving the same alleged design defect are pending in other courts, that Defendant has moved to sever and dismiss the joined claims in each case, and that all but one² of the motions has been denied. See Allstate Ins. Co. v. Electrolux Home Prods., Inc., No. 1:16-cv-09639, Doc. 23 (N.D. Ill. Mar. 31, 2017) (forty-six claims); Allstate Ins. Co. v. Electrolux Home Prods., Inc., No. 16cv6804, Doc. 27 (S.D.N.Y. Dec. 5, 5016) (eighteen claims); Allstate Ins. Co. v. Electrolux Home Prods., Inc., No. 1:16CV1946, 2016 WL6995271 (N.D. Ohio Nov. 30, 2016) (six claims); Allstate Ins. Co. v. Electrolux Home Prods., Inc., No. CV 16-6514, Doc. 25 (C.D. Cal. Nov. 3, 2016) (twenty-four claims); Allstate Ins. Co. v. Electrolux Home Prods., Inc., No. 16-4276, Doc. 17 (E.D. Pa. Sept. 22, 2016) (nine claims); State Farm Fire & Cas. Co. v. Electrolux Home Prod., Inc., No. 11 C 8946, 2012 WL 1287698 (N.D. Ill. Apr. 16, 2012) (210 claims). These courts have reached similar conclusions and found claims regarding the same alleged design defect arise from the same transaction or occurrence.³

Here, Defendant argues that it has manufactured over 2,000 different models of ball-hitch clothes dryers since the 1990s, and that each dryer was separately installed and maintained. ECF No. 6-1 at 3-7. However, Plaintiffs' allegations do not indicate the fires would have occurred in only certain models or under certain conditions. Instead, the allegations are that the same design defect was

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involved in the models at issue here. The Court finds Plaintiffs' five claims arise out of the same transaction or occurrence because they involve the same alleged design defect in ball-hitch dryers produced by Defendant. See, e.g., Allstate Ins. Co., No. 1:16-cv-09639, Doc. 23 at p. 6 (finding claims related to forty-six different dryer fires alleging a common design defect arose from the same transaction or occurrence); Allstate Ins. Co., 2016 WL 6995271, at *2-3 (same); State Farm, 2012 WL 1287698, at *5 (same).

Next, Defendant argues that although Plaintiffs' five claims may share common issues of law, there are "myriad factual differences between the five claims," "which will require different witnesses and evidence." ECF No. 6-1 at 4-7. Defendant cites examples of such factual differences, contending issues involving the installation, maintenance, and use of the particular dryer involved in each fire will vary from claim to claim.⁴ Id. Although Plaintiffs' five claims arise from separate fires, they all involve the same alleged defective design present in dryer models manufactured by Defendant. Moreover, Plaintiffs allege the same causes of action—strict liability and negligence—for all five claims. The fires occurred in South Carolina, and the substantive law of...