Space Heater Recall Nets $1.6 Million for QVC

(CN) - QVC can collect more than $1.6 million from the manufacturer of smoking, fire-catching space heaters that it sold to thousands of home shoppers, a federal judge ruled.

The multinational home-shopping giant bought more than 28,000 electric space heaters from MJC America dba Soleus International between 2007 and 2008. QVC sold more than 19,000 heaters between December 2007 and March 2008.

In January 2008, nearly 100 QVC customers complained that their newly bought heaters were smoking, overheating, sparking, melting, emitting odors of burning, and/or catching fire.

Soleus repeatedly told QVC quality assurance senior engineer Shawn Fitzgerald in February that any heaters with rust or burnt wires must have been used improperly outside of clients' homes and thereby tempered by foreign debris.

Soon thereafter, Soleus representative Gary Mickles sent an email one of its sales managers asking whether anyone had seen "what Shawn [Fitzgerald] wrote back to us when we gave him that bullshit about water and grease getting into the units I sent back?"

Fitzgerald had Intertek, an independent testing company, evaluate the heaters in March 2008. Intertek concluded that poor quality wiring had caused the units to overheat.

After communicating this information to Soleus, QVC recalled the heaters in April 2008 under the Consumer Product Safety Act (CPSC). It sued Soleus for breach of contract that summer.

The Eastern District of Pennsylvania granted QVC summary judgment in July 2011, and U.S. District Judge Thomas O'Neill Jr. entered judgment in favor of QVC on Oct. 22, 2012.

QVC was not required to limit the scope of the heater recall, the ruling states.

"The implied duty of good faith and fair dealing cannot be used to create such an obligation," he wrote. "Indeed, Section 5 of the Purchase Orders explicitly provides that QVC was entitled to make such a determination 'in its sole discretion' after making a reasonable determination that any heaters sold to its customers contained any defect."

"By supplying heaters to QVC with defective crimp connections, Soleus broke its promise to QVC that all of the heaters would be free from all defects, including latent defects," O'Neill added. "QVC was not obligated to prove that all of the heaters were defective to prevail on its breach of warranty claims and its breach of warranty claims are not limited to those heaters with actual defects."

The court rejected Soleus' claim that QVC should have investigated whether the crimping errors could be isolated to a particular batch.

"Clearly a serious injury might occur if a heater were to emit smoke or flames inside of a consumer's residence," the 53-page opinion states. "Because I find that QVC reasonably determined that certain of the heaters contained a defect, QVC was entitled to exercise its discretion to participate in the CPSC's Fast Track recall program for the heaters."

Soleus also failed to convince the court that QVC failed to mitigate.

"Once Soleus had notice that QVC intended to pursue a recall of the heaters, Soleus did not request from QVC any information that would have helped it to narrow the number of heaters subject to recall," O'Neill wrote. "Further, Soleus has not put forth any evidence to support a conclusion that the wire-crimping problem was in fact limited to an identifiable subset of the heaters. I find that Soleus has not met its burden of proving QVC's failure to mitigate."

QVC is entitled to recover more than $1.6 million in damages, plus attorneys' fees and prejudgment interest.

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