Appliance Maker Gree Sanctioned With Default in Fire Suit

Aug. 19, 2021, 6:45 PM

Gree USA Inc.'s punishment for lackluster document searches and violation of a related court order is a default finding of liability for a house fire blamed on a dehumidifier it sold, a federal court in Indiana ruled.

Damages for the home’s destruction are still to be determined, Judge James Patrick Hanlon said Wednesday for the U.S. District Court for the Southern District of Indiana.

Gree dehumidifiers caused $19 million in property damage in the U.S., the Consumer Product Safety Commission estimated in November 2016. The agency assessed one of its highest-ever penalties, $15.5 million, against Gree in March 2016 for allegedly failing to report fires caused by the dehumidifiers, which were sold under 13 brand names, including Frigidaire, GE, and Kenmore. Gree also improperly used the UL certification mark and lied to CPSC staff, the agency said.

Numerous house-fire cases are pending against Gree and related companies based in China and Hong Kong, many brought by insurance companies that covered their policyholders’ expenses.

Here, Anthony and Barbara Avenatti allege their Gree dehumidifier caught fire while they were home. They sustained injuries while escaping, and their home and possessions were completely destroyed, they say. Among the alleged losses was a firearms collection worth nearly $500,000.

The Avenattis sued several Gree entities and MJC America Ltd., which does business as Soleus International Inc. and is allegedly related to Gree.

The court found in March 2021 that the companies made boilerplate objections to the Avenattis’ discovery requests, and that MJC in particular put forth “some of the most stunningly meritless arguments the undersigned has seen in over a decade on the bench.” It ordered the companies to provide prompt, complete, and unequivocal discovery responses.

But they didn’t even attempt to comply fully with the order, according to a magistrate judge’s July 26 report. “There is simply no way that Defendants’ behavior in this case can be characterized as mere mistake or carelessness,” Magistrate Judge Mark J. Dinsmore said in recommending the sanction of default. The “ultimate sanction” is justified by a “clear record of delay or contumacious conduct,” he said.

Hanlon accepted the recommendation and entered the default. The parties are expected to propose a plan for determining the amount of damages.

Matthiesen Wickert & Lehrer SC represents the Avenattis. Clendening Johnson & Bohrer PC and Gordon Rees Scully Mansukhani LLP represented the defendants.

The case is Avenatti v. Gree USA, Inc., S.D. Ind., No. 2:20-cv-00354, 8/18/21.

To contact the reporter on this story: Martina Barash in Washington at mbarash@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com

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