Wal-Mart agrees to contribute $25 million to settle gas can explosion lawsuits
By Lisa Myers and Rich Gardella, NBC News
(NBC) - The nation's largest retailer, Wal-Mart, has agreed to contribute about $25 million to settle unresolved lawsuits filed on behalf of consumers allegedly injured or killed in explosions involving portable plastic gas cans, according to court documents obtained by NBC News.
The money from Wal-Mart amounts to slightly more than 15 percent of a proposed $161 million fund that would settle dozens of lawsuits against the largest manufacturer of these cans, Blitz USA, records from U.S. Bankruptcy Court in Delaware show. A hearing on the proposed settlement is set for early next year.
The retail chain, the largest seller of plastic gas cans, sold tens of millions of Blitz gas cans. In agreeing to contribute toward the settlement, it does not acknowledge any safety defect in the Blitz cans.
Blitz, based in Miami, Okla., and formerly the nation's largest manufacturer of plastic gas cans, is now in bankruptcy and out of business, largely because of the lawsuits and previous payouts to victims of alleged gas can explosions.
Plaintiff attorneys representing individuals burned in alleged gas can explosion incidents have filed at least 80 lawsuits against can manufacturers in the last decade or so. Some have also targeted retailers that sold the cans.
Wal-Mart tells NBC News it's been named as a defendant in 24 of the lawsuits.
Those lawsuits allege that Blitz and Wal-Mart knowingly sold a defective product that could explode and produce catastrophic and sometimes fatal injuries, and refused to add a safety device, known as a flame arrester, to make the cans safer.
Blitz and other manufacturers have argued that any alleged injuries were caused by the users' own negligence and misuse, and that the cans were not at fault.
According to many scientific experts, a flame arrester – an inexpensive piece of mesh or a disk with holes – can reduce the likelihood of an explosion of a gas/air vapor mixture inside a gas can. They said the arrester can prevent a flame from entering the can by absorbing and dispersing its heat energy.
Parties to the lawsuits, including Blitz USA's estate, debtors, participating insurers and Walmart, have agreed to contribute $161 million to settle with many of the plaintiffs, while denying liability for the personal injury claims or that any defect in the cans is the cause of the incidents.
In depositions, Wal-Mart officials insisted that the manufacturer -- not Wal-Mart -- was responsible for the safety of the product. A former gas can buyer for Wal-Mart, Jacques DesHommes, said when questioned in 2010 for a lawsuit that even after being sued over alleged gas can explosions, the company did not conduct any tests or investigate whether explosions were actually occurring.
"Wal-Mart does not test the can, the products. The suppliers test the products," he said.
Diane Breneman, an attorney who has represented about 30 plaintiffs in gas can cases, claims Wal-Mart should have used its power years ago to demand these cans be made safer.
"If you repeatedly are sued in cases and the allegations are people are being severely burned or burning to death, you can't hide your head in the sand," Breneman said. "You're making money off of those cans. You have a responsibility at that point to investigate it, to do whatever is necessary, if you're going to continue to sell the product."
Wal-Mart spokesperson Brooke Buchanan said the retail chain was aware of the alleged explosion incidents through its involvement in lawsuits involving Blitz cans since 2005 (and one earlier product by another manufacturer in the early 1990s).
Buchanan acknowledged that Wal-Mart did not ask Blitz or any other can manufacturer to take any action to investigate the alleged explosion incidents, evaluate the safety of the cans or make changes to the can's design, such as adding a flame arrester.
Buchanan noted that such explosions are "very, very rare occurences" and said it's not proven that flame arresters will prevent them.
"We're waiting on industry experts," Buchanan said.
At NBC News' request, the Consumer Product Safety Commission analyzed available incident and injury databases and counted reports of at least 11 deaths and 1,200 emergency room visits that involved gas can explosions during the pouring of gasoline since 1998.
Both Breneman and Wal-Mart declined comment on the proposed settlement, which would cover those injured by gas can explosions between July 2007 and July 2012.
In a video statement provided in response to NBC News inquiries, Wal-Mart's Buchanan said, "These types of events are tragic and we're saddened that a small number of people have suffered injuries from the misuse of gas cans."
While acknowledging Wal-Mart did not ask Blitz to make changes to reduce the likelihood of flashback explosions, company officials who gave depositions in some of the lawsuits said Blitz was asked to make a different change in the product.
DesHommes said after customers complained about gas can spout leaking, Wal-Mart asked Blitz to change the spout. The company did so.
In a deposition in 2006, then-CEO and owner of Blitz USA, John C. "Cy" Elmburg, testified he asked the retailer to support a national campaign to educate consumers about the potential dangers of misusing gas cans, and about how to use them properly.
Wal-Mart officials acknowledged that Blitz asked Wal-Mart to support such a campaign. The officials told NBC News that Wal-Mart did not agree to help with the campaign, but did not explain why.
An internal corporate video from a company meeting in 2003, posted on YouTube by a communications company, shows a Wal-Mart official making a joke about a gas can exploding.
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In the video, a Wal-Mart employee wearing a helmet and sunglasses, drives what appears to be a motorized scooter down a store aisle and into a display of the red portable plastic gas cans, marked with a sign that reads "2 for $9.00." A chorus of shouted "whoas!" can be heard in the background as some of the cans fall to the ground.
The camera cuts to three officials on a stage, one of whom asks, "Whose gas can was that?"
Another chimes in, "It's a great gas can – it didn't explode!"
Buchanan told NBC News that the video was made two years before the first lawsuit involving a Blitz can that named Wal-Mart as a defendant. She later confirmed that a lawsuit involving an alleged gas can explosion in the 1990s had named Wal-Mart as a defendant. That lawsuit involved a different manufacturer, Rubbermaid, which no longer makes plastic gas cans, Buchanan said.
Asked why Wal-Mart did not ask Blitz USA to add flame arresters after it became aware of allegations in the lawsuits that the absence of a flame arrester had contributed to those incidents, Buchanan said, "Wal-Mart is a retailer, we rely on the experts."
Buchanan noted that when the issue was brought before the Consumer Product Safety Commission in 2011, the commission decided not to act.
But in response to an NBC News investigation published last week, the CPSC reviewed government reports about injuries from alleged gas can explosions and its own engineering data about flame arresters, then called on the industry to add the devices to portable gas cans.
"We believe this is the right process to determine if the product can be made even safer," Buchanan said. "We're looking forward to seeing their results. As always, we're continually working to offer customers high-quality products that meet and exceed their expectations."
(ASTM International last week released preliminary results from testing of flame arresters at a combustion lab at Worcester Polytechnic Institute in Massachusetts. The results showed that four of the 12 flame arrester designs from six manufacturers that were tested effectively prevented such explosions by stopping flame from passing into the can from the outside.)