July 16, 2024
Distributor Cleared in Venture Lighting Fire Lawsuit
Case claiming $1.5 million in damages continues against Venture Lighting and other defendants
A federal judge has dismissed claims against GrowGeneration Corp. (NASDAQ: GRWG) in a lawsuit stemming from a 2020 fire at a cannabis cultivation facility in Cumberland, Maryland. The case, originally filed in October 2022 by National Fire & Marine Insurance Company, continues against other defendants, including Ohio-based Venture Lighting International and its parent company, Advanced Lighting Technologies. Venture Lighting and Advanced Lighting Technologies deny the insurance company's allegations implicating the companies in the fire's cause.
U.S. District Judge Matthew J. Maddox granted GrowGeneration's motion to dismiss, ruling that the plaintiff failed to establish GrowGeneration's liability as a successor to Chlorophyll Inc., the original distributor of the lighting products allegedly involved in the fire.
GrowGeneration's involvement
GrowGeneration, the nation's largest chain of specialty hydroponic and organic garden centers, boasts a significant presence in the horticultural products industry. With 63 retail and distribution centers across 14 states and an active e-commerce platform, the company achieved $226 million in revenues for 2023.
GrowGeneration became involved in the case due to its 2018 acquisition of certain assets from Chlorophyll Inc. The plaintiff argued that this acquisition made GrowGeneration liable for Chlorophyll's actions as a successor company.
Details of the fire incident
The lawsuit details a catastrophic incident that occurred on August 17, 2020. According to the complaint, a Venture Lighting Sunmaster 1000 Watt High Pressure Sodium (HPS) lamp, installed in an E. Papillon light fixture, exploded while in operation at Manticorp LLC's cannabis cultivation facility. The failure allegedly resulted in hot, molten metals, electrical arcs, and other byproducts dropping onto combustible materials below, igniting a fire.
The blaze reportedly caused significant damage to the property, including the building structure, equipment, cannabis products being cultivated, and Manticorp's overall business operations. National Fire & Marine Insurance, as Manticorp's insurer, claims it paid out $1,547,849 for the damages incurred.
The complaint alleges that the Sunmaster lamp, designed and manufactured by Advanced Lighting and Venture Lighting, and the E. Papillon fixtures, imported by pHive.8 and supplied by Chlorophyll – which was eventually acquired by GrowGeneration – were defective and unreasonably dangerous. The plaintiff asserts that the defendants were negligent in their roles as manufacturers, suppliers, and distributors by providing products that were defective in design, manufacture, and assembly.
Court's decision
Judge Maddox found that the plaintiff's third amended complaint did not provide sufficient facts to support GrowGeneration's liability under the "mere continuation" exception to successor liability rules. The court noted that while former Chlorophyll employees joined GrowGeneration, this alone was not enough to establish successor liability.
Importantly, the dismissal applies only to GrowGeneration. The case continues against the other defendants, including the manufacturers of the allegedly defective lamp and importers of the fixture.
