Financially troubled footwear maker Crocs, Inc. (NASDAQ: CROX) has recently settled at least five design defect lawsuits rather than contest allegations that its popular foam rubber clogs are unsafe for children to wear on moving escalators.

Since February 2008, parents of at least 11 children allegedly injured when their clogs got caught in an escalator have sued Crocs for product liability, breach of warranty, and failure to warn of a design defect. The company, the suits say, knew of the potential danger of escalator entrapment but did nothing to warn consumers.

Sanjay and Marisela Prakash of Miromar Lakes, Fla., filed the most recent complaint in April, alleging their 4-year-old son nearly lost a toe after his foot got stuck in a Miami International Airport escalator. The suit seeks $6 million in damages and, judging by the way things have gone in other cases, the Prakashes are likely to receive a settlement.

According to court records, five cases have been settled within a year or less of being filed and only one of those cases -– that of an injured 3-year-old girl from Kentucky -– got anywhere near trial.

The child, identified only as the daughter of Alison Cox Pregliasco of Louisville, was wearing Crocs when her foot got caught in the sidewall of an escalator at Atlanta's Hartsfield International Airport in June 2008. She was with her mother, her twin sibling, and a friend of her mother's at the time.

In a motion for summary judgment, Crocs attorney Julie M. Walker of Denver said the case should be dismissed in part because Pregliasco admitted in her deposition that she did not read the safety warning on the escalator and violated safety rules, including those stating “no strollers on escalator” and “face forward at all times.”

“That Ms. Pregliasco chose to ignore the obvious danger, and ignore the warning signs posted on the escalator about rider safety, does not shift the responsibility to Crocs as a shoe manufacturer to warn her again of this same hazard,” Walker argued.

Because Pregliasco failed to read the escalator safety warning “and/or convey the information to the children,” she continued, “there is no reason to believe” Pregliasco would have read a warning tag on Crocs or that “the accident would not have occurred had a warning been attached to the shoes.”

Crocs, however, agreed earlier this month to a settlement of the case before Pregliasco even responded to the motion, averting a trial which had been set for February 2010. Her attorney had previously disputed the parental irresponsibility argument.

“The issue is [parents] not knowing of what will happen when their child's foot makes contact with the side of an escalator when that foot is in a Croc,” Andrew M. Laskin of New York  said.

Having lost $185 million in 2008, recently laid off a third of its workforce and been sued for providing false information to shareholders, Crocs has plenty of incentive to avoid costly design defect litigation.

Of the pending federal court cases against Crocs, two including the Prakashes' have been referred to mediation and another is in discovery. Laskin represented the plaintiffs in four of the five cases that have settled.

By Matthew Heller
7/26/09