Is Amazon a seller under Texas products liability law? That is the question before the Texas Supreme Court in a case whose decision will undoubtedly reverberate around the country. The case stems from an incident involving a 19-month-old toddler who swallowed a lithium-ion battery while handling a generic Apple TV remote control purchased on the Amazon website. The toddler sustained permanent injuries to her esophagus.
The remote was manufactured in China and sold by Chinese third-party seller, Hu Xi Jie, through the company’s “Fulfillment by Amazon” service, in which Amazon stores sellers’ products at its warehouses until they are sold and shipped to purchasers.
The child’s mother, Morgan McMillan, sued the third-party seller and Amazon alleging strict liability and negligence in 2018. The third-party seller never answered or made an appearance on the case. U.S. District Judge Vanessa Gilmore granted McMillan summary judgment, finding Amazon was liable because it placed the product in the stream of commerce. Amazon appealed the decision arguing that because the remote was purchased from a third-party seller it cannot be deemed the remote’s seller under the Texas Products Liability Act, chapter 82 of the Civil Practices and Remedies Code. Judge Gilmore granted the parties’ joint motion to certify the order for interlocutory appeal stating it presented a “controlling question of law” on which there was “substantial ground for difference of opinion.” Fifth Circuit Judge Don Willet authored the opinion certifying the question, which he described as a “…determinative question of Texas law with far-reaching consequences and no instructive state-court guidance.” Texas law makes a distinction between those who place a product into commerce, versus those who facilitate the stream of commerce.
In the Pennsylvania case, Heather Oberdorf was walking her dog on a retractable leash, when the dog lunged, the d-ring on the collar broke. The leash recoiled back, hitting Oberdorf in the face and eyeglasses, resulting in permanent blindness in her left eye. The collar was purchased on Amazon from a seller named “The Furry Gang.” Neither Amazon nor the plaintiff were able to locate “The Furry Gang.” Oberdorf sued Amazon in the U.S. District Court for the Middle District of Pennsylvania alleging claims for strict liability, negligence, breach of warranty, and other related claims. Following Amazon’s Motion for Summary Judgment, the District Court found that, under Pennsylvania law, Amazon was not liable for Oberdorf’s injuries. In its opinion, the District Court emphasized that a third-party vendor rather than Amazon itself listed the collar on Amazon’s online marketplace and shipped the collar directly to Oberdorf, concluding that Amazon is not a “seller” under Pennsylvania products liability law. The Obderdorfs appealed to the Third Circuit. A 3-judge panel decided the issue, reversing the lower court and finding that Amazon was a “seller.” Two months after the Pennsylvania Supreme Court agreed to consider the case, Amazon reached a settlement with the Oberdorf’s for an undisclosed amount. The settlement delays the decision as to whether online retailers can be sued in Pennsylvania for potentially defective products sold on their websites for the time being.
The certified question read as follows: “Under Texas products liability law, is Amazon a ‘seller’ of third-party products sold on Amazon’s website when Amazon does not hold title to the product but controls the process of the transaction and delivery through Amazon’s “Fulfillment by Amazon” program?”
The Arguments For and Against Amazon
On March 25, lawyers for Amazon and McMillan argued before the Texas Supreme Court. Amazon lawyer Brendan Murphy of Perkins Coie argued that liability for defective products was limited “to those who actually place the product in the stream of commerce,” and that Amazon did not qualify. The certified question is directed toward a specific subset of products listed in the product description and order confirmation pages as “sold by” a vendor other than Amazon. These transactions are not the same as purchases of products “sold by” Amazon, products listed as “sold by” third parties and shipped directly to consumers by the third-party vendor, and products sold through other websites or stores and delivered through the “Fulfillment by Amazon” program.
Jeff Meyerson of the Meyerson Law Firm represents McMillan and argued that Amazon had performed the exact same functions as a brick-and-mortar store. “Amazon is just this giant behemoth that people should be able to trust, but they really can’t, and the public’s not aware that Amazon is not taking proactive measures to make sure their products are safe,” he said during oral arguments. Myerson also stated that the exact remote that caused the toddler’s injuries was still available for sale on Amazon’s website despite Amazon removing the page and terminating the seller.
Amazon’s liability for injuries from unsafe products that consumers purchase from third-party sellers has been questioned in other states including New York, California, New Jersey, and Pennsylvania. Results have been mixed and Amazon attorneys have made varying arguments as to why the company should not be held liable for defective and dangerous third-party products. In November 2020, the Ninth Circuit Court of Appeals ruled Amazon was not a seller under Arizona law. A California state appellate court ruled that it could be liable in Bolger v. Amazon; the California Supreme Court declined to review the ruling. The Third Circuit Court of Appeals asked the Pennsylvania Supreme Court to interpret its laws for a definitive answer, similar to the McMillan case.
During arguments in the McMillan case, plaintiff attorney Meyerson said that after deposing an executive with Amazon’s product safety team he became even more concerned, and that the executive was “just asleep at the wheel.” He said a seller who was kicked off the marketplace could simply create a new company, noting that McMillan only learned Hu’s name through her lawsuit and that the seller on Amazon was named “USA Shopping.” Justice Debra Lehrman asked if Amazon is not held liable and cannot be sued for injuries caused by products sold on its platform, how would consumers have recourse and how can they be expected to navigate the third-party seller landscape. Attorneys for Amazon argued that this was a policy concern better addressed by the state legislature than the court.
The Texas Supreme Court is expected to issue a ruling on the case this summer.
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The Mass Tort Institute is a consortium of industry leaders dedicated to providing education, training, and networking opportunities for those advocating on behalf of mass tort victims.
