IS AMAZON LIABLE FOR DEFECTIVE PRODUCTS IT MARKETS FOR OTHER VENDORS?

McMillan v. Amazon.com, Inc.
Supreme Court of Texas, No. 20-0979 (certified question accepted January 8, 2021)
Fifth Circuit Opinion by Judge Willett (linked here)
The Texas Supreme Court has accepted a certified question that could lead to one of the more important opinions of 2021: 

 “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 McMillan plaintiffs allege injuries to a 19-month-old child who swallowed a battery from a TV remote purchased on Amazon’s website. The listed seller was “USA Shopping 7693,” which Amazon traced to a vendor account owned by Hu Xi Jie—an individual or company that neither Amazon nor plaintiffs have been able to contact or serve. Amazon’s potential liability for the child’s injuries turns on whether it is a “seller” of the product under the Texas Products Liability Act, chapter 82 of the Civil Practice and Remedies Code. A federal district court held Amazon was a seller, i.e., “engaged in the business of placing the product in the stream of commerce.” The court granted the parties’ joint motion to certify the order for interlocutory appeal under 28 U.S.C. § 1292(b), as it presented a “controlling question of law” on which there was “substantial ground for difference of opinion.”

 Fifth Circuit Judge (and former Texas Supreme Court Justice) Don Willett authored the opinion certifying the question, which he describes as “a res nova, determinative question of Texas law with far-reaching consequences and no instructive state-court guidance.” Similar issues are under consideration or have been addressed by several courts, with mixed results. (A similar question has been certified by the Third Circuit to the Pennsylvania Supreme Court.)

To answer the question, the Texas Supreme Court will need to apply its “bricks-and-mortar precedents”—which distinguish between “those who place products in the stream of commerce” and those who merely “facilitate the stream”—to Amazon’s complex technology by which “millions of third-party merchants” get their products sold and delivered to customers.

To be clear, the certified question is directed to a specific (but large) subset of Amazon transactions—products listed in the product-description and order-confirmation pages as “sold by” a vendor other than Amazon and delivered from Amazon warehouses through the “Fulfillment by Amazon” (FBA) program. These transactions differ from other purchases, including products listed as “sold by” and delivered by Amazon, products listed as “sold by” third parties and shipped directly to customers by the vendor, and products sold through other websites or stores and delivered through the FBA program.

The Texas Supreme Court might determine the legal significance of these differences in the context of allocating liability for personal injuries attributed to allegedly defective products. Meanwhile, it behooves us all to pay attention to the “sold by” designation and the “Conditions of Use” we might have unknowingly agreed to as Amazon customers.

Stay tuned.

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