Amazon cannot be held liable for selling an allegedly defective product when the online purchasing site merely helped complete the purchase between the buyer and manufacturer, a federal appeals court ruled Wednesday in excusing the web-based company of liability for the Burtonsville house fire potentially caused by a lamp bought through the website.
In its published 3-0 decision, the 4th U.S. Circuit Court of Appeals said Amazon was just an intermediary for Trung Cao’s online purchase of a Dream Light LED headlamp as a gift for his friends Minh and Anh Nguyen.
Amazon’s purchase “fulfillment” role does not make it the seller of Dream Light’s product under Maryland law, the 4th Circuit held.
Maryland law defines sale as the transfer of title from its owner, in this case Dream Light, to the buyer, Cao, the 4th Circuit said. Amazon, having never taken title to the headlamp, could not be the seller, the court added.
“In short, Amazon functioned much like an auctioneer, a broker, a consignee, or a bailee, none of whom actually possesses title but nonetheless is, if it is a merchant, authorized to effect a transfer to the buyer of title held by the owner – i.e., the seller,” Judge Paul V. Niemeyer wrote for the court.
The 4th Circuit’s decision was a defeat for Erie Insurance Co., which sued Amazon in an effort to recover the $313,000 the underwriter had paid on its homeowners’ policy to the Nguyens, after concluding the gift headlamp malfunctioned and caused the fire. Senior U.S. District Judge Roger W. Titus, of Greenbelt, had earlier dismissed the lawsuit, similarly concluding Amazon was not the seller under Maryland law.
Affirming Titus’ dismissal, the 4th Circuit rejected Erie’s argument that Cao’s transaction with Amazon indicates the online service was the actual seller of the Dream Light product, as Amazon advertised the product, collected credit card payments from buyers and provided for the product’s shipment to purchasers.
The 4th Circuit held that Amazon’s actions show it took possession – but never title — of the headlamp at its Virginia transfer station before completing the transaction between Dream Light and Cao. Thus, Amazon – which received a logistics services fee from Dream Light — was not the seller under Maryland law, the court added.
The 4th Circuit also noted Amazon stated on its website that the headlamp was being “sold by Dream Light.”
“While Amazon does in fact sell products that it owns on its website and thus would be considered a seller of those products, in this case it facilitated the sale for Dream Light under its fulfillment program,” wrote Niemeyer, joined by Chief Judge Roger L. Gregory and Judge Diana Gribbon Motz.
“Although Amazon’s services were extensive in facilitating the sale, they are no more meaningful to the analysis than are the services of UPS Ground, which delivered the headlamp to Cao,” Niemeyer added. “Neither Amazon nor UPS Ground was a seller incurring liability for the defective product.”
Motz, in a concurring opinion, stated that Amazon’s role as an online purchase fulfiller, but not owner, “disrupts the traditional supply chain” and “shields it from traditional products liability whenever state law strictly requires the exchange of title for seller liability to attach, in many cases forcing consumers to bear the cost of injuries caused by defective products (particularly where the formal ‘seller’ of a product fails even to provide a domestic address for service of process).”
But these strict states, such as Maryland, can change their laws to keep up with the changes wrought by online services, Motz added.
“Although at the moment, Maryland law supports the result we reach, much of the state’s product liability law was adopted at a time when the American economy operated much differently than it does now,” Motz wrote. “(N)othing in today’s holding prevents Maryland’s own courts or legislators from taking up and resolving these difficult, fast-changing and cutting-edge issues differently.”
Erie Insurance’s attorney said he takes solace in Motz’s concurrence, adding that the judge “basically invites state courts and legislatures both to take a really close look” at their narrow, title-based definitions of the term “seller.”
“This was today,” John Weston said of the loss in the 4th Circuit. “But it is a bell that’s going to ring as a warning to Amazon that things aren’t going to go their way.”
Weston is with Sacks Weston Diamond LLC in Philadelphia.
Amazon’s counsel, Brendan Murphy, declined to comment on the decision. Murphy is with Perkins Coe LLP in Seattle.
The case was in federal court based on the diversity of citizenship between Pennsylvania-based Erie Insurance Co. and Washington-based Amazon and an amount in controversy exceeding $75,000.
The 4th Circuit rendered its decision in Erie Insurance Co. v. Amazon.com Inc., No. 18-1198.