TEXAS SUPREME COURT TO CONSIDER THE LIABILITY OF AMAZON FOR SELLING DEFECTIVE PRODUCTS

TEXAS SUPREME COURT TO CONSIDER THE LIABILITY OF AMAZON FOR SELLING DEFECTIVE PRODUCTS

The courts in the US have different opinion regarding whether Amazon is a seller and whether it is liable for selling any faulty products through its website. The Supreme Court of Texas dealt with this question in the case of McMillan v. Amazon.com, Inc., No. 20-20108, 2020 WL 7417454 (5th Cir. Dec. 18, 2020).

Amazon.com Inc. is considered to be the largest and biggest online shopping center today selling and shipping millions of products every day. Post the COVID-19 pandemic, people changed their shopping preferences to online as there was no physical contact to be made, hence making Amazon the most globally accepted online shopping center. Many stores and online retailers struggled for their survival post COVID but Amazon reported record sales. But the real question is whether Amazon is liable if the product purchased from the Amazon harms a customer? Is Amazon liable when it has no role of manufacturing and designing the product?

In McMillan v. Amazon.com, a young girl swallowed some batteries of a remote which were ordered through Amazon. The trial court found Amazon liable for this incident and for selling of substandard quality of batteries of a remote. Further to this, Amazon appealed to the Fifth Circuit contending that Amazon is not an original seller but only a medium to sell a product.

The Fifth Circuit held that “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 Texas Supreme Court accepted the certified question on January 8, 2021, requesting briefing on the merits. The Texas Supreme Court also set the case for oral argument.

The Fifth Circuit is not the only court to address the issue of whether an online retailer can be held liable for defects in the products it sells. Several state and federal courts across the country have issued rulings addressing similar questions. See e.g., Oberdorf v. Amazon.com Inc., 818 F. App’x 138, 143 (3d Cir.), certified question accepted, 237 A.3d 394 (Pa. 2020) (certifying the question of whether Amazon is a seller to the Pennsylvania Supreme Court); 

The Eastern District of New York had observed that “[w]hile many courts that initially considered the issue found in Amazon’s favor, some more recent cases have reached different results, with appeals on a few of these cases still pending. Indeed, this is a developing area of law.” Philadelphia Indem. Ins. Co. v. Amazon.com, Inc., 425 F. Supp. 3d 158, 163 (E.D.N.Y. 2019)

The Ninth Circuit recently heard a case in which an allegedly defective hoverboard injured an Amazon customer. The court ultimately sided with Amazon, affirming dismissal and concluding that Amazon is not a “seller” under the Second Restatement of Torts § 402A as adopted by Arizona state law. State Farm Fire & Cas. Co. v. Amazon.com, Inc., No. 19-17149, 2020 WL 6746745, at *3 (9th Cir. Nov. 17, 2020).

On the contrary, the California Court of Appeal held that Amazon should be liable for selling faulty batteries and defective proucts. Also, Amazon should bear the cost of liability between itself and its third-party sellers. Bolger v. Amazon.com, LLC, 53 Cal. App. 5th 431, 438–39 (2020).

As e-commerce continues to dominate Americans’ shopping preferences, this area of law will continue to develop and adverse rulings against Amazon will likely encourage consumers to file suit.