Amazon not liable for third party’s product, says Texas top court

By Brendan Pierson

(Reuters) – Amazon.com Inc cannot be held liable under Texas law for injuries caused by a third-party seller’s product that the e-commerce giant shipped from its warehouse, the state’s highest court has ruled.

The 5-2 decision, handed down Friday in a case brought by the mother of a toddler who suffered esophageal burns after swallowing a remote control battery, puts Texas in line with most other states whose courts have considered Amazon’s potential liability for third-party sellers’ products.

Jeff Meyerson of The Meyerson Law Firm, a lawyer for the mother, Morgan McMillan, could not immediately be reached for comment. Nor did Amazon or its attorney Brendan Murphy of Perkins Coie.

McMillan sued Amazon in 2018, alleging a knockoff Apple TV remote sold by a Chinese third-party seller, Hu Xi Jie, was defective and allowed the battery to pop out. The remote was sold through Amazon’s “Fulfillment by Amazon” service, in which the company stores sellers’ products at its warehouses and then ships them to buyers.

U.S. District Judge Vanessa Gilmore of the Southern District of Texas granted McMillan summary judgment, finding Amazon was liable because it had placed the product in the stream of commerce.

On appeal, the 5th U.S. Circuit Court of Appeals certified the question of whether Amazon was liable under Texas law to the Texas Supreme Court. The case was argued in March.

Justice Brett Busby, writing for the majority on Friday, found that the Texas Products Liability Act’s definition of “seller” does not extend to Amazon in the context of third-party products.

The law defines a seller as a “person who is engaged in the business of distributing or otherwise placing, for any commercial purpose, in the stream of commerce for use or consumption a product or any component part thereof.”

Busby said that definition must be read in the context of Texas common law, which has been shaped by the Third Restatement of Torts. He wrote that the court had previously recognized certain non-sale transactions, such as leasing, as giving rise to liability, but “refused to extend liability to all persons or entities involved in the distribution chain.”

“In sum, we conclude that when a product-related injury arises from a transaction involving a sale, sellers are those who have relinquished title to the allegedly defective product at some point,” he wrote.

Justice Jeffrey Boyd dissented, joined by Justice John Devine. He wrote that, using the “common, ordinary meanings” of the words in the Texas statute, Amazon was “unquestionably” a seller of products sold through Fulfillment by Amazon, since it “completely controls” the transaction once a product is in its warehouse.

Lawsuits have been filed in courts around the country in recent years seeking to hold Amazon liable for defective products from third-party sellers.

Though most courts have ruled in Amazon’s favor, a California state appellate court last year ruled it could be liable for products shipped through Fulfillment by Amazon. The state’s highest court declined to review that decision.

The case is Amazon.com Inc v. McMillan, Supreme Court of Texas, No. 20-0979.

For Amazon: Brendan Murphy of Perkins Coie

For McMillan: Jeff Meyerson of The Meyerson Law Firm