Fed. 4th Cir.

As a Distributor, Amazon Not Liable for Defective Product

The Fourth Circuit, applying Maryland law, upheld a district court ruling that held Amazon.com Inc. (“Amazon”) was not liable for a house fire allegedly caused by a lamp sold on its website because, as related to this product, Amazon was only a distributor, not a seller.

In the underlying case, a defective lamp purchased on Amazon’s website allegedly caused a house fire totaling $300,000 in damages. The homeowner’s insurer, Erie Insurance Company (“Erie”), covered the cost. According to transaction records, the lamp was sold by Dream Light and the order was fulfilled by Amazon. This was possible because Dream Light and Amazon had entered into an agreement where Amazon would provide logistical services for a fee. Under the agreement, Dream Light shipped its products to an Amazon warehouse where they were stored until an order was received and Amazon would fulfill the request. 

Erie sued Amazon to recover the loss from the house fire arguing that Amazon was the seller of the lamp and should be liable for the damages. Specifically, Erie argued that the agreement granted Amazon such a high degree of control over the sale of the lamp that it could reasonably be considered the seller. Erie argued that the arrangement “doesn’t make [Amazon] any different than if you go to a Home Depot and . . . bought the same product from a Home Depot.” In effect, Dream Light’s role in the transaction was “passive” while Amazon was the “controlling party.”

While the court recognized that under Maryland law the seller of a defective product is liable for damages resulting from a defect, it found that Amazon was not the seller. The court stated that the ordinary meaning of seller is “one that offers [property] for sale,” and sale is defined as “the transfer of ownership of and the title to property from one person to another for a price.” Therefore, the court concluded that to hold Amazon liable as the seller, it would be necessary for Amazon to have transferred title of the lamp to the purchasers. Amazon, however, never possessed title to the lamp and, thus, could not be its seller. The court explained that “shippers, warehousemen, brokers, marketers, auctioneers, and other bailees or consignees, who do not take title to property during the course of a distribution but rather render services to facilitate that distribution or sale, are not sellers.” The court concluded that title remained with Dream Light until it was transferred to the purchaser of the lamp. The court noted, however that Amazon held title to items it owns, and, in those instances, it would be liable for the sale of a defective product. 

Notably, in a concurring opinion, Judge Diana Gribbon Motz explained that state courts and legislatures would need to grapple with the new complexities Amazon has inserted into the realm of product liability law. Erie Ins. Co. v. Ebay, Inc., No. 18-1198 (4th Cir. May 22, 2019).