Erie Insurance Company v. Amazon.com, Inc.

925 F.3d 135
CourtCourt of Appeals for the Fourth Circuit
DecidedMay 22, 2019
Docket18-1198
StatusPublished
Cited by30 cases

This text of 925 F.3d 135 (Erie Insurance Company v. Amazon.com, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Erie Insurance Company v. Amazon.com, Inc., 925 F.3d 135 (4th Cir. 2019).

Opinion

NIEMEYER, Circuit Judge:

The main issue before us is whether Amazon.com, Inc., is subject to liability for a defective product that a customer purchased on its website from a third-party seller with Amazon "fulfilling" the transaction by storing the product and shipping it to the customer.

Trung Cao of Montgomery County, Maryland, purchased a headlamp on Amazon's website and then gave it to friends as a gift. The headlamp's batteries apparently malfunctioned, igniting the friends' house and causing over $ 300,000 in damages. Erie Insurance Company, which insured the house, paid the loss and now, as subrogee, is pursuing this action to obtain reimbursement from Amazon for negligence, breach of warranty, and strict liability in tort, arguing that Amazon has liability under Maryland law because it was the "seller" of the headlamp. In particular, Erie contends (1) that, based on the services that Amazon provided in the transaction, it was a seller; (2) that, in any event, Amazon was a "distributor," which Maryland law deems to be a seller; and (3) that Amazon was an "entrustee," as the term is used in Maryland's Uniform Commercial Code, and therefore Amazon passed title to the purchaser of the headlamp and thus should be considered a seller.

On Amazon's motion, the district court granted summary judgment to Amazon, concluding that Amazon was not the seller of the headlamp and therefore did not have liability for its defective condition. It also held that Amazon was immune from suit under the Communications Decency Act, 47 U.S.C. § 230 (c)(1), a federal law protecting internet intermediaries in the online publication of a third-party's information.

While we conclude that in this case Amazon is not immune under § 230(c)(1), we do agree with the district court that, in the circumstances of the transaction before us, Amazon was not the "seller" of the headlamp and therefore did not have liability under Maryland law for products liability *138 claims asserted by reason of the product's defective condition.

I

On April 9, 2014, Trung Cao, a resident of Montgomery County, Maryland, purchased online an LED headlamp - "for cycling, camping, [and] hiking" - and gave it as a gift to his friends, Minh and Anh Nguyen, who lived in Burtonsville, also in Montgomery County. Two weeks later, the headlamp malfunctioned, supposedly from a defective battery or batteries, igniting the Nguyens' house and causing $ 313,166.57 in damages. Erie Insurance Company, the Nguyens' insurer, paid the loss.

Cao purchased the headlamp on Amazon's website, and the document evidencing the transaction stated that the headlamp was "sold by: Dream Light" - and "Fulfilled by: Amazon." There can be no dispute that this information was displayed to Cao on the website when he purchased the headlamp. The headlamp was paid for by credit card and delivered to Cao on April 11, 2014, by UPS Ground.

The arrangement between Dream Light and Amazon was governed by Amazon's comprehensive "Amazon Services Business Solutions Agreement" and included "fulfillment" services offered by Amazon. Under the fulfillment program, Amazon provided logistics services for a fee. The seller could ship its inventory to an Amazon warehouse for storage and, once an order was received online for a product, Amazon would retrieve the product from inventory, box it, and ship it to the purchaser. In this case, Dream Light shipped its headlamps to Amazon's warehouse in Virginia, and, when Cao's order for one came in, Amazon packaged and shipped it to Cao using the third-party shipper, UPS Ground. As part of its fulfillment services, Amazon also collected payment and, after withdrawing its service fee, remitted the balance to Dream Light. Dream Light set the price for the headlamp and created the content of the product's description used on the Amazon site. While Dream Light was also allowed under the program to "offer any warranty," apparently no explicit warranty information was provided in this case.

After paying the fire loss, Erie Insurance Company, as subrogee, commenced this action against Amazon, asserting products liability claims based on its allegation that Amazon was the "seller" of the headlamp and therefore had the liability attributable to sellers of defective goods under Maryland law.

On Amazon's motion, the district court granted summary judgment to Amazon, concluding that Amazon was not the "seller" and therefore was not liable to Erie. In reaching that conclusion, the court focused on the nature of Amazon's fulfillment services program:

The question is whether the circumstances of this case in which Amazon "fulfilled" the order converts Amazon into the status of the seller. ... The fulfillment role as far as Amazon is concerned is that it stored the product at the expense and risk of the seller Dream Light. That it allowed the merchandise to be advertised on Amazon's webpage. That if a purchase was made, Amazon would take the product from its fulfillment center, put it in a box and send it to the purchaser who made arrangements to buy the Dream Light.
Amazon would collect the money and ultimately remit to Dream Light whatever is leftover after Amazon has covered its various charges ....
* * *
I conclude that the case can be disposed of favorably to Amazon on summary judgment because it is not a seller.

*139 The court also concluded that the Communications Decency Act "would preclude the claims in any event." From the district court's judgment dated January 11, 2018, Erie filed this appeal.

II

At the outset, we address Erie's contention that the district court erred in holding that Amazon was immune from suit under the Communications Decency Act, which provides immunity "not only from ultimate liability [as the publisher or speaker of information], but also from having to fight costly and protracted legal battles." Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc. , 591 F.3d 250 , 255 (4th Cir. 2009) (cleaned up). The district court held that the Act applied in this case because Amazon controlled the content of Dream Light's offer of sale for its headlamp, noting that Amazon had "standards governing the third-party content and controlled the user experience and what the content - what content was displayed." Erie argues, however, that the Act does not apply, positing that if its claims "sought to hold Amazon liable for a misrepresentation made by Dream Light in its Amazon advertisement, then the Communications Decency Act might apply." But, it notes, its claims were "based, not on ... internet content, but on Amazon's own affirmative actions as a seller (or distributor) of products. ... The Communications Decency Act does not insulate Amazon from liability for its own tortious acts and seller warranties."

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925 F.3d 135, Counsel Stack Legal Research, https://law.counselstack.com/opinion/erie-insurance-company-v-amazoncom-inc-ca4-2019.