In 2014, a headlamp purchased on Amazon allegedly caused a fire that burned down a Maryland couple’s home. The couple’s insurance company sued Amazon and lost, and last week, the US Court of Appeals for the Fourth Circuit affirmed the lower court’s decision that Amazon was not liable.
The item was listed on Amazon by China-based Dream Light, which sent the headlamp to Amazon’s US fulfillment center through the Fulfillment by Amazon (FBA) program.
State laws would have to be changed before the courts could rule any differently, a circuit judge explained in her concurrence, but she clearly felt dissatisfied with the outcome.
Courthouse News Service summarized the case in March, writing that “Erie (Insurance) aimed to keep Amazon as a defendant in the suit despite the retailer’s claim that Dream Light was responsible as a third-party seller using its website. Erie said Amazon was directly involved in the sale. It argued that while the headlamp at issue was purchased through the retailer’s platform, Amazon also warehoused the product, which gave it ownership.”
In its appeals decision last week, the Fourth Circuit said there was no evidence to indicate that title passed other than from the seller (Dream Light) to the buyer (Cao, a friend of the couple who gave the headlamp to them as a gift).
Circuit Judge Paul V. Niemeyer wrote, “Although Amazon’s services were extensive in facilitating the sale, they are no more meaningful to the analysis than are the services provided by UPS Ground, which delivered the headlamp to Cao. Neither Amazon nor UPS Ground was a seller incurring liability for the defective product.”
However, concurring Circuit Judge Diana Gribbon Motz said the decision was based on Maryland state law and said that lawmakers had the option to reform those laws.
“By design, Amazon’s business model cuts out the middlemen between manufacturers and consumers, reducing the friction that might keep foreign (or otherwise judgment-proof) manufacturers from putting dangerous products on the market,” she wrote. “Today, Amazon makes up at least 46 percent of the online retail marketplace, selling more than its next twelve online competitors combined. Yet Amazon’s business model shields it from traditional products liability,…”
That’s a challenge that’s only going to get bigger. Marketplace Pulse estimates that 40% of the top sellers on Amazon are based in China, up from 26% two years ago, helped by the FBA program and proactive efforts by Amazon.
Judge Motz said Amazon had played an “outsized role” in the transaction in the headlamp case. “Trung Cao, the purchaser of the allegedly defective headlamp, ordered the product from Amazon’s website and paid Amazon directly. Amazon took physical possession of the product, warehoused it, packaged it, and delivered it to the carrier. Amazon even assumed the risk of credit card fraud, received payment, and remitted a portion of that payment to the manufacturer. Nearly the only thing Amazon did not do was hold title.”
Legislative reforms are available to state leaders who seek to “confront these uniquely modern challenges,” she said, noting that she was writing separately to emphasize why it may not always be the case that Amazon is not considered a seller under these circumstances under Maryland law.
Leave a comment on the AuctionBytes Blog post, “Federal Judge Finds Amazon Model Troubling.”
I think Amazon IS responsible, considering they house the item, and ship it, I mean, they want to run all of our businesses for us, they should be held responsible for all ill effects.
They allowed china to send them products directly from china and Amazon didn’t care about its buyers safety and just stock them regardless.
It would be nice if the state law mentioned would at least be cited to give more clarity to the court’s decision.
The really sad part is that with all amazon’s money, they could have covered the insurance payout as a friendly gesture while not admitting guilt in any way. Assuming it would have cost them around maybe $250K or less, that wouldn’t even make a bump in Jeff’s pocket or Amazon’s bottom line.