Amazon doesn’t sell stuff in Texas.
At least, it’s not a “seller” as far as the Supreme Court of Texas is concerned. Or at least not when a toddler swallows a battery from a remote control bought from Amazon online.
The Texas Supreme Court weighed in on the issue Friday in answer to a certified question proposed by the U.S. Court of Appeals for the Fifth Circuit.
Specifically, the federal appeals court asked the highest court in Texas whether Amazon.com is a “seller” under Texas law when it does not hold title to third-party products sold on its website but controls the process of the transaction and delivery.
“We answer no,” Justice Brett Busby wrote in response.
His “we” did not include all of his colleagues. The decision was 5-2 from the court, left short-handed by the resignation of Justice Eva Guzman. Justice Jimmy Blacklock did not participate in the case.
The issue arose when the 19-month-old daughter of Texas resident Morgan McMillan swallowed the button-style battery from a generic remote purchased for $5.99 online. Though the battery was surgically removed, fluid spillage damaged the young girl’s esophagus.
The remote was purchased through Amazon from “USA Shopping 7693” — later identified as Hu Xi Jie, a vendor with an address in China. Amazon suspended the account and removed the remote from its website.
In 2018, McMillan sued both Hu Xi Jie and Amazon in federal court in the Southern District of Texas alleging, among other things, strict products liability for design and marketing defects. Hu Xi Jie neither answered nor made an appearance in subsequent proceedings. And Amazon, at the conclusion of discovery, asked the trial court for summary judgment.
Amazon argued that as a business service (Fulfillment By Amazon), the company was not actually a “seller” under Chapter 82 of the Texas Civil Practice and Remedies Code.
Under Chapter 82, a seller is defined 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 thereof.”
In denying Amazon’s motion, U.S. District Judge Vanessa Gilmore reasoned that simply being a “service provider” with no title to the remote did not preclude Amazon from being a seller under Texas law; that Amazon’s possession and control of the remote before the sale was evidence that, just like any seller, Amazon was engaged in the stream of commerce.
McMillan appealed to the Fifth Circuit and with no previous Texas case law on-point available, the federal appeals court sought guidance from the state’s highest court.
In his opinion Justice Busby noted that Texas products liability laws generally protect sellers from liability for defects more properly placed at the feet of manufacturers and designers. But sellers can become liable when the manufacturer is not subject to the jurisdiction of the court. There are other “non-sale commercial” exceptions beyond the strict definition of Chapter 82: defective merchandise used to promote sales; vendors with mixes of goods and services; lessors and bailors who retain title but are still part of a commercial transaction. All can be unprotected “sellers,” according to Busby.
Under Texas case law, “non-sale liability is possible only when the person or entity provides the product in a way that puts them in the same position as one making the sale,” Busby writes.
For Justice Jeffrey Boyd, who was joined by Justice John Devine in his dissent, that seems to be what Amazon does for a living.
Boyd notes that when a seller places their product with Amazon’s fulfillment operation, Amazon becomes the sole channel of communication between the buyer and the product. Amazon displays and promotes the product on its website, takes the order, collects the money, packages and delivers the product and, if something goes wrong, receives it in return and reimburses the money.
For Boyd and Devine that seems to describe a key phrase in the wording of Chapter 82: “Distributing or otherwise placing…in the stream of commerce.” To say otherwise, said Boyd, is to narrow the plain language of the law.
“We are not asked in this case to decide how the common law should be developed to clarify or improve the concept of “seller.” Instead, we must decide how to properly construe the Act’s definitions of ‘seller,'” writes Justice Boyd.
“Applying the statute’s definition and the common, ordinary meaning of its language when the statute was enacted, I would answer the Fifth Circuit’s certified question by holding that Amazon.com is a seller,” Boyd said in dissent.
Amazon.com is represented by Clifford Harrison of Munsch Hardt in Houston and Monique Wirrick of Perkins Coie in Seattle. McMillan is represented by Jeff Meyerson of the Meyerson Law Firm in Austin.