Texas court rules Amazon is liable for third-party sales

Amazon has been hit by another setback in its defense against lawsuits claiming it should be liable for injuries caused by products bought on its websites – even if they are being sold by third-party sellers.

The US District Court for the Southern District of Texas court has overturned an earlier ruling that Amazon should not be liable as a ‘seller’ under the state’s product liability statute for injuries caused by a defective product sold by a third-party – in this case a generic Apple TV remote ordered from Chinese vendor Hu Xi Jie.

The lawsuit (McMillan v., Inc., No. 18-CV-2242) was filed after the battery fell out of the device and was swallowed by the plaintiff’s 19-month-old daughter causing permanent injuries.

The case only applies to Texas law, but is another setback for Amazon in its long-running defense, spanning multiple lawsuits, against plaintiffs trying to force it to take responsibility for third-party sales that are distributed via its ‘fulfilled by Amazon’ (FBA) service.

Recent defeats on this issue for the e-commerce giant have come after a protracted series of victories for the retailer.

In the latest case, plaintiff Morgan McMillan filed a complaint against Hu Xi Jie and Amazon for strict liability, negligence and breach of implied warranties.

The Chinese vendor has never responded to the litigation, and Amazon responded with a counter-claim – supported by the US Chambers of Commerce – that it was not a seller under Texas’ product liability laws.

In its first ruling, the court determined that Amazon was a seller because it had control over the sale, was an integral part of the distribution chain, and was engaged in the business of placing the remote into the stream of commerce, acting as the sole channel of communication between the purchaser and vendor.

Amazon appealed on the grounds that the US Communications Decency Act (CDA) barred the plaintiff’s claims, which states that no “provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”

The court dismissed claims against Amazon relating to its failure to provide a product warning on its website, but determined that the CDA did not apply to the remainder of claims related to Amazon’s involvement in the sales process for the remote.

The big question for now is whether this case in Texas will set a precedent for other disputes involving third-party vendor products that use Amazon’s FBA service. At the very least, Amazon is no longer looking quite so invulnerable on the product liability issue.

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