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Erie Insurance Co. v. Amazon.Com, Inc.

United States Court of Appeals, Fourth Circuit

May 22, 2019

ERIE INSURANCE COMPANY, a/s/o Minh Nguyen and Anh Nguyen, Plaintiff - Appellant,
v.
AMAZON.COM, INC., Defendant-Appellee, and EBAY, INC., Defendant.

          Argued: March 21, 2019

          Appeal from the United States District Court for the District of Maryland, at Greenbelt. Roger W. Titus, Senior District Judge. (8:16-cv-02679-RWT)

         ARGUED:

          John Kerry Weston, SACKS WESTON DIAMOND, LLC, Philadelphia, Pennsylvania, for Appellant.

          William Brendan Murphy, PERKINS COIE LLP, Seattle, Washington, for Appellee.

         ON BRIEF:

          Jesse M. Cohen, SACKS WESTON DIAMOND, LLC, Philadelphia, Pennsylvania, for Appellant.

          Eric D. Miller, Laura Hill, PERKINS COIE LLP, Seattle, Washington, for Appellee.

          Before GREGORY, Chief Judge, and NIEMEYER and MOTZ, Circuit Judges.

          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 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 ...


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