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Amazon Likens Itself to Auctioneer in ‘Seller’ Liability Appeal

Dec. 4, 2020, 12:58 AM

Attorneys for Amazon.com Inc. and the parent of an injured girl sparred at the Fifth Circuit on Thursday over the relevance of a Texas auction case to Amazon’s potential liability for a product sold on its web marketplace.

The judges though pondered whether to ask the state high court to weigh in. Most of the argument focused on Amazon’s own role—as a seller or mere facilitator, a controller or mere holder of the product, and whether it’s engaged in the business of selling.

But one judge raised the possibility that Amazon acted as an agent of the product maker in transferring title to the buyer, an issue not brought out in the briefing or in similar cases against Amazon elsewhere.

The company wants the appeals court to overturn a lower court ruling that allows Morgan McMillan to proceed with claims on behalf of herself and her daughter, who allegedly ingested a remote-control battery as a toddler. The remote’s China-based maker didn’t even try to comply with industry standards, McMillan alleged.

Brendan Murphy, Amazon’s attorney, told the U.S. Court of Appeals for the Fifth Circuit that a 2008 Texas Supreme Court opinion, New Texas Auto Auction Services LP v. Gomez De Hernandez, makes a critical distinction between those who can be liable by placing a defective product in the stream of commerce and facilitators like the auctioneer in that case, who cannot.

Sales on Amazon’s web marketplace are like the mechanics of the sale in New Texas Auto except for the scale of Amazon’s operations and that the marketplace is online, said Murphy of Perkins Coie LLP in Seattle. The only way to allow McMillan’s suit to proceed is “to put Amazon in one of the categories allowed by Texas law” such as a seller or lessor, and the district court didn’t do that, he argued.

One judge didn’t see Texas cases closely on point and asked why the panel shouldn’t certify the question to the Texas Supreme Court.

Murphy disagreed that there was no guiding caselaw, pointing to the auction case. Amazon has opposed certification to the high court in briefing.

Jeff Meyerson of Meyerson Law Firm PC in Austin, Texas, said McMillan, his client, would also prefer that the Fifth Circuit rule. “It could be a couple of years,” he said, concerned that witness memories would fade before it reached trial. But the judges said opinions often come back from the state supreme court, which gives priority to Fifth Circuit questions, within a year.

Texas law favors McMillan, Meyerson said. The child’s father, Carey Gartner, “didn’t buy a service. He bought a product,” he said.

New Texas Auto was a “one-off” case with unusual facts, he said. The auctioneer in that case was never “engaged in the business of selling,” a key phrase in court interpretations of Texas product liability law, he said.

“What Amazon is seeking is an exception that Texas businesses don’t have,” he said.

The case is McMillan v. Amazon.com, Inc., 5th Cir., No. 20-20108, oral argument 12/3/20.

To contact the reporter on this story: Martina Barash in Washington at mbarash@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Meghashyam Mali at mmali@bloombergindustry.com

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