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Week 21 (2019)

Week of May 20, 2019 through May 24, 2019

Orellana v. Barr (Motz 5/23/2019): The Fourth Circuit held the Board of Immigration Appeals abused its discretion by “disregarding and distorting” immigrant’s claims for asylum and relief from deportation and by failing to offer reasoned explanation for its decision.  The court vacated Board’s order denying asylum and held that on remand the agency must consider all relevant and credible evidence and state reasons for its decision to  deny or grant asylum. Full Opinion.

Westmoreland v. TWC Admin. LLC (Motz 5/22/2019): The Fourth Circuit affirmed jury verdict and denial of judgment as a matter of law from the Western District of North Carolina.  The Court held the jury’s verdict was based on sufficient evidence and District Court managed proceedings fairly without prejudice to TWC. Full Opinion.

Highlight Case

Erie Ins. Co. v., Inc.

Decided: May 22, 2019

The Fourth Circuit held that, under Maryland law, was not the “seller” of a headlamp purchased through its website and was therefore not liable for damages caused when the headlamp’s batteries apparently malfunctioned, caught fire, and burned a home.  

On April 9, 2014 Mr. Cao, a Maryland resident, purchased a headlamp as a gift for the Nguyen family.  Two weeks later the headlamp malfunctioned and caught fire, causing $313,166.57 in damage to the Nguyen’s home.  Erie Insurance Company, the Nguyen’s insurer, paid the loss and subsequently brought a subrogation claim against Amazon, alleging that Amazon had liability under Maryland law as the seller of the headlamp.  The U.S. District Court for the District of Maryland granted Amazon’s motion for summary judgment, holding that Amazon was not the “seller” of the headlamp and was therefore not liable for its defective condition.  The district court further held that Amazon was immune from suit under the Communications Decency Act, 47 U.S.C. § 230(c)(1).  

Regarding the District Court’s holding related to the Communications Decency Act,  the Court agreed with Erie that the Act did not protect Amazon against the claims in this case. The Act provides immunity for interactive computer service providers against claims related to publishing a third party’s speech.  The Act was enacted to protect and maintain “the robust nature of Internet communications” but does not protect entities from liability for selling a defective product online.    

The Fourth Circuit did not, however, agree with Erie that Amazon was liable for damages as the “seller” of the headlamp. Amazon argued that, based on its Fulfillment Services Agreement with the manufacturer of the headlamp, it was not the seller of the headlamp and was therefore not liable.  The court began its analysis by stating that Maryland law requires plaintiffs in a products liability case to establish a defect, attribution of the defect to a seller, and a causal relationship between the defect and the injury.  The court noted these elements must be demonstrated whether the claim is based in negligence, breach of warranty, or strict liability.  Citing several cases, the Court noted liability hinges upon the status of the defendant as a “seller” – defined as “owners of personal property who transfer title to purchasers of that property for a price.”  

The Court held that the manufacturer retained ownership and merely transferred physical possession of the headlamp when it shipped the item to Amazon’s warehouse.  Rather than purchase and re-sell the headlamp in the typical retail fashion, Amazon simply held possession of the item and facilitated the sale from the manufacturer to the purchaser.  Amazon explicitly posted on its site that the manufacturer was the seller of the headlamp.  Further, the manufacturer set the price for the headlamp, designed the product description posted on Amazon’s website, paid a fee for Amazon’s fulfillment services, and was paid the full purchase price less Amazon’s fee at completion of the transaction.  Additionally, the court found that the agreement between Amazon and the headlamp manufacturer repeatedly and specifically stated that the manufacturer, not Amazon, retained title to items stored in Amazon’s warehouse.  Because Amazon did not take title to the item, but only acted as a facilitator of the transaction between the manufacturer and the purchaser, Amazon was not a “seller” under Maryland law and was therefore not liable.

Judge Motz, in a separate opinion, fully concurred with the court’s opinion rejecting Erie’s claims that Amazon was a “seller” under Maryland law but wrote separately to note that technological and societal changes may prompt a change in the law.  The concurrence notes that Amazon’s business plan is, in all likelihood, intentionally designed to avoid taking title to goods and assuming liability and points to Amazon’s disruption of the traditional supply chain as “reducing the friction that might keep foreign (or otherwise judgment proof) manufacturers from putting dangerous products on the market.”  Noting this, the concurrence opines that nothing stands in the way of legislators or state courts from making changes to the law to reach a different result.         

Full Opinion

Michael Stover