McMillan v. Amazon.com, Inc.

• Decision Date: 07 January 2020
• Docket Number: Case No. 4:18-CV-2242
• Citation: 433 F.Supp.3d 1034
• Parties: Morgan MCMILLAN, Individually and as Next Friend of E.G., a minor child, Plaintiff, v. AMAZON.COM, INC., and Hu Xi Jie, Defendants.
• Court: U.S. District Court — Southern District of Texas

433 F.Supp.3d 1034

Morgan MCMILLAN, Individually and as Next Friend of E.G., a minor child, Plaintiff,

v.AMAZON.COM, INC., and Hu Xi Jie, Defendants.

Case No. 4:18-CV-2242

United States District Court, S.D. Texas, Houston Division.

Signed January 7, 2020

Jeff Meyerson, Meyerson Law Firm, Austin, TX, for Plaintiff.

Clifford L. Harrison, Munsch Hardt Kofp & Harr, PC, Houston, TX, Monique R. Wirrick, William Brendan Murphy, Perkins Coie LLP, Seattle, WA, for Defendants.

ORDER

VANESSA D. GILMORE, UNITED STATES DISTRICT JUDGE

Pending before the Court is Defendant Amazon.com, Inc.'s Motion for Summary Judgment. (Instrument No. 33).

I.

A.

This tort case arises from the purchase of a generic Apple TV remote ("Remote") on Amazon.com, Inc. ("Amazon" or "Defendant") from a third-party vendor, Defendant Hu Xi Jie. (Instrument No. 23 at 1).

Amazon operates an online marketplace for sellers to offer products and buyers to purchase them. (Instrument No. 33 at 10). Amazon or a third-party vendor can be a seller on Amazon's marketplace. Id. To sell on Amazon's marketplace, third-party vendors must agree to the Amazon Services Business Solutions Agreement ("BSA"). (Instrument No. 33 at 36, ¶ 8). When third-party vendors sell products on Amazon's website, they must decide what to sell, source the product, provide the information displayed on the product's page, set the price, and provide purchasers with any warranty. Id. at 37 [4:1—16].

Amazon also offers its third-party vendors services for additional fees. One of the services is the Fulfillment by Amazon ("FBA") program, to which Hu Xi Jie subscribed. Id. at 38, 41; (Instrument No. 1 at 4). Through this program, Amazon stores the vendor's products in Amazon fulfillment centers until the product is purchased. (Instrument No. 33 at 38 ¶15). When an order is placed, Amazon retrieves the product from its facility, packages it, applies a shipping label as required, and delivers the product. Id. Amazon also offers a payment processing service that charges buyers and remits the purchase price to third-party vendors, less the fees that Amazon retains. Id. at 39 ¶ 18. Both services are offered to third-party vendors operating outside of the Amazon marketplace. Id. at 39.

On March 12, 2017, Plaintiff Morgan McMillan's ("Plaintiff's") husband, Carey Gartner, ordered the Remote through Amazon. (Instrument No. 1 at 3). The Remote was listed by user "USA Shopping 7693," an account belonging to Hu Xi Jie. Id. at 4; (Instrument No. 33 at 9). At the time of purchase, Plaintiff and Plaintiff's husband were unaware that the remote's battery compartment could easily open without effort, revealing a lithium button battery that could loosen and fall out. Instrument No. 1 at 4.

On April 17, 2018, the Remote's battery compartment opened and exposed the button battery. Id. at 5. Plaintiff's 19-month-old daughter, E.G., ingested the battery, which became lodged in E.G.'s esophagus. Id. Plaintiff took E.G. to the emergency room where the button battery was surgically removed. Id. At that point, the battery's caustic fluid from its electric charge had caused severe, permanent, and irreversible damage to E.G.'s esophagus. Id. Plaintiff alleges that E.G.'s injuries have increased the risk for infection and choking. Id. at 6.

In April 2018, Plaintiff notified Amazon of the incident and requested that it cease the sale of Hu Xi Jie's remotes. (Instrument No. 45 at 7). In response, Amazon removed the product from the Amazon marketplace and requested information from Hu Xi Jie. (Instrument No. 33 at 12). Hu Xi Jie did not respond Id. Accordingly, Amazon suspended Hu Xi Jie's account "USA Shopping 7693" and the remote remains unavailable. Id. Amazon allegedly reported the incident to the Consumer Product Safety Commission, which has yet to act. (Instruments No. 45 at 7; No. 33 at 177). Because there is no evidence of safety issues for other products, Amazon has not acted against other remotes for sale in the marketplace. (Instruments No. 45 at 7; Instrument No. 33 at 168-69).

B.

Plaintiff filed her Complaint on June 29, 2018, raising five causes of action against Amazon: (1) strict liability for design defect; (2) strict liability for marketing defect; (3) breach of implied warranty; (4) negligence; and (5) gross negligence. (Instruments No. 1 at 8-9; No. 33 at 12). As to Hu Xi Jie, Plaintiff asserts claims for strict liability for design defect and breach of implied warranty. (Instrument No. 1 at 8-9). Defendant Amazon filed its Answer on August 8, 2018. (Instrument No. 5).

Because Hu Xi Jie is a Chinese individual or entity with its principal place of business in China, Plaintiff served Hu Xi Jie through the Texas Secretary of State. (Instruments No. 23 at 2; No. 26). Plaintiff attempted to serve Hu Xi Jie on July 17, 2018 and March 5, 2019. (Instrument No. 45 at 98, 100). Hu Xi Jie failed to answer or otherwise make an appearance as required by law. Id.

On April 4, 2019, Plaintiff filed her Amended Complaint. (Instrument No. 23). Amazon filed its Answer on April 25, 2019. (Instrument No. 25). On August 6, 2019, Amazon filed its Motion for Summary Judgment. (Instrument No. 33). On September 5, 2019, Plaintiff filed her Response. (Instrument No. 45). In turn, Amazon filed its Reply in Support of its Motion for Summary Judgment on September 16, 2019. (Instrument No. 51).

II.

Federal Rule of Civil Procedure 56 provides that "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). Initially, the movant has "the burden of demonstrating the absence of a genuine issue of material fact." Cannata v. Catholic Diocese of Austin , 700 F.3d 169, 172 (5th Cir. 2012) (citing Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ). If the movant meets this burden, the nonmovant must go beyond the pleadings and point out specific facts in the record showing the existence of a genuine issue for trial. Id. "A genuine issue of material fact exists when the evidence is such that a reasonable jury could return a verdict for the non-moving party." Fisk Elec. Co. v. DQSI, L.L.C. , 894 F.3d 645, 650 (5th Cir. 2018) (internal quotations omitted)

In deciding a summary judgment motion, the district court does not make credibility determinations or weigh evidence, E.E.O.C. v. Chevron Phillips Chem. Co., LP , 570 F.3d 606, 612 n.3 (5th Cir. 2009), although the court draws all reasonable inferences in the light most favorable to the nonmoving party. Connors v. Graves , 538 F.3d 373, 376 (5th Cir. 2008). The nonmovant's "burden will not be satisfied by some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence." Boudreaux v. Swift Transp. Co. , 402 F.3d 536, 540 (5th Cir. 2005) (quoting Little v. Liquid Air Corp. , 37 F.3d 1069, 1075 (5th Cir. 1994) ). Similarly, "[u]nsupported allegations or affidavit or deposition testimony setting forth ultimate or conclusory facts and conclusions of law are insufficient to defeat a motion for summary judgment."

Clark v. Am.'s Favorite Chicken , 110 F.3d 295, 297 (5th Cir. 1997).

III.

First, Defendant moves for summary judgment on all claims because it argues that it is not a seller of the Remote. (Instrument No. 33 at 13). Defendant contends that Plaintiff's causes of action all hinge on its seller status and, since Defendant is not a seller, Plaintiff's claims fail as a matter of law. Id. Second, Defendant moves for summary judgment because it argues that the Communications Decency Act bars Plaintiff's claims. Id. at 25.

Plaintiff alleges that Defendant is a nonmanufacturing seller of the Remote. (Instrument No. 23 at 8). Consequently, as seller of the Remote, Plaintiff argues that Defendant is strictly liable for the defects of the Remote, breached the implied warranties, and violated its duty of care, resulting in negligence and gross negligence. Id. at 7-11. Plaintiff also contends that the Communications Decency Act is not applicable to this case. (Instrument No. 45 at 16).

Because the Court is sitting in diversity and this is a product liability case, Texas law governs Plaintiff's claims. See Erie R. Co. v. Tompkins , 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938).

A.

As a preliminary matter, this Court must review whether manufacturer Hu Xi Jie is subject to the jurisdiction of this Court.

Texas law states that a nonmanufacturing seller of a product is not liable for harm caused by the product. Tex. Civ. Prac. & Rem. Code § 82.003(a). However, § 82.003 lists seven exceptions. Id. Among these is an exception where "the manufacturer of the product is ... not subject to the jurisdiction of the court." Id. § 82.003(a)(7)(B). Plaintiff points to this exception as one of the reasons Amazon—an alleged seller—is liable for the Remote's defect. (Instruments No. 23 at 8-9; No. 45 at 15-16). Because of this, the Court must first determine if Hu Xi Jie is subject to this Court's jurisdiction.

Section 82.003(c) lays out a procedural mechanism that claimants must follow to receive a "conclusive presumption" that a manufacturer is not subject to jurisdiction of the court. See id. § 82.003(c). The provision states that the claimant can serve the manufacturer through the Texas Secretary of State. Id. If the manufacturer fails to answer or "otherwise make an appearance," the burden shifts to the seller "to secure personal jurisdiction over the manufacturer in the action." Id. Otherwise, it is conclusively presumed that the manufacturer is outside the court's jurisdiction and the seller can be held liable for the product's defect. Id.

Prior to the adoption of subsection (c), the claimant had to "prove the negative" by showing that the manufacturer did not establish minimum contacts with Texas. See Fields v. Klatt Hardware & Lumber, Inc. , 374 S.W.3d 543, 547 (Tex. App.—San...