Case Note by Emile H. Garon
In a “peculiar twist on the traditional use of the alter ego doctrine,” the United States District Court for the Western District of Louisiana ruled that Amazon, a trillion-dollar marketplace, is likely to be the alter ego for a small Chinese battery manufacturer.
Archie Pickard—a seventy-four-year-old man living in Shreveport, Louisiana-- purchased a lithium-ion battery charger on Amazon that was sold by a third-party Chinese manufacturer named Jisell. Mr. Pickard paid just fifteen dollars, but in reality, this charger cost him his life. Six days later, an alleged defect in the product caused Mr. Pickard's home to catch fire. Mr. Pickard suffered severe burns and died weeks later. In the following months, his family filed a wrongful death and survival action suit against Amazon asserting claims under the Louisiana Products Liability Act (LPLA), the exclusive remedy for products liability actions in Louisiana.
Although Amazon is not considered a “manufacturer” under the LPLA's traditional definition, the Pickards believed Amazon qualified under the LPLA's ““seller-manufacturer” exception. For this exception to apply, the court first needed to determine whether Amazon was the “seller” of the battery charger. Under the LPLA, a seller is defined as “a person or entity ... who is in the business of conveying title to or possession of a product to another person or entity in exchange for anything of value.” Amazon never held title of the charger, but the charger was sold through Amazon's Fulfillment by Amazon (FBA) program—meaning Amazon stored the product in a domestic facility on behalf of Jisell and arranged shipment to the customer. Therefore, Amazon's potential liability under the LPLA hinged on the definition of “possession” under Louisiana law. Did Amazon, who physically stored the charger and arranged shipment to Mr. Pickard, possess the battery charger? These facts posed an issue of first impression in Louisiana, and, given the lack of guidance from the LPLA, the district court decided to issue a certified question to the Louisiana Supreme Court.
The Louisiana Supreme Court accepted the court's certified question and provided the following answer:
[U]nder the Louisiana Products Liability Act, the operator of an online marketplace is a “seller” of third-party products sold in its marketplace when the operator did not hold title to the product but: (i) had physical custody of the product in its distribution warehouse; and (ii) controlled the process of the transaction and delivery through its product fulfillment program.
With this clarification, the case was sent back to the Western District of Louisiana, which then denied Amazon's motion for summary judgment to dismiss the LPLA claim, holding that there was a dispute of material fact as to whether Amazon is an “alter ego” for Jisell.
The noted case is significant because it is the first application of the Louisiana Supreme Court's expanded definition of what constitutes a “seller” under the LPLA. Although faced with the difficult task of applying the LPLA to the modern world of e-commerce, the district court's analysis overlooked relevant Louisiana jurisprudence and failed to cite any authority to back its novel interpretation of the alter ego doctrine under the LPLA. This Case Note suggests that the district court erred in its decision to deny Amazon's motion for summary judgment on the alter ego issue, and in doing so, drastically expanded liability under the LPLA. Part II provides the context that informed the court's decision by examining the origins of the LPLA, with a focus on the alter ego doctrine. Part III discusses the district court's denial of Amazon's motion for summary judgment on the alter ego issue. Part IV explores the court's analysis of the LPLA's alter ego factors—particularly its unprecedented application of the fourth factor—and argues that the court incorrectly concluded that Amazon is likely an alter ego for Jisell. Part V briefly concludes.
About the Author
Emile H. Garon, J.D. Candidate 2027, Tulane University Law School; B.A. 2018, University of Michigan.
Citation
100 Tul. L. Rev. 879