This is an upper brachial palsy that usually results from excessive increase in the angle between the neck and the shoulder. This increased angle can be case stretching or tearing of the superior parts of the brachial plexus (specifically the C5 and C6 roots, which comprise the superior trunk of the brachial plexus)

In all cases, paralysis of the muscles of the shoulder and arm are supplied by C5 and C6 spinal nerves. These muscles include the deltoid, biceps brachii, brachialis, and brachioradialis.

Erb-Duchenne Palsy results in an adducted shoulder, medially rotated arm, extended elbow (“waiter's tip hand”), plus a loss of sensation in the lateral aspect of the upper limb.
- Erb-Duchenne Palsy is caused by traction or tear of the superior trunk of the brachial plexus.
- 3 Clinical findings of the arm in Erb-Duchenne palsy include the arm hanging by the side, the arm medially rotated, and the forearm is pronated.
- 2 Classic causes of Erb-Duchenne Palsy is a blow to the shoulder and trauma during birth.
- Is seen with a lesion of the upper trunk of the brachial plexus.
- The arm hands by the side in Erb-Duchenne palsy because of paralysis of shoulder abductors.
- The arm is medially rotated in Erb-Duchenne palsy because of paralysis of the lateral rotators.
- The forearm is pronated in Erb-Duchenne palsy because of loss of the biceps brachii.

- Excessive downward traction on the upper limb during birth can result in injury to the C5 and C6 roots.  This results in paralysis of the deltoid, the short muscles of the shoulder, brachialis and biceps.  The combined effect is that the arm hangs down by the side with the forearm pronated and the palm facing backwards.  This has been termed the 'waiter's tip' position.

Reference:
1. Anatomy at a Glance. Omar Faiz and David Moffat.  Blackwell Science. 2002.