In 2016, Angela Bolger needed a replacement battery for her laptop. She founded exactly what she needed on Amazon. Despite being listed as coming from a third-party vendor, Lenoge Technology (HK) Ltd. dba “E-Life,” Amazon processed Bolger’s payment for the order, retrieved the laptop battery from one of its many fulfillment warehouses, prepared the battery for shipment in Amazon-branded packaging, and sent it to Bolger. Several months later, the battery exploded, Bolger argued in the lawsuit that she filed against Amazon and Lenoge, causing her to suffer severe burns as a result.
In her complaint, which was filed with a San Diego Superior Court in January 2017, Bolger set forth claims of strict products liability, negligent products liability, breach of implied warranty, breach of express warranty, and “negligence/negligent undertaking” against Lenoge and Amazon. Lenoge did not respond, and the court entered a default judgment as a result.
Amazon, on the other hand, responded, and sought for the court to toss out the case on the basis that strict products liability claims do not apply, as it did not distribute, manufacture, or sell the product at issue. Instead, the Seattle-based giant argued that Lenoge was the seller, and it is merely the operator of an online marketplace.
The district court agreed, and granted Amazon’s motion for summary judgment, prompting Bolger to appeal. In a decision dated August 13, the Court of Appeal for the Fourth District of California sided with Bolger on that basis that Amazon is not merely a marketplace operator, and in reality, played a “pivotal” role “in bringing the product here to the consumer,” and acted “as a powerful intermediary between the third-party seller and the consumer.”
In a 47-page decision, Judge Patricia Guerrero held on behalf of herself and concurring judges Terry O’Rourke and Patricia Benkethat Amazon is strictly liable for defective products offered on its website by third-party sellers like Lenoge. “As a factual and legal matter,” Guerrero stated that “Amazon placed itself between Lenoge and Bolger in the chain of distribution of the product at issue here” in that it “set the terms of its relationship with Lenoge, controlled the conditions of Lenoge’s offer for sale on Amazon, limited Lenoge’s access to Amazon’s customer information, forced Lenoge to communicate with customers through Amazon, and demanded indemnification as well as substantial fees on each purchase.”
Moreover, she held that Amazon is “the only member of the enterprise reasonably available to an injured consumer in some cases, it plays a substantial part in ensuring the products listed on its website are safe, it can and does exert pressure on upstream distributors (like Lenoge) to enhance safety, and it has the ability to adjust the cost of liability between itself and its third-party sellers.”
In addition to addressing Amazon’s role in the distribution chain, Guerrero pointed to case law, which has “expanded the scope of strict liability, where necessary, to account for ‘market realities’ and to cover new transactions in ‘widespread use … in today’s business world.’” In this vein, she states that the California Supreme Court has “extended strict liability to retailers,” on the basis that “retailers like manufacturers … are an integral part of the overall producing and marketing enterprise that should bear the cost of injuries resulting from defective products.”
Guerrero asserts that “Amazon should be held liable if a product sold through its website turns out to be defective,” especially given that “in some cases the retailer may be the only member of that enterprise reasonably available to the injured plaintiff.” She also pointed to a 2008 decision from the Fourth District, hold that “beyond manufacturers, anyone identifiable as ‘an integral part of the overall producing and marketing enterprise’ is subject to strict liability.”
Against this background, and given that “Amazon is not shielded from liability by title 47 U.S.C. section 230, [which] generally prevents internet service providers from being held liable as a speaker or publisher of third-party content [but that] does not apply here because Bolger’s strict liability claims depend on Amazon’s own activities, not its status as a speaker or publisher of content provided by Lenoge for its product listing.” The court held that regardless of “the term we use to describe Amazon’s role, be it ‘retailer,’ ‘distributor,’ or merely ‘facilitator,'” the company should be held liable for defective products offered on its website by third-party sellers.
“The court’s decision was wrongly decided and is contrary to well-established law in California and around the country that service providers are not liable for third party products they do not make or sell,” a spokesperson for Amazon said on Friday. Amazon revealed that it intends to appeal the decision to the California Supreme Court, an unsurprising move given the stakes at play.
As Reuters reported on Friday, “Amazon has faced multiple lawsuits seeking to hold it responsible for damage or injuries caused by defective products sold by third parties, including ones based overseas in China, with most courts concluding it is not a ‘seller’ under various states’ product liability laws. But a few rulings have gone the other way and have allowed Amazon to be sued.”
Among a number of similar cases that Amazon is currently facing across the U.S. is the one filed against the e-commerce behemoth in June 2015 by Heather Oberdorf, who permanently lost vision in one of her eyes after a dog leash that she purchased from a third-party on Amazon’s marketplace broke. Following a favorable outcome before a district court in Pennsylvania, the U.S. Court of Appeals for the Third Circuit similarly held last year that Amazon should be considered the “seller” of defective products offered through its marketplace.
Amazon has since sought a reconsideration by the Third Circuit, which agreed to rehear the case.
This string of cases are significant in that a determination that Amazon is, in fact, liable for the goods offered up by third-parties on its vast marketplace site, which represented some 52.8 percent of the retailer’s revenue as of 2018, could drastically alter the workings of its model, including by adding new costs and significant legal liabilities.
*The case is Angela Bolger v. Amazon.com LLC, 37-2017- 00003009 (4DCA).