Is Amazon liable for third-party sellers’ defective products?

This question was recently answered in the affirmative by California’s intermediate court of appeals in Bolger v. Amazon.com (4th App. Dist., Div. One, 8/13/2020), https://static.reuters.com/resources/media/editorial/20200813/bolgervamazon--opinion.pdf, and in the negative by the Ohio Supreme Court in Stiner v. Amazon.com (10/1/2020), http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2020/2020-Ohio-4632.pdf

The following is excerpted from the California court’s 3-page summary of its 47-page opinion:

Plaintiff Angela Bolger bought a replacement laptop computer battery on Amazon….The Amazon listing for the battery identified the seller as “E-Life,” a fictitious name used on Amazon by Lenoge Technology (HK) Ltd. (Lenoge).  Amazon charged Bolger for the purchase, retrieved the laptop battery from its location in an Amazon warehouse, prepared the battery for shipment in Amazon-branded packaging, and sent it to Bolger.  Bolger alleges the battery exploded several months later, and she suffered severe burns as a result.

[Bolger sued Amazon and Lenoge.]  Lenoge was served but did not appear, so the trial court entered its default.  Amazon moved for summary judgment.  It primarily argued that the doctrine of strict products liability…did not apply to it because it did not distribute, manufacture, or sell the product in question.  It claimed its website was an “online marketplace” and E-Life (Lenoge) was the product seller, not Amazon.  The trial court agreed [and] granted Amazon’s motion….Bolger appeals.  She argues that Amazon is strictly liable for defective products offered on its website by third-party sellers like Lenoge….[W]e agree.

As a factual and legal matter, Amazon placed itself between Lenoge and Bolger in the chain of distribution of the product at issue here.  Amazon accepted possession of the product from Lenoge, stored it in an Amazon warehouse, attracted Bolger to the Amazon website, provided her with a product listing for Lenoge’s product, received her payment for the product, and shipped the product in Amazon packaging to her.  Amazon 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.  Whatever term we use to describe Amazon’s role, be it “retailer,” “distributor,” or merely “facilitator,” it was pivotal in bringing the product here to the consumer….

Amazon is a direct link in the chain of distribution, acting as a powerful intermediary between the third-party seller and the consumer.  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.  Under established principles of strict liability, Amazon should be held liable….Strict liability here affords maximum protection to the injured plaintiff and works no injustice to the defendants, for they can adjust the costs of such protection between them in the course of their continuing business relationship.  (Citations and internal quotation marks omitted; emphasis added.)

The Ohio Supreme Court’s contrary decision in Stiner v. Amazon was based on its determination that Amazon is not a “supplier” within the meaning of the Ohio Products Liability Act, which defines that term as one who “sells, distributes, leases, prepares, blends, packages, [or] labels” a product.  One judge concurred only in the result:

Reluctantly, I agree that the definition of “supplier” in the Ohio Products Liability Act…is worded in such a way that it does not allow us to incorporate in it the role that appellee, Amazon.com, plays when a sale on its website is fulfilled by a third-party merchant.  I disagree, though, with the notion that it would not promote the purpose of products-liability law to hold Amazon liable for unsafe products that would not reach consumers but for the consumers’ decision to shop on Amazon’s website.  To the contrary, the failure to hold Amazon liable for injuries to its customers thwarts the purpose of products liability law because it puts Amazon’s customers at risk of being injured by a seller that can easily make itself unreachable for redress.  The use of strict liability would incentivize Amazon to select and monitor reputable merchants with safer products just as strict liability incentivizes sellers to select safer products that are sourced from reputable wholesalers or manufacturers.

In fact, not long ago the U.S. Third Circuit Court of Appeals, applying Pennsylvania law, concluded (in a 2-1 decision with a vigorous dissent) that Amazon is a “seller” within the meaning of Section 402A of the Restatement (Second) of Torts, and therefore is strictly liable for defective products sold by third-party vendors.  Oberdorf v. Amazon.com (3d Cir. 7/3/2019), http://www2.ca3.uscourts.gov/opinarch/181041p.pdf

This is an evolving area of the law, and it appears that Amazon’s years of successfully raising the “we’re merely an online marketplace” defense may be coming to an end.  See https://www.washingtonpost.com/technology/2020/08/29/amazon-product-liability-losses/; for an argument that this trend is not a good thing, see https://www.jdsupra.com/legalnews/how-amazon-s-liability-for-third-party-30990/.  Of course, the determination that Amazon is subject to strict liability for defective products sold by third-party vendors is only the first step; the plaintiff must present expert testimony that the product in question was, in fact, defective, and the defense will need its own expert witnesses to testify to the contrary.  Vident Partners is your best source of experts for products liability cases and all other types of litigation.

 

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