An appeals court found Amazon can be held liable for injuries caused by products sold by third-parties on Amazon, whether the products are “Fulfilled by Amazon” or not.
A California Court of Appeal, in August 2020, ruled in Bolger v. Amazon.com that Amazon can be held strictly liable for third-party products sold on Amazon which were “Fulfilled by Amazon.” Now, an appeal from a judgment of the Superior Court of Los Angeles County has ruled that Amazon can be held strictly liable for third-party products sold on Amazon which are not “Fulfilled by Amazon.” The decision was filed on April 26 in the Court of Appeal of the State of California, Second Appellate District, Division Eight.
The lawsuit in question, Loomis v Amazon.com, involves a hoverboard purchased on Amazon on November 28, 2015. The hoverboard allegedly caught fire after being plugged in to charge, burning the plaintiff as she fought the fire. The hoverboard was sold by a third party seller named TurnUpUp, which court documents say is a name used by Chinese company SMILETO to sell products on Amazon. Amazon moved for summary judgment in the lawsuit, claiming it didn’t fall within the chain of distribution for the purposes of product liability, and a trial court granted summary judgment. The appeal court decision reversed this judgment.
The plaintiff, in the appeal, contended that summary adjudication was improperly granted because Amazon participates in the product’s vertical distribution chain. Amazon disclaimed any liability, stating it is neither a seller or manufacturer of the hoverboard.
The appeals court found that “we are persuaded that Amazon’s own business practices make it a direct link in the vertical chain of distribution under California’s strict liability doctrine.”
While Amazon asserted that it only provided an online website for TurnUpUp to sell goods on, the appeals court found “it is undisputed Amazon placed itself squarely between TurnUpUp, the seller and… the buyer, in the transaction at issue.”
The appeals court decision notes that the plaintiff looked through product listings on Amazon, and Amazon took her order and processed her payment, then transmitted the order to TurnUpUp. The decision also notes that when the plaintiff wanted to know if the hoverboard would arrive before Christmas, she had to communicate this question to Amazon, since TurnUpUp “was not allowed to communicate” with her directly. The decision notes that if she wanted to return the hoverboard, the return would have been “routed through Amazon.” The decision claims that Amazon remitted the plaintiff’s payment to TurnUpUp after deducting fees, including a 15 percent referral fee.
The decision claims these facts undermine Amazon’s assertion that it merely provides storefronts for sellers. The decision states that interacting with customers, taking orders, processing orders, collecting money and being paid a percentage of a sale “are consistent with a retailer or a distributor of consumer goods.”
The decision also found that the trial court erred in granting adjudication on the strict liability claim based on a stream of commerce approach. The appeals decision found that Amazon failed to provide evidence it didn’t play a role in establishing a market for TurnUpUp’s hoverboards, and that evidence shows Amazon received over $110,000 for sales of TurnUpUp’s hoverboards from September 2015 to December 2015, thus constituting “a direct financial benefit from its activities and sales of the product.” The appeals court also found Amazon “had substantial ability to influence the manufacturing or distribution process through its ability to require safety certification,” such as by requiring products it lists to be certified by the Underwriter’s Laboratories.
“Amazon’s contention that it has no relationship with the manufacturer or the distributors has no bearing on whether it can influence the manufacturing process,” the appeals court stated.
The appeals court found that applying strict liability in this case can further relevant public policy goals. The relevant public policy considerations in this case, according to the appeals court decision, are whether Amazon may substantially insure a product is safe, whether Amazon may be the only part of the distribution chain reasonably available to an injured plaintiff, and whether Amazon is in a position to adjust costs of compensating injured plaintiffs amongst various distribution chain members.
The appeals court found Amazon can substantially insure a product is safe by doing things such as requiring proof a product complies with safety standards before the product is listed. “Application of strict liability in this case may incentivize Amazon to expand its safety compliance requirements to more products and thus further the goal of product safety,” the appeals court found.
The appeals court found that Amazon may be the only distribution chain member reasonably available for injured consumers to recover damages, nothing that defendants have failed to appear in similar previous cases.
The appeals court found Amazon “can adjust the costs of consumer protection between it and third party sellers through its fees, indemnity requirements, and insurance.”
The appeals court also found that summary adjudication was improperly granted by the trial court relating to the plaintiff’s negligence claim, stating, “a duty of care may be imposed on a defendant who is not a manufacturer or seller in the context of a negligent products liability claim if certain policy factors are met.” The appeals court found that Amazon failed to provide an analysis as to how it didn’t owe a duty of care to the plaintiff.
Justice John Wiley concurred with the result, writing, “thus we have an easy case that beautifully illustrates the deep structure of modern tort law: a judicial quest to minimize the social costs of accidents… Amazon has cost-effective options for minimizing accident costs. Amazon therefore has a duty in strict liability to the buyers from its site.”
Wiley further wrote, “Amazon owes its customers a duty in strict liability because Amazon’s position in the distribution chain allows it to take cost-effective steps to reduce accidents,” adding, “this case is easy. Amazon is well situated to take cost-effective measures to minimize the social costs of accidents. Strict liability will prompt this beneficial conduct.”
For more information on injury and products liability lawsuits in Los Angeles, consult with Nadrich & Cohen Accident Injury Lawyers.
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