California Court Finds Amazon Liable for Defective Third Party Products

A recent appellate court ruling has thrown a significant roadblock in front of Amazon’s frequent defense against liability for defective products sold onsite via third parties. On August 13, 2020, Judge Patricia Guerrero, of the Fourth Appellate District, Division One in California, reversed the San Diego Superior Court’s dismissal of product liability case, Bolger v. Amazon.com LLC. Previously, the lower court ruled that Amazon, as a service provider in the transaction, could not be held strictly liable after a customer purchased a laptop battery that later exploded. Upon appeal, however, the appellate court disagreed, holding that Amazon was “an integral part of the overall producing and marketing enterprise” through which the plaintiff made her purchase and, as such, could be held liable. Amazon indicated that it plans to appeal the ruling, asserting it was wrongly decided and contrary to well-established California and other state laws.

The Defective Amazon Purchase

In 2016, Angela Bolger, a San Diego resident and Amazon Prime member, bought a replacement laptop battery on Amazon. It was purchased from Lenoge Technology Ltd., a technology merchant operating on Amazon under the name E-Life. Several months after Bolger received the battery from Amazon, she says it exploded, inflicting serious burns on her that required two weeks of hospitalization. Throughout the entire purchase and delivery process, Bolger’s only contact was with Amazon. The battery in question had been stored at an Amazon fulfillment center in Oakland, CA before shipment and arrived at the plaintiff’s home in Amazon-branded packaging.

Bolger sued Amazon and Lenoge Technology in 2017 claiming strict product liability, negligent product liability, breach of implied warranty, breach of express warranty, and/negligent undertaking. The plaintiff also claimed she was not informed by Amazon that it had blocked Lenoge’s account due to product safety concerns less than a month after she bought the battery. Lenoge was served but failed to appear and the trial court entered its default judgment.

The Appellate Court Ruling

Upon Bolger’s appeal, Judge Guerrero reversed the trial court’s ruling. In her decision, Judge Guerrero directed the Superior Court to vacate the summary judgment order, and enter a new order denying summary adjudication of Bolger’s strict product liability claims. Additionally, Judge Guerrero ordered the trial court to grant a summary adjudication of Bolger’s remaining claims, and conduct further proceedings not inconsistent with this opinion. Bolger was awarded costs for the appeal.

Legal Precedents of Product Liability

Given the current digital economy where consumers rely heavily on e-commerce marketplaces like Amazon, eBay, or Esty, this is an extremely significant ruling. Judge Guerrero took great care in laying out the California precedents that she relied on to determine that a strict liability cause of action should go forward against Amazon. She explained that “[t]he strict liability doctrine derives from judicially perceived public policy considerations, i.e., enhancing product safety, maximizing protection to the injured plaintiff, and apportioning costs among the defendants.”

The judge also pointed out that the Supreme Court extended strict liability to retailers for defective product design and manufacturing in Canifax v. Hercules Powder Co. in 1965. In this case, the court ruled that any wholesaler, retail dealer, or distributor is engaged in the business of selling and, therefore, strictly liable for defects. Judge Guerrero concludes, “[l]ike the defendant in Canifax, Amazon acted as an intermediary between an upstream supplier and the ultimate consumer. Amazon accepted an order for a product, billed the consumer, and remitted the proceeds to the upstream supplier. Indeed, in this case, Amazon went further. It took possession of the product, so it fulfilled the consumer’s order directly.”

Guerrero also cites the 1968 case, Barth v. B.F. Goodrich Tire Co., where the court rejected the defendant’s stance that it was merely a conduit for the sale and not a seller of a product. She explains that “[l]ike the defendant in Barth, Amazon was a link in the chain of product distribution even if it was not a seller as commonly understood. Pursuant to a contract with the seller, Amazon retrieved the product from its warehouse and supplied it to the consumer. And again, Amazon went further. Its business model compels the consumer to interact directly with Amazon, not the seller, to place the order for the product and pay the purchase price.” This appellate ruling hinged on Judge Guerrero’s view that whatever terms were used to describe Amazon’s role—retailer, distributor, or facilitator—the e-commerce giant was integral in supplying the product to the consumer.

Critiques of the Plaintiff’s Expert Witnesses

Also important to her ruling, Judge Guerrero frequently references Bolger’s expert’s opinions. For example, the judge elaborates on an expert’s assertion that “Amazon owns the customer” and implying that suppliers have no direct relationship with buyers. She also cites Bolger’s expert’s view that Amazon is in the front seat for all communications with buyers. The plaintiff’s experts effectively demonstrated that any product problems or pre-purchase questions between buyers and third-party sellers are strictly anonymized in the Amazon message console. Sellers cannot contact buyers regarding payment or influence a purchase decision. These expert opinions helped Judge Guerrero reach her conclusion that Amazon is integral to the transactions on its platform and, therefore, subject to strict liability.

Amazon’s Previous Strict Liability Litigation

Amazon has previously been successful in avoiding strict liability as a seller, including two federal appellate cases. However, in July 2019, the 3rd U.S. Circuit Court of Appeals in Philadelphia reversed a lower court’s decision that Amazon could not be held strictly liable. In Oberdorf v. Amazon.com Inc., the plaintiff claimed a retractable dog leash she purchased from Amazon left her blinded in one eye after it snapped back and hit her in the face. Furry Gang, the third-party seller of the leash, has not come forward in the lawsuit.

Circuit Judge Jane Richards Roth ruled that Amazon could be partly liable because its business model “enables third-party vendors to conceal themselves from the customer, leaving customers injured by defective products with no direct recourse to the third-party vendor.” The case was sent back to the lower court for determination on product defectiveness.

Plaintiff Claims Will Surge

This landmark ruling is sure to motivate plaintiff counsels to bring more strict liability cases against Amazon. Amazon is known as one of the most profitable retailers on the planet, with a reported $11 billion profit from third-party sellers alone during the first quarter of 2019. CEO Jeff Bezos stated that third-party sellers accounted for 58% of Amazon’s gross, physical merchandise sales in 2018. Amazon undoubtedly now has a target on its back in California, if not beyond.

Another influential fact is that brick and mortar stores have long been subject to strict liability in California. This strict product liability doctrine applies to other major retailers such as Walmart and Target that are considered competitors to Amazon. But with rulings like Bolger and Oberdorf pushing U.S. courts to catch up with the reality of digital commerce, we are likely to see more cases like this go after big e-commerce companies.