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Amazon Liable for Third-Party Product Safety, Appeals Court Rules

In a decision that could have a sweeping impact on the future of e-commerce, judges from the California Court of Appeal ruled that Amazon could be held strictly liable for a defective battery manufactured by a third party and sold on its website.

The decision reverses the trial court’s judgment in favor of Amazon, which argued that it was merely advertising sellers’ products rather than participating in sales.

About the Case

The ruling stems from a case involving a plaintiff who purchased a replacement laptop battery on Amazon that later exploded. The battery was listed by a third party and sold through Amazon’s “Fulfilled by Amazon” program.

The program allows third-party sellers to ship products to Amazon’s warehouses and list them on the Amazon marketplace. Once sold, the products are retrieved by Amazon personnel from the Amazon warehouse and shipped to the consumer in Amazon-branded packaging. Amazon collects customer payment and processes any returns. The program also prohibits third-party vendors from communicating with Amazon customers.

In the initial case, the trial court ruled that strict liability did not apply because Amazon didn’t manufacture, distribute or sell the product and was rather a “provider of services by maintaining an online marketplace, warehousing and shipping goods and processing payments.”

The appeals court reversed that ruling by finding Amazon strictly liable for defective products listed by third-party sellers on its website. The Court noted strict liability was intended to protect consumers and that its application has expanded to account for market realities and how transactions happen today.

In this light, the Court noted that due to Amazon’s involvement in the chain of distribution and because it was the only entity available to injured consumers in many cases, it was an “integral part of the overall producing and marketing enterprise that should bear the cost of injuries resulting from defective products.” The Court concluded: “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.”

Products Liability in the Modern Era

While Amazon has already sought review from the California Supreme Court, the latest ruling sends a message to major corporations and retailers that liability for defective products can extend beyond our traditional definitions of a “manufacture,” “distribute,” or “sell.”

While online retailers have been around for some time, they have become increasingly popular in the age of COVID, when more consumers are turning to online marketplaces for goods and products. For services like Amazon, much of the prolific growth is due to its expansion of offerings from third-party vendors – including third parties that may be fictitious or foreign enterprises that don’t take necessary steps to ensure the safety of products. As our world changes and the realities of the way we sell and buy products evolves, so too much our laws and how we interpret them.

If the ruling sticks and spreads to other jurisdictions, it could make for big change and give consumers more options to issues over defective products. It may also prompt e-commerce retailers like Amazon to overhaul safety processes to protect themselves against lawsuits and ultimately make product offerings safer for customers.

At Levinson Axelrod, P.A., we have extensive experience fighting for victims injured by defective products in complex products liability claims. Our attorneys closely track major decisions like this to assess how courts and juries are addressing important legal issues and tailor how we handle our clients’ cases. If you have questions about a potential products claim, contact us for a FREE consultation.

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