Did California Court Overstep Its Authority in Amazon Marketplace Liability Case?

The influence of Amazon is so ubiquitous in modern society it’s hard to imagine life without it. As the world’s most popular e-commerce site, many of the products sold on Amazon are sourced by third-party sellers seeking to use Amazon’s website to reach a wider variety of consumers. Traditionally, strict products liability has been confined to deficiencies in a defendant’s own product, and the court has “never extended strict liability to an entity that provides a forum or service used by others to sell their own products.”

In an unprecedented decision, a California appeals court held that Amazon was strictly liable for defective products sold by third-parties on their site, becoming the only published decision in the nation holding Amazon liable in this situation. In Bolger v. Amazon.com, plaintiff Angela Bolger purchased a replacement battery for her laptop sold by Lenoge Technology, a third-party seller using Amazon’s website to service the sale. Bolger alleges that the replacement battery exploded months after her purchase, causing her to suffer severe burns throughout her body. She subsequently sued Amazon alleging various causes of action including strict products liability. Amazon’s motion for summary judgment was granted by the trial court on the grounds that strict liability should apply to the product seller (here, Lenoge), and that Amazon was merely an “online marketplace.”

The California Court of Appeal’s Fourth Appellate District reversed, choosing not to focus on terminology (i.e. “retailer,” “distributor,” “facilitator”) but instead on the fact that Amazon was “pivotal in bringing the product here to the consumer.” As such, the court found that Amazon is an “integral part of the overall producing and marketing enterprise that should bear the cost of injuries resulting from defective products.”

Amazon recently petitioned the California Supreme Court to review the decision, arguing not only that the appellate court unjustifiably expanded strict liability law, but that they “usurped the Legislature’s role” and “overstepped its authority to make public policy choices.” While there can be no doubt that the Court of Appeals decision, if upheld, will have a significant impact on consumers and online retailers across the country, Amazon seems to be on board with a change in the law so long as it applies to all stores equally and is enacted by the Legislature.

A recent California bill, AB 3262, would extend strict liability to online marketplaces and has already been passed by the California State Assembly in June and approved by the state senate’s judicial committee. The bill was recently shelved as the term expired before a vote could be conducted, but it is expected to be reintroduced in the next legislative session. In somewhat of a surprise announcement, Amazon issued a letter in support of the bill, stating that they “share the California legislature’s goal of keeping consumers safe,” noting however that their support is conditioned on the legislation applying equally to all stores, including all online marketplaces.

Perhaps the question is not whether Amazon should be held strictly liable for defective products sold on their site – Amazon already seems to be supportive of this. Instead, the question should be whether it is in the purview of the Judiciary or the Legislature to be making this decision. Amazon clearly believes that the California appellate court inappropriately overstepped its authority to make public policy decisions, viewing strict products liability laws as having the potential to influence the marketplace and economy which should be left to the Legislature to ultimately decide. Public policy decisions have long been left to the Legislature as they are in a better position to consider the competing policies, have the ability to conduct hearings, and are more directly accountable to the people of their state.

If it is indeed true that strict products liability laws should be left to the Legislature, and the California Court of Appeals decision is overturned, consumers will likely have to wait until the bill is passed before being able to go after Amazon and other online services directly. Opponents of the bill believe the “one-size-fits-all” approach would significantly and disproportionately hurt small businesses and online marketplaces who depend on e-commerce to survive. Amazon is better positioned to “weather exposure to liability for defective products” than smaller companies are, and eliminating the competition of these companies may actually end up benefiting Amazon. This benefit may explain why Amazon has publicly expressed support of the California bill. At the end of the day, it is ultimately up to the California Supreme Court to grant certiorari and decide which branch of government is the most appropriate to be making decisions about strict products liability law. Either way, a decision will have vast impacts on consumers and online retailers alike.

Chris Jones