E-tailers Beware: California Court of Appeal Rules that Amazon Can be Sued for Products Sold by Third-Party Vendors on its Website

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E-tailers Beware: California Court of Appeal Rules that Amazon Can be Sued for Products Sold by Third-Party Vendors on its Website

8/21/20

A California Court of Appeal issued a ruling on August 13, 2020, holding that Amazon can be held strictly liable for products sold on its website by third-party sellers through its “Fulfilled by Amazon” (“FBA”) program. (Bolger v. Amazon.com, LLC (Aug. 13, 2020, No. D075738) ___Cal.App.5th___ [2020 Cal. App. LEXIS 761].)This ruling now opens the door for consumers to sue Amazon for any defective products sold on its website regardless of whether those products are directly sold by Amazon.

The ruling arises out of a lawsuit filed by a woman, Angela Bolger, who purchased a computer battery through Amazon that was sold through third-party vendor Lenoge Technology (HK) Ltd., fictitiously named “E-Life” on Amazon (“Lenoge”). Bolger alleges that the battery exploded several months later, causing her severe burns. Bolger sued several defendants, including Lenoge and Amazon, alleging strict products liability, negligent products liability, breach of implied warranty, breach of express warranty, and “negligence/negligent undertaking.” Lenoge did not appear and default judgment was entered against it. Amazon moved for summary judgment, arguing that a theory of strict liability and other related torts could not apply to it because it did not distribute, manufacture, or sell the product in question. A San Diego Superior Court granted the motion for summary judgment, and Bolger appealed.

Now the Court of Appeal has overruled the Superior Court, holding that Amazon “placed itself between Lenoge and Bolger in the chain of distribution” by accepting possession of the battery, storing it, promoting its website, listing the battery for sale, receiving Bolger’s payment, and shipping the battery to Bolger. Amazon inserted itself into the relationship between Lenoge and Bolger and set the terms of its own relationship with Lenoge, including demanding indemnification and fees. The court held that whether Amazon is labeled as a “retailer,” “distributor,” or “facilitator,” “it was pivotal in bringing the product here to the consumer,” and therefore, can be held strictly liable for any defect with the product. (Id. at *3.)

This holding follows a similar ruling in Pennsylvania, which was appealed and is now pending. (Oberdorf v. Amazon.com Inc. (3d Cir. June 2, 2020, No. 18-1041) 2020 U.S. App. LEXIS 17974.) Should these rulings remain in effect, they likely will change how websites offering products through third-party sellers approach their roles in the chain of distribution and assess future potential liability. It may – and should – make online retailers such as Amazon more cautious about offering products that they have not vetted or tested.

If you have questions or would like more information, please contact Anastasia Osbrink at aosbrink@fmglaw.com.

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