December 23, 2020

[Note Horvitz & Levy Appellate Fellow Sarah Hamill prepared this summary of current developments in online retailer liability.]

With the increase in online shopping during the pandemic, online retailers are facing potential liability for defective products they sell on behalf of third parties. Amazon has been at the forefront of a legal battle regarding a potentially shifting legal landscape of liability for defective products sold online.

Many online retailers, like Amazon, do not fit the typical definition of retailers who may be held strictly liable for defective products, because online retailers, unlike “brick-and-mortar” retailers, do not take title to and possession of the product or exert the control over the product required for strict liability.[1] Because of this distinction, Amazon has largely avoided strict liability for products sold by third parties on its website. But consumer advocates are pushing to change that.[2]

With Assembly Bill 3262,[3] it appeared California law was poised to hold online retailers strictly liable. This bill “would require an electronic retail marketplace, as defined, to be held strictly liable, subject to certain exceptions, for all damages caused by defective products placed into the stream of commerce to the same extent as a retailer.”[4] However, on November 30, 2020, the bill died in the Senate.

Court decisions in California and around the country may shift the law before legislatures speak on the issue. Amazon has been sued across the country by plaintiffs asking courts to hold Amazon strictly liable for defective products sold on its website. In the most recent case in California, Bolger v. Amazon.com, LLC, the Fourth District Court of Appeal denied Amazon summary judgment, finding that Amazon may be strictly liable for a defective laptop battery sold on its website that exploded and severely burned the plaintiff.[5] The court found that under the circumstances of this case, the “record [did] not demonstrate as a matter of law that Amazon [could not] be held strictly liable for the defects in the third-party products sold through its website.”[6] Amazon sought review of this decision in the California Supreme Court, but the Court declined to review the case or to depublish the Court of Appeal opinion.

Since Bolger was published, a trial court in New York, citing Bolger, denied Amazon’s motion for summary judgment and found that when viewing the facts in the light most favorable to the plaintiff, “Amazon [exercised] sufficient control over the product to be considered among ‘retailers and distributors.’”[7] In Ohio, on the other hand, the Supreme Court (with the dissent citing Bolger) found the trial court properly granted Amazon summary judgment, concluding Amazon did not participate in “placing a product in the stream of commerce and therefore [could not] be held liable as a ‘supplier’ under the Ohio Products Liability Act.”[8]

It is unclear whether online retailers will in fact be held strictly liable for third-party products sold on their websites. Some courts seem to be heading in that direction; others are making clear that strict liability will not apply to online retailers selling third-party products unless the legislature changes the law.

We will continue to monitor developments in this area as more cases emerge. 

________________________________________
[1] Steven Geise & Annika Mizel, Online Retailer Liability Could Soon Take New Shape in Calif., Law360 (Aug. 3 ,2020, 1:32 PM), https://www.law360.com/articles/1297094.
[2] Id.
[3] Assemb. B. 3262, 2019-2020 Reg. Sess. (Cal. 2020).
[4] Id. (Legis. Counsel’s Dig.).
[5] Bolger v. Amazon.com, LLC, 53 Cal. App. 5th 431, 437-38 (2020).
[6] Id. at 462.
[7] State Farm Fire & Casualty Co. v. Amazon.com Servs., Inc., No. 008550, 2020 WL 7234265, at *4 (N.Y. Sup. Ct. Dec. 8, 2020).
[8] Stiner v. Amazon.com, Inc., No. 2019-0488, 2020 WL 5822477, at *1 (Ohio Oct. 1, 2020); see id. at *8 (Donnelly, J., dissenting).