Appellate ruling frustrates Amazon’s efforts to avoid strict liability for marketplace transactions

Earlier this month, the California Court of Appeal became the latest court to address whether an online retailer may be held strictly liable for a dangerous product sold on its website in a transaction associated with a third-party seller. Bolger v. Amazon.com, LLC, 2020 DJDAR 8836 (Aug. 13, 2020).

Plaintiff Angela Bolger purchased a replacement laptop battery on Amazon's site, which later exploded and caused her serious injury. Bolger sued Amazon, but the online retailer argued it could not be held liable because the product was purchased in a "marketplace" transaction. This meant that (unbeknownst to Bolger) a third party had provided the battery to Amazon and created the product listing. According to Amazon, this third-party vendor was the true "seller" of the product, and it -- not Amazon -- was responsible for any defect.

The trial court granted summary judgment in Amazon's favor, but the Court of Appeal reversed in a unanimous decision. The 4th District Court of Appeal held that Amazon was a "direct link in the chain of distribution between the third-party seller and the consumer" and thus could be held strictly liable for defective products sold on its site.

The court noted the plenary role Amazon played in facilitating the transaction, from accepting possession of the battery from the third-party vendor, storing the battery in its warehouse, receiving payment for the battery from Bolger, and shipping the battery to Bolger in Amazon-branded packaging. "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." The court also recognized that Amazon may be the only participant in the distribution chain available to compensate an injured consumer, that Amazon has the power to ensure the products listed on its site are safe, that Amazon can exert pressure on third-party sellers and distributors to promote safety, and that Amazon has the ability to adjust the cost of liability between itself and third-party sellers. The court concluded that established principles of California products liability law permitted Bolger's case against Amazon to proceed.

Bolger leaves two major questions looming:

First, what impact will it have on subsequent cases against Amazon?

Here, we emphasize that the Court of Appeal expressly limited Bolger to its facts -- a so-called "Fulfilled by Amazon" sale in which Amazon actually "took possession of the product" and ultimately "fulfilled the consumer's order directly." This leads one to wonder whether Bolger would have reached the same result in a "regular" Amazon sale. Bolger itself suggests it would: As the court noted, the mere fact that Amazon "accepted an order for a product, billed the consumer, and remitted the proceeds to the upstream supplier" was sufficient for strict liability under existing California law (citing Canifax v. Hercules Powder Co., 237 Cal. App. 3d 44 (1965). Indeed, Amazon's undeniable ability to influence product safety and spread risk stems from its ownership of -- and control over -- the underlying marketplace, not whether it ships the product. Thus, Amazon is "a powerful intermediary between the third-party seller and the consumer" in any Amazon sale, regardless of whether it actually ships any product.

Courts outside California are also grappling with this question, with mixed outcomes depending on the facts of the case and the particular state's tort law. Some courts have concluded Amazon should not be subject to strict liability for any marketplace transactions. (E.g., Fox v. Amazon.com, Inc., 930 F.3d 41 (6th Cir. 2019) (applying Tennessee law); Erie Insurance Co. v. Amazon.com, Inc., 925 F.3d 135 (4th Cir. 2019) (applying Maryland law). Others have found Amazon liable. E.g., McMillan v. Amazon.com, Inc., 433 F. Supp. 3d 1034 (S.D. Tex. 2020) (applying Texas law), interlocutory appeal granted, 20-20108 (5th Cir. 2020). Other courts have yet to decide this important question. E.g., Oberdorf v. Amazon.com, Inc., 18-1041 (3rd Cir. June 2, 2020) (certifying question to Supreme Court of Pennsylvania); Carpenter v. Amazon.com, Inc., 19-15695 (9th Cir. 2020). Certainly, Bolger hurts Amazon's effort to vigorously resist the application of strict liability for marketplace transactions in pending cases or those that will inevitably arise in the future.

The other question is what might the California Supreme Court do if Amazon successfully seeks review in Bolger? Before answering that question, we pause to address its predicates:

We assume Amazon will seek review. As just discussed, Bolger is a major set-back in Amazon's nationwide campaign to amass favorable case law. Left standing, Bolger exposes Amazon to significant tort liability, both here (as law) and elsewhere (as persuasion).

Whether the California Supreme Court will grant review is a tougher question: The court grants review in very few cases (5-7%), and nothing in Bolger warrants it. Moreover, with pro-consumer legislation on the horizon that should resolve this issue once and for all (see Assembly Bill 3262), the court may regard the issue as soon-to-be moot.

That said, as one author has experienced firsthand, this Supreme Court has shown an interest in reviewing tort issues that are the subject of nationwide judicial discourse, even if it ultimately affirms the Court of Appeal. E.g., T.H. v. Novartis Pharmaceuticals Corp., 4 Cal. 5th 145 (2017).

That last point leads back to the larger discussion: One should not assume the Supreme Court will reverse if it grants review. To the contrary, we believe the court would ultimately affirm if it did: After all, Bolger is firmly rooted in "established principles of strict liability." Indeed, it was Amazon who conceded that, to find in its favor, the Court of Appeal had to engage in "the wholesale dismantling of California's strict products liability doctrine." Obviously, the Court of Appeal was not eager to do so, and we doubt the California Supreme Court would be either. 