Amazon may be held liable for products it sold, panel says

Amazon may be held liable for a product sold on its platform by a third party, a California appellate court has ruled.

The decision could have significant implications for a company that has become the most dominant player in online retail by creating an exchange that links millions of buyers and sellers.

"Amazon provides no legal support for its argument that negligent products liability may only be imposed on manufacturers and sellers," Los Angeles Superior Court Judge Sam O. Ohta, sitting by assignment on the 2nd District Court of Appeal, wrote for the two-justice majority on Monday. "Instead, a duty of care may be imposed on a defendant who is not a manufacturer or seller in the context of a negligent products liability claim if certain policy factors are met."

"Amazon invests heavily in the safety and authenticity of all products offered in our store including proactively vetting sellers and products before being listed, and continuously monitoring our store for signals of a concern," said an Amazon spokesperson in an email. "Amazon supports legislation that provides protections for consumers wherever they shop online to ensure all stores are held to the same standards."

The case was brought by Kisha Loomis, who said she bought a Chinese-made hoverboard -- a popular skateboard-like electronic device -- for her son. She said it caught fire while plugged in to charge, injuring her.

Ohta reversed a summary judgment ruling that Amazon won from one of his colleagues on the LA County Superior Court. He remanded the case to reexamine "Loomis' strict products liability and negligent products liability claims." He also awarded Loomis' costs of appeal. Loomis v. Amazon, 2021 DJDAR 3932 (April 26, 2021).

The case builds on a California appellate ruling from last year, Bolger v. Amazon.com LLC, 53 Cal. App. 5th (2020). That case involved an exploding laptop battery. That court engaged in a similar test finding Amazon was integral to the sale, gained financial benefit and exercised control over its website.

Amazon and its attorney, Max L. Rothman of Perkins Coie LLP, did not respond to emails seeking comment. The company and its counsel have repeatedly argued it is merely an online marketplace and not subject to strict liability for defective products. The Civil Justice Association of California filed an amicus brief to support Amazon.

Representing Loomis in the appeal, Christopher B. Dolan argued Amazon does not differ from a brick and mortar store which makes a percentage from a sale and incurs potential liability when it sells a product.

"If this hoverboard had been sold at a local mom-and-pop sporting goods store, they could be held liable for the injuries caused by its defects," the founder and chief legal counsel of Dolan Law Firm in San Francisco, said in a news release. "Amazon shouldn't get a pass by claiming that they are just a 'digital matchmaker.'"

In a separate concurring opinion, Justice John S. Wiley Jr. focused on Amazon's tort liability and the control it exercises over the goods sold on its website.

"Once Amazon is convinced it will be holding the bag on these accidents, this motivation will prompt it to engineer effective ways to minimize these accident costs," Wiley wrote. "Tort law will inspire Amazon to align its ingenuity with efficient customer safety. Customers will benefit."

Last year, Assemblyman Mark Stone, D-Scotts Valley, introduced a bill that would have imposed strict product liability on electronic retail marketplaces. Backed by the Consumer Attorneys of California and other groups, AB 3262 made it to the Senate floor before dying without a floor vote. The Civil Justice Association of California argued the bill was too expansive and could impose excess liability on online retailers when the maker of a product is "judgment proof" because of being located in another country.