In a decision that may impact future e-commerce, the California Court of Appeal held in Bolger v. Amazon.com, LLC that under California law, Amazon could be strictly liable for an allegedly defective battery manufactured by a third-party and sold on its website.  The Court further found Amazon was not immune from liability under the Communications Decency Act.  The Court reversed the trial court’s grant of summary judgment in favor of Amazon.

In Bolger, Angela Bolger suffered severe burns after a replacement laptop battery she purchased on Amazon’s website exploded.  The Amazon listing for the battery identified the seller as “E-Life,” a fictitious name used on Amazon by Lenoge Technology (HK) Ltd.  The battery was sold through Amazon’s “Fulfilled by Amazon” program.  Through the program, third-party sellers ship products to Amazon’s warehouses; the products are populated on Amazon’s website; once the products are sold, Amazon personnel retrieve the product from the Amazon warehouse and ship it to the consumer in Amazon-branded packaging; Amazon collects payment from the customer and is responsible for any returns.  Under the program, third-party sellers like Lenoge are prohibited from communicating with Amazon customers, except indirectly through the Amazon website where such interactions are anonymized.

In granting summary judgment to Amazon, the trial court found strict liability did not apply, because Amazon did not distribute, manufacture, or sell the product in question.  Rather, Amazon was a mere “provider of services by maintaining an online marketplace, warehousing and shipping goods and processing payments.”  The trial court further found Amazon was not strictly liable under the “marketing enterprise doctrine.”

The Court reversed.  As a matter of first impression, it found Amazon was strictly liable for defective products offered on its website by third-party sellers like Lenoge.  In reaching its decision, the Court examined the policies underlying the development of the doctrine of strict liability, noting that the doctrine was created to protect consumers of manufactured goods.  The Court explained that the doctrine had been expanded, where necessary, to account for “market realities” and to cover new transactions in “widespread use . . . in today’s business world.”

Against this backdrop, the Court analyzed Amazon’s role in the chain of distribution. Amazon placed itself between Lenoge and Bolger in the chain of distribution; it accepted the product from Lenoge and stored it in an Amazon warehouse; attracted Bolger to its website; listed Lenoge’s product; accepted her money for the product; and shipped the product to Bolger in Amazon packaging.  Amazon controlled the terms of its relationship with Lenoge and the conditions of Lenoge’s offer for sale; restricted Lenoge’s access to the customer’s information; required Lenoge to communicate with customers through Amazon; and demanded indemnification and significant fees for each purchase.  After reviewing these factors, the Court concluded: “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.”

In applying established principles of strict liability, the Court found Amazon was an “integral part of the overall producing and marketing enterprise that should bear the cost of injuries resulting from defective products.”  Amazon was the “only member of the enterprise reasonably available to an injured consumer in some cases, it plays a substantial part in ensuring the products listed on its website are safe, it can and does exert pressure on upstream distributors (like Lenoge) to enhance safety, and it has the ability to adjust the cost of liability between itself and its third-party sellers.”

The Court also rejected Amazon’s claim that the Communications Decency Act shielded Amazon from liability because Bolger’s causes of action were based on Amazon’s publication of Lenoge’s sales listing.  Instead, the Court found Bolger’s strict liability claims were based on Amazon’s own conduct and involvement in the distribution of an allegedly defective product—not the content of Lenoge’s product listing. “Bolger’s claims are based on Amazon’s role in the chain of production and distribution of an allegedly defective product.  The fact that some content provided by Lenoge was posted on the Amazon website does not automatically immunize Amazon for its own choices and activities unrelated to that content.”

It remains to be seen whether this decision will stick.  Amazon has already sought review from the California Supreme Court.  Time will tell whether the California Supreme Court will accept review, and if so, whether it will affirm the decision, or take a more restricted view of the application of strict liability to online sellers like other courts.