Home Civil Law California Court Holds Amazon Strictly Liable for Marketplace Items Amazon Didn’t Fulfill-Loomis...

California Court Holds Amazon Strictly Liable for Marketplace Items Amazon Didn’t Fulfill-Loomis v. Amazon – Technology & Marketing Law Blog


This is one other lawsuit over a fiery Chinese-manufactured hoverboard offered by means of Amazon’s market. In Bolger v. Amazon from August 2020, a California appellate courtroom held that Amazon was strictly answerable for market objects it fulfilled, and Section 230 immunity didn’t apply. A second California appellate courtroom has endorsed Bolger however goes additional: strict legal responsibility applies even when Amazon doesn’t do the fulfilment. This places Amazon is a legally dicey spot, and its countermoves will seemingly shake up the trade.

The courtroom says that Amazon might be strictly liable as a result of it’s within the “vertical chain of distribution” primarily based on the next details (emphasis added):

Amazon’s own enterprise practices make it a direct link within the vertical chain of distribution under California’s strict legal responsibility doctrine….Amazon positioned itself squarely between TurnUpUp, the vendor, and Loomis, the client, within the transaction at concern. When Loomis needed to purchase a hoverboard for her son, she perused product listings on Amazon’s web site. Amazon took Loomis’s order and processed her fee. It then transmitted the order to TurnUpUp, who packaged and shipped the product to Loomis

When Loomis questioned whether or not the hoverboard would arrive in time for Christmas, she communicated her considerations by means of Amazon. TurnUpUp was not allowed to speak with Loomis immediately. If Loomis had needed to return the hoverboard, the return would have been routed by means of Amazon.

Amazon remitted Loomis’s fee to TurnUpUp after deducting its charges, together with a 15 % referral price primarily based on the entire sale worth. These details undermine Amazon’s characterization of its market as an on-line mall offering on-line storefronts for sellers. Owners of malls sometimes don’t function conduits for fee and communication in every transaction between a purchaser and a vendor. Moreover, they don’t sometimes cost a per-item price quite than a hard and fast quantity to lease their storefronts. Instead, these actions – 1) interacting with the shopper, 2) taking the order, 3) processing the order to the third occasion vendor, 4) accumulating the cash, and 5) being paid a proportion of the sale – are in line with a retailer or a distributor of client items.

In different phrases, Amazon acted like an on-line market.

Alternatively, the courtroom says there’s a triable concern over whether or not Amazon is within the stream of commerce. The courtroom additionally sends the negligence query again for additional consideration.

Amazon argued that it was merely a “service provider” to its market distributors.  The courtroom responds: “Amazon took the order for the hoverboard, took the payment, and passed the order up the chain of distribution.”

In help of imposing strict legal responsibility, the courtroom cites how Amazon undertakes some product security efforts, comparable to requiring UL certification. In different phrases, the courtroom embraces the moderator’s dilemma, when courts weaponize a service’s belief & security efforts to carry them answerable for no matter they didn’t do. The courtroom says “Application of strict liability in this case may incentivize Amazon to expand its safety compliance requirements to more products and thus further the goal of product safety.” That’s true, or it might inspire providers like Amazon to counterproductively cut back their current T&S work and even exit the trade. As I’ve predicted before, Amazon can and possibly will more and more nix market objects and retail a few of these objects immediately, and people modifications will devastate many present small market distributors and presumably additional consolidate Amazon’s market place.

Section 230 will get an inconsequential point out within the footnotes. Apparently the plaintiff dropped the claims Amazon thought Section 230 immunized, and Amazon apparently didn’t argue that Section 230 immunized the strict legal responsibility and negligence claims.

A prolonged and scholarly concurrence from Judge Wiley (a former UCLA legislation professor) excoriates Amazon. It begins out: “Amazon.com can control what it created” and goes downhill from there. Some quips:

  • “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. Tort law will inspire Amazon to align its ingenuity with efficient customer safety. Customers will benefit.”
  • “we have an easy case that beautifully illustrates the deep structure of modern tort law: a judicial quest to minimize the social costs of accidents—that is, the sum of the cost of accidents and the cost of avoiding accidents….Amazon has cost-effective options for minimizing accident costs.”
  • “The cost-benefit analysis in Amazon’s case is not a close call: the benefits of the actions Amazon can take to minimize accidents vastly outweigh the costs of these actions to Amazon.”
  • “moral justice and cost-benefit analyses do not conflict in this case.”

Last August, a proposed California invoice would have largely codified the Bolger holding. In a shock transfer, Amazon flipped to help the invoice–as long as its rivals additionally received equally hammered. That invoice received near passage however ran out of time when the legislative session ended; I consider it’s been resurrected this 12 months. I interpreted Amazon’s flip as an indication that Amazon will finally hand over its authorized protection and plans to reconfigure its market. Still, till then, Amazon is digging in its heels in courtroom–which appears more and more unlikely to prevail in the long run.

Meanwhile, each on-line market–together with eBay–appears to do the entire following: “1) interacting with the customer, 2) taking the order, 3) processing the order to the third party seller, 4) collecting the money, and 5) being paid a percentage of the sale.” This is a troubling commonplace for all on-line marketplaces, although they weren’t within the courtroom to defend their pursuits.

Case quotation: Loomis v. Amazon.com LLC, 2021 WL 1608878 (Cal. App. Ct. April 26, 2021)

BONUS: Another Amazon hoverboard case, from Illinois, reached a unique end result. The courtroom says: “the Supreme Court of Illinois has consistently conveyed that the key criterion for being a seller is exercising control over the product, not over the purchasing process,” and the federal courtroom repeatedly says it must be cautious increasing legal responsibility past what the state courts have stated. The negligent misrepresentation declare failed as a result of the vendor, not Amazon, wrote the product itemizing. That additionally means Section 230 applies. Summary judgment for Amazon. Great Northern Insurance v. Amazon.com, Inc., 2021 WL 872949 (N.D. Ill. March 9, 2021).

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