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Posted by on Aug 15, 2020 in Publications |

Bolger v. Amazon – Online marketplaces may be strictly liable when they facilitate the sale of defective products

Bolger v. Amazon – Online marketplaces may be strictly liable when they facilitate the sale of defective products

One consequence of our shopping moving online is that, more and more frequently, it’s not always clear exactly who is selling us the product we’re buying. Companies such as Amazon are more accurately described as an online marketplace rather than a store – while you can certainly buy things directly from Amazon, many times you are not buying from Amazon but are instead buying from a third-party seller who is simply using Amazon to sell products to you. The physical analogy is to a shopping mall – when you go shopping at a mall, you’re not buying things from the mall; rather, you’re buying from stores who are “hosted” by the mall.

Such was the case for Angela Bolger (“Bolger”), who bought a replacement laptop battery using Amazon’s website. Amazon didn’t technically sell the battery; rather, a company named Lenoge Technology (“Lenoge”) was the business that actually sold the battery to Bolger. But even though Lenoge technically sold the battery, it had already given the battery to Amazon long before Bolger put in her order. This meant that Amazon, not Lenoge, charged Bolger for the purchase of the battery and Amazon, not Lenoge, retrieved the battery from one of its warehouses and then shipped the battery to Bolger. So while Lenoge was the technical seller of the replacement laptop battery, all of Bolger’s interactions were actually with Amazon. Put more simply, Amazon sold Bolger a battery on behalf of a third-party seller, acting as a middleman between the seller and Bolger by facilitating the purchase and delivery of the battery.

The problem with this arrangement was when the laptop battery exploded and injured Bolger, as it left her with a fundamental problem at first – who did she sue? After trying to sue Lenoge and a number of other foreign companies, all of which she couldn’t find or were located in a foreign country, she eventually focused on Amazon and sued the company over the defective battery as linked below:

This presented the California Court of Appeal with an issue of first impression: can an online marketplace be held liable when one of the products it sells is defective? After a lengthy analysis, the Court’s answer was yes. The Court pointed to a laundry list of ways in which Amazon played an integrated, meaningful role in the transaction – such as by bringing customers to its website, authorizing Lenoge to sell through it, accepting Lenoge’s products, processing the purchase and payment, and shipping the battery to Bolger. Because of this, the Court found that Amazon is an “integral part of the overall production and marketing enterprise that should bear the cost of injuries resulting from defective products”; that Amazon was “involved in the vertical distribution of consumer goods and responsible for passing the product down the line to the consumer”; and was “one of the entities responsible for placing a defective product into the stream of commerce.”

Of course, this doesn’t mean that every online marketplace is automatically liable for every defective product it hosts. One could imagine an online marketplace in which the host is completely hands off and simply provides a means for buyers and sellers to connect with one another and otherwise has no part in the transaction. Indeed, the Court of Appeals noted that this was a limited decision about Amazon being strictly liable for this particular battery and that other stores and marketplaces may be “distinguishable.” However, it does not take much to imagine a string of similar lawsuits finding their way into the court system to determine just exactly where the limits are for when an online marketplace is liable.

As a practical matter what does this mean? If you are a consumer that purchased a defective product online, don’t be afraid to take a look at the company that handled the transaction for you – even if they are not the business that technically sold the product to you. And if you are involved in e-commerce, it would be prudent to take a closer look at both the products you are selling and the extent to which you’ve inserted yourself into the middle of the interactions between the buyers and sellers using your services. Failure to do so could find you in the crosshairs of the next angry customer to be injured by an exploding battery.

TLDR: Depending on the circumstances, California law now allows that an e-commerce host may be strictly liable for facilitating the sale of a defective product between third-party buyers and sellers.