The Subrogation Strategist

The California Court of Appeals recently ruled that Amazon.com, Inc. (Amazon) can be held strictly liable for injuries caused by a defective product sold by a third-party vender on its website. Bolger v. Amazon, D075738, 2020 Cal. App. LEXIS 761. The decision in Bolger comes just two months after the United States District Court for the Southern District of Texas reached the same ruling under Texas law in McMillan v. Amazon.com, Inc., No. 18-CV-2242, 2020 U.S. Dist. LEXIS 102025

In Bolger, Angela Bolger (Bolger) bought a laptop computer battery on Amazon.com. Amazon identified the “seller” as E-Life, which was a fictitious name Amazon allowed Lenoge Technology (HK) Ltd. (Lenoge) to use. Lenoge was a member of Amazon’s “Fulfillment by Amazon” (FBA) program, so the battery was stored in an Amazon warehouse, packaged by Amazon and shipped to Bolger in Amazon-branded packaging. Several months after the battery was delivered, the battery exploded and Bolger suffered severe burns.

Bolger sued Amazon and Lenoge, asserting causes of action for strict products liability, negligent products liability, breach of express and implied warranty, and negligent undertaking. Lenoge was served but did not appear, and the trial court entered its default. Amazon moved for summary judgment arguing that it was not the “seller” of the battery and, thus, strict liability (and any theory based on selling the battery) did not apply to it. Amazon argued that its website was an “online marketplace” and only Lenoge was the product seller. The trial court agreed with Amazon; Bolger appealed the decision.

The Court of Appeals reversed, because, “[w]hatever 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 Bolger court reached its ruling because of Amazon’s integral role in placing the battery into the stream of commerce. As stated by the court:

Amazon accepted possession of the product from Lenoge, stored it in an Amazon warehouse, attracted Bolger to the Amazon website, provided her with a product listing for Lenoge's product, received her payment for the product, and shipped the product in Amazon packaging to her. Amazon set the terms of its relationship with Lenoge, controlled the conditions of Lenoge's offer for sale on Amazon, limited Lenoge's access to Amazon's customer information, forced Lenoge to communicate with customers through Amazon, and demanded indemnification as well as substantial fees on each purchase.

The Bolger court placed particular emphasis on the fact that Lenoge was not involved in the sales transaction; Lenoge did not approve the sale before it was made, and it did not learn of the sale until it received a report from Amazon. The court also emphasized that, if a product is returned under the FBA program, it is shipped back to Amazon, where Amazon inspects the product, determines whether it can be resold and places it back in its warehouse.

Unlike other courts deciding whether Amazon can be held strictly liable for defective products sold by its third-party vendors, the Bolger court was not moved by the fact that Amazon does not set the price of the products or take title to them. Because Amazon was an “integral part of the overall producing and marketing enterprise” that brought the battery to Bolger, the court held that Amazon could be strictly liable for any product defect.

The court next dismissed Amazon’s fallback argument that it should have immunity under the Communications Decency Act (CDA). The CDA states that “[n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” 47 U.S.C. § 230(c)(1). The court explained that the CDA does not shield Amazon from product liability claims because such claims are not based on the content of speech by Amazon. Amazon’s own conduct in bringing the product to the consumer, not the content of Lenoge’s product listing, was the basis for liability.

Bolger is another significant case for subrogating carriers pursuing product defect claims against Amazon under California law. Under Bolger, Amazon can be held strictly liable for defective products sold by its third-party vendors using the “Fulfillment by Amazon” program.