Products Liability in the Era of the Online Marketplace

Link to the article: Gideon_Asen MLR 2023.09.14 – Products Liability in the Era of the Online Marketplace

Several years ago, Gideon Asen received a phone call from a mom whose 3-year-old son had swallowed a button-sized lithium battery that fell out of his toddler drawing tablet. When mom discovered that her son had swallowed the battery, she rushed her son to the nearest hospital. Multiple efforts were made to retrieve the battery from the child’s stomach. Those efforts were too late to prevent the battery from eroding in the child’s stomach and causing serious gastrointestinal burns. 

The toddler drawing tablet had been purchased on Amazon.com from a third-party vendor located in China. It arrived at mom’s house in a defective state: the tablet did not have the tiny screw which secures the battery tray inside the tablet. So, when the child was playing with it, the battery tray and battery slid out. Lo and behold, the 3-year-old did what 3-year-olds do, and he put the battery in his mouth and swallowed it.

It was immediately clear to us that the absence of a screw protecting the battery was unreasonably dangerous. The problem was figuring out who was responsible for the sale and distribution of this dangerous product. Was Amazon responsible, or was the only responsible party a Chinese manufacturer that would be extremely difficult to sue, assuming it was even solvent?

Generally, in Maine, a manufacturer, seller, or supplier is strictly liable for the distribution of a defective product. 14 M.R.S.A. § 221; see also Adams v. Buffalo Forge Co., 443 A.2d 932, 940 (Me. 1982) (noting that “[t]he Legislature formulated our strict liability statute. .  . directly from section 402A of the Restatement (Second) of Torts”). Thus, the liability of an online marketplace, such as Amazon.com, hinges on whether Amazon constitutes a “seller” under Maine law and the Restatement (Second) of Torts.

One might think that online platforms like Amazon constitute a digital marketplace and, therefore, the law ought to treat them as a seller, not different from a brick-and-mortar store like Home Depot or Walmart. However, Amazon has taken the position that it is often simply a platform for third-party sellers to execute their sales. And until recently, courts have largely agreed. 

For example, in Garber v. Amazon.com, a plaintiff brought a product liability claim against Amazon concerning a defective hoverboard manufactured by a Chinese company and purchased through Amazon’s online marketplace. The hoverboard self-ignited, causing a fire that damaged the plaintiff’s home. Amazon moved for summary judgment, arguing that “it did not manufacture or sell the defective hoverboard, and instead merely provided the service of its online marketplace to match third-party buyers and sellers, and so it cannot be strictly liable under Illinois law.” Garber v. Amazon.com, Inc., 380 F. Supp. 3d 766, 775 (N.D. Ill. 2019). The Court agreed with Amazon, noting that “the facts before the Court reveal that Shenzhen [the Chinese manufacturer], not Amazon, owned the hoverboard, sourced it and listed it for sale on Amazon’s marketplace, and sold and shipped it directly to the Garbers.” Id. at 777; see also Eberhart v. Amazon.com, Inc., 325 F. Supp. 3d 393, 400 (S.D.N.Y. 2018) (holding that Amazon owed no duty to the plaintiff because it “did not manufacture, sell, or otherwise distribute” the third-party coffeemaker that shattered causing the plaintiff an injury).

Recently, however, courts have become increasingly skeptical of Amazon’s argument that it is a “marketplace” rather than a seller. A leading case against Amazon is

Bolger v. Amazon.com, LLC (2020) 53 Cal.App.5th 431, which was decided by California’s 4th District Court of Appeals. In Bolger, a consumer in California sued Amazon for severe burns suffered from a laptop battery that caught fire which had been purchased from a third-party seller on the Amazon platform. Id. at 437. The trial court granted summary judgment in Amazon’s favor on the basis that Amazon did not manufacture or sell the battery. Id. However, the California Court of Appeals reversed the decision, declaring that “[a]s a factual and legal matter, Amazon placed itself between [the manufacturer] and Bolger in the chain of distribution of the product at issue here. . . .” 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.” Id. at 438. Likewise, in 2019, a three-judge panel in the Third Circuit held that Amazon.com constituted a seller under Pennsylvania law. Oberdorf v. Amazon.com Inc. 930 F.3d 136 (3d Cir. 2019). That decision was subsequently taken up by the Third Circuit en banc, which certified the question to the Pennsylvania Supreme Court. Oberdorf v. Amazon.com Inc., 818 Fed. Appx. 138, 139 (3d. Cir. 2020). Apparently, the case settled before the Supreme Court could answer the Third Circuit’s question.

Perhaps not surprisingly, we are heartened by the recent cases suggesting that online “marketplaces” like Amazon.com and eBay have some responsibility to sell safe products. In many cases, a rule to the contrary eviscerates the ability of victims to have any recourse for their injuries. Moreover, in our view, society is better off providing Amazon and other marketplaces with a strong financial incentive to police its platforms to ensure they are selling safe products.

In any event, questions about the liability of websites like Amazon.com are not going away. On the contrary, they will only become more important, as an increasingly large percent of American shopping is done online.