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Courts Continue to Grapple with “E-Tailer” Liability

December 28, 2020 Ecommerce,Knowledge Base

By Jeremy K. Robinson

Following Casey Gerry’s landmark appellate win in Bolger v Amazon.Com, 53 Cal.App.5th 431 (2020), courts around the country have continued to struggle with the boundaries of online marketplace liability. In four recent decisions (all of which cite Bolger), courts have reached differing conclusions on the scope marketplace liability for defective products sold on the marketplace.

Most recently, in an opinion written by former Texas Supreme Court Justice Don. R. Willett, a panel of the Fifth Circuit Court of Appeals certified the question of Amazon’s liability for a defective product to the Texas Supreme Court. See, McMillan v., No. 20-20109, — F.3d — (5th Cir. 2020). Although the judges seemed disinclined to buy Amazon’s argument that its role in the sale of the defective product—in this case a remote control—it nevertheless decided the Texas high court was best suited to resolve the dispute given the “potentially sweeping implications” of the ruling and because “[n]o Texas court has yet decided whether an online retailer like Amazon is a ‘seller’ under Texas products-liability law.” Casey Gerry attorney Jeremy Robinson co-authored an amicus brief in McMillan submitted on behalf of the national consumer advocacy organization Public Justice and will continue to support the plaintiffs’ position in the Texas Supreme Court. The full McMillan opinion can be found here.

Shortly before the McMillan opinion was issued, a trial court in New York denied a motion for summary judgment by Amazon in which Amazon claimed it was merely a service provider for a defective thermostat that caught fire and caused significant property damage. See, State Farm Fire & Cas. Co. v. Servs., Inc., No. 008550/2019, 2020 WL 7234265, at *1 (N.Y. Sup. Ct. Dec. 8, 2020). The court ruled that under New York law, “Amazon exercises sufficient control over the product to be considered among ‘retailers and distributors.’” Id. at *4. This holding is particularly noteworthy because it runs counter to two earlier federal district court decisions construing New York law to exclude Amazon from liability, Eberhart v., Inc., 325 F.Supp.3d 393, 397 (S.D.N.Y. 2018) and Philadelphia Indemnity Ins. Co. v., Inc. 425 F.Supp.3d 158, 162-164 (E.D.N.Y. 2019). This sets up a conflict that likely will have to be resolved by the New York appellate courts.

Still, Amazon managed to dodge liability in two other cases, Stiner v., Inc., 2020-Ohio-4632, —N.E.3d — (2020) and State Farm Fire & Cas. Co. v., Inc., No. 19-17149, 2020 WL 6746745, at *1 (9th Cir. Nov. 17, 2020). In Stiner, the Ohio Supreme Court ruled that Amazon was not a “supplier” under the Ohio Products Liability Act of caffeine powder that killed a teenager, and in State Farm, a divided panel of the Ninth Circuit held Amazon was not strictly liable under Arizona law for defective hoverboard batteries that burned a home. However, a dissenting judge argued the matter should be decided by the Arizona Supreme Court and State Farm has requested that relief in a Petition for Rehearing En Banc.

One of the possible reasons for this divergence, aside from variances in state law, is that McMillan and the New York State Farm case both involved “Fulfillment by Amazon,” (FBA) meaning Amazon takes possession of the product before the sale, and Stiner and the Arizona State Farm case did not. To date, no appellate-level court has held Amazon strictly liable in a case that did not involve FBA except for a panel of the Third Circuit in Oberdorf v., Inc., 930 F.3d 136 (3d Cir. 2019). But that opinion was vacated by a grant of rehearing en banc, see Oberdorf v. Inc., 936 F.3d 182 (3d Cir. 2019), and the en banc court certified the question to the Pennsylvania Supreme Court. See, Oberdorf v. Inc., 818 F. App’x 138 (3d Cir. 2020)[1]. The parties then resolved the case before a ruling from the Pennsylvania high court, so the original Oberdorf panel opinion remains vacated and has no precedential value.

As product sales continue to migrate online, more and more of these cases are being filed, including a new one by the Casey Gerry team that prevailed in BolgerCarrillo v., et. al., 3:20-cv-02347 (S.D. Cal.) Stay tuned for further updates on this rapidly evolving area of law.

[1]  Casey Gerry attorney Jeremy Robinson also co-authored an amicus brief for Public Justice in this case.