Court of Appeals Makes Major Decision Regarding Products Liability & The Role of Companies Like Amazon
The recent products liability decision involving Amazon and its place in the “chain of distribution” arguably sends a message to designers, distributors, manufacturers, retailers, suppliers, wholesalers, and more. Specifically, the question before the court was whether the company that simply sells the product and has no other involvement in the creation or advertising of the product can be held liable in this chain of distribution. Ultimately, the court decided that Amazon is not a seller and therefore not subject to liability for allegedly defective products that are sold on its website and processed for delivery from its warehouses.
The case involved a subrogation action that was brought by the insurance company for a couple whose house caught on fire after they received a gift from Amazon which was allegedly defective and caused the fire. Here, the plaintiffs’ insurance company felt that, because the purchaser had paid Amazon directly, ordered it from the site, the package was processed at Amazon’s warehouse location and delivered; and given that Amazon received the payment from the purchaser and the purchaser never actually had any direct contact with the third-party seller; that the contract was between the purchaser and Amazon, and the purchaser reasonably assumed that the title passed directly from Amazon onto them.
Deciding Whether Amazon Is A “Seller”
In deciding whether Amazon could be considered a “seller” in the chain of distribution, the court looked at a number of factors, including Amazon’s actions with respect to the products, agreements with the sellers, and notices it puts on its website, in making its decision. Specifically, in this case, there was a notice specifically indicating that the product is sold by a third-party and fulfilled by Amazon.
When it comes to these types of products, they are typically governed by what are known as “Amazon services businesses solutions agreements,” whereby Amazon agrees to provide logistics services in exchange for a fee of what selling the product brings in. The products are then sent to an Amazon warehouse for storage, placed on Amazon ‘s website at a price set by the actual seller, and Amazon retrieves the product, boxes it, and ships it via UPS. Finally, Amazon collects the payment and takes it service fee.
State Law Governs
In its decision, the court noted that one must look to state law to see what extent liabilities are imposed on the seller, and in this case, given the state law’s definition of “seller” and the fact that the third party seller transferred ownership and title for a price, Amazon did not receive title by simply transferring the product. In other words, Amazon was essentially the “conduit” to facilitate the sale; similar to the role that UPS played. Without title passing from company to consumer, that company cannot be held liable for defective product.
Similarly, although other decisions concerning whether companies like Amazon qualify as sellers are still pending, other courts have indicated that they too would side with Amazon on this and find that these third-party vendors are simply relying on Amazon to market their products. In addition, they have noted that Amazon cannot realistically examine all of the various products on that site and is, instead, more of a “newspaper classified ad section.”
The Dissent: It Is Just A Matter Of Time Before States Change The Decision Because It Is Not In Keeping With Modern Times
It is important to note, however, that the dissent, while agreeing with the majority (based on how the law is currently worded), also pointed out that the decision may not stand up over time, as state products liability laws were adopted when the economy operated very differently than it does now and there were no companies like Amazon. The judge also included implicit criticism of Amazon’s business model working to shielded from traditional products liability; noting that it would likely only be a matter of time before state courts challenge this decision, and, instead find that, due to a change of circumstances, current interpretations of state products liability laws simply do not make sense in the context of modern life.
For now, those who bring cases on behalf of consumers who are injured by products must exercise some caution when it comes to challenging products sold by third-party vendors on Amazon.
Contact Our Florida Civil Litigation & Products Liability Attorneys
Everyday products—regardless of who sells them—should not cause serious bodily injury or death. Our Orlando civil litigation attorneys take on companies of all sizes when they neglect consumers in favor of profit. Contact us at the Baez Law Firm today to find out more.