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The world of online retail (and retail in general) changed in a big way with the advent of not only Amazon Prime, but also Amazon’s marketplace that sells products from third parties. Many other retailers have since jumped on the bandwagon, offering subscriptions for faster shipping and their own space for third-party sellers.

As people increasingly shop these marketplaces, it begs the question: Who is responsible when someone gets hurt by a product sold by a third party?

Attorneys like Jeremy K. Robinson, partner at CaseyGerry, have been fighting to hold Amazon and other retailers accountable for the safety of third-party sellers’ products. Last year, Jeremy secured a precedent-setting decision in Bolger v., a case surrounding a defective laptop battery made in China that badly burned his client. Even though Amazon had defeated the argument numerous times previously, an appeals court ruled that Amazon can be held strictly liable for defective products purchased through its online marketplace. The decision has major implications for accountability of Amazon and other retailers, but the battle isn’t over.

A recent ruling in a different case, Loomis v., is yet another step further. Jeremy shared the update with us.

Court finds Amazon liable for all third-party products sold on its marketplace

By Jeremy Robinson, Partner at CaseyGerry, Written for Milestone

In August 2020, a California Court of Appeal in Bolger v., 53 Cal.App.5th 431 (2020) ruled Amazon could be held strictly liable for third-party products sold on its marketplace where the product was “Fulfilled by Amazon” (“FBA”). Bolger marked the first time a state appellate court anywhere in the country found Amazon strictly liable. Bolger contrasted with a string of losses by plaintiffs in other jurisdictions and, at the time, was the only published appellate decision where a plaintiff prevailed against Amazon on that argument.

Now there is another decision, and one with an even broader holding. On April 26, 2021, Division Eight of the California Court of Appeal for the Second District rendered its unanimous opinion in Loomis v., LLC, Case No. B297995 (2021). Loomis involved injuries caused by a defective hoverboard that was purchased through Amazon and that later caught fire. Unlike Bolger, the third-party vendor in Loomis did not use FBA, meaning Amazon never had possession of the hoverboard. Instead, it shipped directly from the third-party vendor overseas.

Despite this fact, the Loomis court followed Bolger to hold Amazon was strictly liable for the damage caused by the hoverboard because it was in the vertical chain of distribution of the hoverboard. The court noted that Amazon placed itself directly between the third-party vendor and the buyer and so should bear the consequences of that business model. Amazon argued that Bolger was wrongly decided and was based on policy considerations that no longer aligned with the modern economy, but the Loomis court did not agree. Conducting an independent review of the law, Loomis agreed with Bolger’s extension of modern product liability law to online marketplaces such as Amazon.

The court also found that Amazon could potentially be liable under the “stream of commerce approach,” an alternative basis for strict liability when the defendant is not directly in the chain of distribution. Liability can be imposed under that approach when the defendant received a financial benefit from the sale, the defendant’s role was integral to bringing the product to the initial consumer market, and the defendant can influence the manufacturing or distribution process. The Loomis court concluded there were triable issues of fact on those issues such that summary judgment was inappropriate.

Justice John Wiley concurred in the result, but took the opportunity to write a lengthy explanation of how holding Amazon liable comports with the overarching policy goal of tort liability to minimize the “social cost of accidents,” i.e., the cost of injuries combined with the cost of avoiding them. In Justice Wiley’s view, the decision was “easy” because “Amazon is well situated to take cost-effective measures to minimize the social costs of accidents.”

This holding will have sweeping implications for other online marketplaces. Most marketplaces do not offer a program similar to FBA and so could have argued Bolger was inapplicable to them because they never had possession of the product. It may or may not have worked, but Loomis eliminates that option entirely.

Loomis also could impact decisions in other states involving similar issues. As Amazon’s losses begin to pile up, it becomes harder for Amazon to maintain it should be exempt from strict liability for defective products. Certain state product liability statutes that are not current with the e-commerce economy may still compel that result, but outside of that, courts are coming to terms with Amazon’s role in product distribution and its responsibility for protecting consumers.

Amazon has not yet said whether it will petition the California Supreme Court for review of Loomis. The California high court rejected Amazon’s efforts to get review of the Bolger case, so it is hard to say whether Amazon will want to try again.

The Loomis family was represented by Christopher B. Dolan and the Dolan Law Firm. Casey Gerry partner Jeremy Robinson, the lead appellate attorney in Bolger, was co-counsel on the appeal.

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