NEW ORLEANS – A majority complement of the Supreme Court of Louisiana has ruled that Amazon is a “seller” under state law and could be held liable for the death of a man who suffered fatal burns from an exploding lithium-ion battery charger, which he purchased on Amazon from a third-party manufacturer.
In a 4-3 decision, state Supreme Court Justices William J. Crain, John L. Weimer, Scott J. Crichton and Piper D. Griffin handed down such a ruling, with Justices Jefferson Hughes, James T. Genovese and Jay B. McCallum all individually dissenting.
Crain authored the Court’s majority ruling in this case.
“This suit arises out of an allegedly defective battery charger purchased by Archie Pickard through Amazon.com. The charger allegedly malfunctioned and ignited a fire that spread throughout Pickard’s home. Pickard was severely burned and died from his injuries. His survivors sued Amazon.com, Inc. and related entities in the Western District Court of Louisiana. In relevant part, petitioners assert causes of action under the Products Liability Act and negligent undertaking,” Crain said.
“As explained in the certification, Amazon’s website includes products sold by Amazon as the retailer and by third parties. The subject charger was sold by a third-party identified as ‘Jisell,’ not Amazon. To use Amazon’s website and payment system, Jisell paid Amazon a fee and provided a description of the product, the price, and any required labels and warnings. Jisell was then responsible for importing and properly packaging its product. The product listing for the subject charger expressly stated it is ‘sold by’ Jisell.”
Crain explained that Jisell paid an additional fee for an optional service called “Fulfillment by Amazon,” where products are sent to an Amazon warehouse for storage and processing. When an order is placed, Amazon retrieves the pre-packaged product from its warehouse, places it in a shipping container or applies a shipping label to its box, and delivers or arranges delivery of the product to the buyer.
Using this service, Jisell delivered Amazon its product, but never transferred ownership to Amazon. Amazon listed the product on its website, physically stored the product, received payment for Jisell, and delivered the product to the purchaser.
Amazon filed a motion for summary judgment, leading the U.S. District Court for the Western District of Louisiana to certify two questions:
• (1) Under Louisiana products-liability law, is the operator of an online marketplace a “seller” of third-party products sold in its marketplace when the operator did not hold title to the product but: (i) had physical custody of the product in its distribution warehouse; and (ii) controlled the process of the transaction and delivery through its product fulfillment program?
• (2) Under what circumstances, if any, would the operator of an online marketplace who voluntarily adopts safety procedures for the products sold through its website by third-party sellers, be liable for injuries sustained by the purchaser of a defective product based on a theory of negligent undertaking?
In answering that question, the majority explained that for a seller to be liable, it must meet the additional statutory requirements of the applicable “manufacturer” definition – which would be (1) When the seller exercises control over a characteristic of the product’s design, construction, or quality; and (2) When the seller imports and distributes products of a foreign manufacturer if the seller is the manufacturer’s alter ego.
Under the Louisiana Products Liability Act, Crain and his colleagues in the majority found that Amazon was in fact a “seller” of third-party products sold in its marketplace.
“Answering the first certified question, we find under the Louisiana Products Liability Act, the operator of an online marketplace is a ‘seller’ of third-party products sold in its marketplace when the operator did not hold title to the product but: (i) had physical custody of the product in its distribution warehouse; and (ii) controlled the process of the transaction and delivery through its product fulfillment program. We emphasize this holding is limited to the term “seller” as specifically defined in the Louisiana Products Liability Act. We express no opinion whether the operator of an online marketplace is a seller in any other context,” Crain said.
As to the second certified question related to negligent undertaking, the Court turned to Section 324A of the Restatement of Torts, Second, which provided:
“One who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of a third person or his things, is subject to liability to the third person for physical harm resulting from his failure to exercise reasonable care to protect his undertaking, if (a) his failure to exercise reasonable care increases the risk of such harm, or (b) he has undertaken to perform a duty owed by the other to the third person, or (c) the harm is suffered because of reliance of the other or the third person upon the undertaking.”
The plaintiffs argued that Amazon “employs multiple tools to scan customer reviews and other feedback for product listings to identify and prevent unsafe or non-compliant products from being listed, each identified product is investigated, and, in some instances, Amazon requests testing documentation or other information about the product from the seller, and Amazon may remove a product, immediately suspend or terminate the seller’s privileges, and notify purchasers of the safety concerns”.
In contrast, Amazon argued that “the plaintiffs’ description of Amazon’s purported duty is not grounded in anything Amazon stated to Pickard or in statements about the product he bought, [and] Amazon further argues petitioners mischaracterize the corporate representative’s testimony, which concerned Amazon’s seller registration process.”
Crain and his majority colleagues found that Section 324A applied to determining if an operator of an online marketplace assumed a duty owed by a third-party seller and is liable for any damages caused by the breach of that duty in this case, and that such a question was best answered by the lower federal court.
Justice Hughes dissented from the majority, saying it “goes around the block to find that a possessor is liable as a seller if it is a manufacturer, or the alter ego of the owner, or a de facto manufacturer, yet does not comply with the parameters of its own analysis.”
“The majority concludes by holding that the operator here is a ‘seller’ because at some point it had possession of the product and ‘controlled the process of the transaction and delivery’ of the product. ‘Process of the transaction and delivery’ does not equal control or influence over the ‘design, construction, or quality’ of the product, or even ‘inspection, adjustment, or preparation’ of the product. The result is a reach and untenable. I would respectfully decline to answer the second question as too broad. It invites an infinite number of speculative factual scenarios,” Hughes said.
Justice Genovese additionally wrote a brief dissent.
“I dissent in part as to the majority opinion’s finding that Amazon is a ‘seller.’ I do not find Amazon as a seller by any stretch of legal imagination. Finding Amazon as a seller redefines the definition of a seller not contemplated under our civil code and supporting jurisprudence,” Genovese said.
Justice McCallum also dissented from the majority ruling.
Supreme Court of Louisiana case 2023-CQ-01596
U.S. District Court for the Western District of Louisiana case 5:20-cv-00198
From the Louisiana Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com