A federal district court in New Jersey has granted summary judgment in favor of Amazon in a products liability lawsuit brought by an insurance company, concluding that Amazon was not a “product seller” for purposes of state law.
The Case
Kathleen Cancel alleged that a defective battery that her daughter had purchased from Amazon for her laptop computer had caused a fire that damaged her New Jersey home. After Ms. Cancel's insurer, Allstate New Jersey Insurance Company, paid for the damage, it filed suit against Amazon as subrogee of Ms. Cancel.
Allstate asserted a products liability count against Amazon under the New Jersey Products Liability Act (“PLA”), alleging that Amazon, in its role as a “product seller” as defined by the PLA, had “marketed sold, shipped, assembled, packaged, distributed and/or was otherwise involved in placing the defective battery in the stream of commerce,” had shipped a battery that “was not reasonably fit, suitable, or safe for its intended purpose,” and “had a duty to warn [Ms.] Cancel that the battery was in an unreasonably dangerous condition.”
Amazon moved for summary judgment, contending that its involvement in the sale of the battery did not qualify it as a “product seller” for purposes of the PLA.
The District Court's Decision
The district court granted Amazon's motion.
In its decision, the district court explained that, in its normal course of business, Amazon generally was involved in three types of transactions:
- The direct sale of its own Amazon-branded products to consumers;
- The sale of a product directly from a vendor to a consumer, with Amazon allowing the vendor to advertise the product and the consumer to order it; and
- The sale of a product from a vendor to a consumer, with Amazon fulfilling the transaction by holding the product in its inventory and shipping it to the consumer.
The district court reasoned that although Amazon “almost certainly” would be a “product seller” for its role in the first transaction, and “likely would not be” a “product seller” for its role in the second transaction, the transaction involving Ms. Cancel's daughter's battery fell “into the third, grayest, category.”
The district court was not persuaded by Allstate's argument that Amazon's activities in fulfilling the order between Ms. Wilmot and the vendor meant that, under New Jersey law, Amazon was a “product seller.”
The district court stated that although it was “a close question,” Allstate's arguments failed because it had not demonstrated that New Jersey courts would, in fact, extend the definition of “product seller” to a party involved in the distribution chain as Amazon was in this case.
The district court pointed out that “not every party involved in the distribution process” could be classified as a “product seller” under the PLA. Under New Jersey law, the district court said, “control over the product” was the “touchstone” that New Jersey courts considered to determine whether a party had the requisite involvement to be a product seller. Even when there was “no doubt” that a party was “in the chain of distribution and contributed to placing the product in the stream of commerce,” it nevertheless had to be shown that the party “exercised control over the product,” the district court said.
Although Amazon “may have technically been a part of the chain of distribution” when it located, boxed, and shipped an already packaged and assembled product (that is, the battery), it never exercised control over the battery sufficient to make it a “product seller” under the PLA, the district court ruled. Accordingly, the district court concluded, Amazon – in this instance – could not be held liable as a “product seller” under the PLA.
The case is Allstate New Jersey Ins. Co. v. Amazon.com, Inc., No. 17-2738 (FLW) (LHG) (D.N.J. July 24, 2018). Attorneys involved include: For ALLSTATE NEW JERSEY INSURANCE COMPANY, as subrogee of KATHLEEN CANCEL, Plaintiff: CHRISTOPHER KONZELMANN, LEAD ATTORNEY, WHITE AND WILLIAMS, PHILADELPHIA, PA. For AMAZON.COM, INC., Defendant: BETH S. ROSE, LEAD ATTORNEY, SILLS CUMMIS & GROSS P.C., NEWARK, NJ; VINCENT R. LODATO, LEAD ATTORNEY, SILLS CUMMIS EPSTEIN & GROSS, PC, NEWARK, NJ.
FC&S Legal Comment
Courts in other jurisdictions also have found that Amazon was not in the class of actors subject to strict liability under state product liability statutes, some of which were similar to the PLA. See, Fox v. Amazon.com, Inc., No. 3:16-CV-03013 (M.D. Tenn. May 30, 2018) (finding Amazon not to be a “seller” under the Tennessee Products Liability Act, Tenn. Code Ann. § 29-28-102(7)); Erie Ins. Co. v. Amazon.com Inc., No. CV 16-02679-RWT (D. Md. Jan. 22, 2018) (finding that Amazon was not a seller under Maryland's UCC); Oberdorf v. Amazon.com, Inc., 295 F. Supp. 3d 496, 499 (M.D. Pa. 2017) (finding Amazon was not a “seller” under Pennsylvania Strict Products Liability Law); Milo & Gabby LLC v. Amazon.com, Inc., 693 Fed. Appx. 879 (Fed. Cir. 2017) (finding that Amazon did not meet the definition of seller under 17 U.S.C. § 106(3) of the Copyright Act); McDonald v. LG Elecs. USA, Inc., 219 F. Supp. 3d 533 (D. Md. 2016) (finding that Amazon's role as the “platform” for third-party sales did not qualify it as a merchant or a seller under Maryland's version of the Uniform Commercial Code); Stiner v. Amazon.com, Inc., No. 15-185837 (Loraine Co. Ct., Ohio Sept. 20, 2017) (finding Amazon was not a “supplier” under Ohio's products liability law).
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].