For some time, we have been following the emerging case law on whether companies, such as Amazon, that create an online marketplace for other sellers, may be held liable when products supplied by those sellers cause injury. The cases have gone both ways, but on November 30 Amazon added another ruling to its win column when a New York appellate court upheld a ruling dismissing negligence and breach-of-warranty claims based on injuries allegedly caused by a defective service from a third-party provider on a product sold by a third party on Amazon’s website.
In Wallace v. Tri-State Assembly LLC (Case No. 2020-04820), the First Department of New York’s Appellate Division affirmed an order dismissing claims against Amazon by an individual who was injured after the handlebars on his electric bike came apart, causing him to fall. His father ordered the bike on Amazon’s website from a third-party seller in China, and at the same time purchased an assembly option from an Amazon-approved service provider, Tri-State. Plaintiff alleged that Amazon and its “agents” were negligent and breached warranties of fitness and merchantability.
The court quickly disposed of the warranty claims, noting that the UCC limits implied warranties to sellers, and finding that undisputed evidence established that Amazon did not sell, manufacture, distribute or assemble the bike and never acquired possession of or title to the bike. (Amazon also disclaimed all warranties on its website.) The court declined to fashion an “equitable remedy” allowing warranty claims against nonsellers when the injured party otherwise would be left without a remedy (likely true here since the assembler had no insurance and had been dismissed from the action). The court pointed out that even the courts in other jurisdictions that recognize strict products liability claims against Amazon based on third-party sales have rejected warranty claims like Plaintiff’s.
The court also cited several cases in New York consistent with an “emerging consensus” that companies such as Amazon, in furnishing online marketplaces for third-party sellers, provide a service and by doing so do not become manufacturers, distributors, or sellers subject to strict products liability.
Finally, the court rejected a claim that Amazon was negligent in failing to adequately “vet” the third-party assembler for competence or adequate insurance coverage, noting that Plaintiff asserted the theory for the first time in his opposition to summary judgment and offered no authority to support it.
The Wallace decision reflects the majority (but not unanimous) view on products liability for third-party sellers. In addition to the New York federal cases cited in Wallace, liability against Amazon has been rejected in cases including Erie Ins. Co. v. Amazon.com, Inc., 925 F.3d 135, 140-44 (4th Cir. 2019); Stiner v. Amazon.com, Inc., 120 N.E.3d 885, 894-95 (Ohio Ct. App. 2019), aff’d, 162 Ohio St.3d 128 (2020); Fox v. Amazon.com, Inc., 930 F.3d 415, 425 (6th Cir. 2019); Garber v. Amazon.com, Inc., 380 F. Supp. 3d 766, 778-81 (N.D. Ill. 2019); and Amazon.com., Inc. v. McMillan, 625 S.W.3d 101 (Tx. 2021). Two California decisions reached contrary conclusions. Bolger v. Amazon.com, LLC, 53 Cal. App. 5th 431 (2020), and Loomis v. Amazon.com LLC, 63 Cal. App. 5th 466 (2021). The Third Circuit initially held in Oberdorf v. Amazon.Com Inc., 930 F.3d 136 (3d Cir. 2019) that Amazon could be liable under Pennsylvania law for products sold through its marketplace by third parties, but on rehearing en banc the court certified the question to the Pennsylvania Supreme Court. That Court took the question but never decided it because the case settled.
It is not surprising that this question has been addressed multiple times, given the burgeoning scale of Amazon’s marketplace for third-party sellers. We are likely to see additional opinions and possibly some state legislation on this issue in the coming years.