Appellate Amazonlazarus Angelestimes – In 2017, the California appellate court ruled that Amazon is responsible for the safety of third-party products it sells. This decision erases a potentially lucrative litigation opportunity for Amazon. However, this development does not represent the end of the road for third-party sellers who may be concerned about their liability with respect to injury claims from consumers. Here’s a look at some key takeaways from this decision and what its implications are moving forward.

The decision. Amazon appealed the ruling of a trial court which concluded that, in the products liability context, Amazon should not be treated as a “seller” but rather is liable as a “manufacturer.” Based on a number of factors, including its control over product listings, Amazon had argued that it should not be considered a “seller,” but instead merely an intermediary between buyer and seller.

The appellate court rejected this argument, holding that Amazon should be considered a “seller” and as such, is liable to the same extent as a brick-and-mortar retailer. Amazon argued that it should be held to a different standard because it lacks the “control” over third-party products which a traditional brick-and-mortar retailer has. The court rejected this point, holding instead that the potential for harm associated with the sale of dangerous products is equal regardless of whether it occurs off or on an online platform. The court stated that “the potential for a product to cause physical harm is the same whether it was sold online or in a brick-and-mortar store.”

The basis for this holding is largely grounded in the Product Comparison Statute which provides that all products are assumed to be “unreasonably dangerous” unless proven otherwise. The statute defines the term “unreasonably dangerous” to mean that the product was equipped with a provision of unreasonable safety, or lacked any element of reasonable safety.

The court’s holding, then, effectively means that online sellers must fulfill the same responsibility as physical retailers to ensure that dangerous products are not sold to consumers. Specifically, the court held that “Amazon can be liable for safety defects in its third-party products just as a brick-and-mortar retailer would be” and “[i]t is unreasonable to expect Amazon to design and market products so as to prevent foreseeable risks of harm.”

Implications. The court’s ruling is unique and novel, as it holds an online seller liable for the safety of third-party products in the same way that a brick-and-mortar retailer would be. As such, it is difficult to predict how this decision will impact online sellers in practice.

On one hand, this decision means that online sellers may be subject to greater liability than they previously thought due to the broad definition of “seller” under the statute. Moreover, the decision sets forth a framework under which online sellers may be held liable as manufacturers, not just sellers of third-party products.

However, some online sellers should still consider themselves fortunate in that the court’s decision only holds them to the same standards as a brick-and-mortar retailer. Online sellers are not held to an “unreasonable” standard, which would require them to make consumer safety their highest priority and to test every product they sell. Rather, the court put online sellers on the same level as brick-and-mortar retailers who simply need to ensure that they are not selling products which are unreasonably dangerous.

In addition, although online sellers may be held liable under this decision, they may still benefit from a number of safe harbors and exceptions to their liability. For example, if a consumer is injured due to a defective product, the seller will be protected from liability under the Unfair Competition and False Advertising Clauses of the Lanham Act.

Finally, while the California appellate court’s decision holds that online sellers are liable for the safety of third-party products they sell, it also requires that they take reasonable steps to ensure that dangerous products are not sold to consumers. In order to meet this standard, online sellers may still require more regulation than brick-and-mortar retailers.