If you were asked, you’d probably say that Amazon sells products. The tech giant is absolutely enormous; its CEO Jeff Bezos briefly beat out Bill Gates as richest man in the world last year, and it you could likely find just about any product you can think of on the site.
If you said that Amazon sells products, you may be partially right. They certainly have their own line of a fair number of types of goods. However, in the eyes of a New Jersey court ruling on products liability, you’d be dead wrong.
In a recent case, Amazon dodged a products liability claim after a court ruled that it was not a “product seller.” For those unfamiliar with products liability, it is one of the most litigated areas of law in the U.S.–and often an area with some of the highest payouts as many such suits are class actions.
You’ve probably heard of some of the more high profile cases–the McDonald’s hot coffee case is a case that gets a bad rap but was a serious problem (the coffee literally caused third degree burns requiring skin grafts through a pair of sweatpants), the Merck Vioxx case where painkillers caused heart attacks had quite a few commercials running to make people aware of it, Owens Corning is the case that publicized the dangers of using asbestos in construction.
The law on products liability, as a civil tort, varies somewhat from state to state. This means that it’s hard to fully explain as a concept. However, it’s quite important to be familiar with as it’s a body of law that could help quite a bit if you’re ever injured or your property damaged by a faulty product.
The New Jersey case dealt with a faulty product with serious consequences. While the lawsuit was brought by the All State insurance company, the actual events saw a homeowner’s daughter in New Jersey buying a new battery for her laptop off Amazon.
The battery was shipped and, for a few weeks, worked just fine. However, about a month after purchase disaster struck. The family left the house with the laptop charging on the daughter’s bed and returned to find that after a couple hours of charging the battery had caused the laptop to burst into flames and had set the entire bed on fire.
You can imagine how horrifying it would be to come home to your mattress aflame. However, defective products are much more common than you may think. It is because they are relatively common that products liability exists as a body of law outside of simple negligence claims.
Today we’re going to take some time to make sure you’re prepared for the flaming batteries that may crop up in your life. We’ll go over the basics of products liability law before discussing the case itself and Amazon’s history with these types of cases–more specifically their history of winning cases where a house caught on fire.
Products liability exists, to some extent, to patch up a hole in negligence law. In a negligence suit, you need to show that somebody’s lack of care–in violation of duty such as the general requirement to take a reasonable level of care–was the cause of your injuries.
This can be applied to a situation where a manufacturer does not take enough care in making their product. However, providing the evidence to demonstrate this lack of care can be extremely difficult or–at a minimum–extremely expensive. It also means that if an entire industry follows a low level of care in making and distributing their products they are likely safe from liability. That’s where products liability comes into play.
Products liability is a type of strict liability, a legal term that means that you can automatically recover damages if a certain situation exists regardless of the need to prove other elements such as negligence. The concept exists in criminal law for things such as statutory rape where intent to commit a crime is not necessary.
While the exact contours of products liability vary from state to state, the basic idea is manufacturers and distributors of products can be automatically liable for damages regardless of whether they acted carelessly. You generally need to show three things.
First, you must show that a product was defective in a way that made it unreasonably dangerous. This defect can be part of the actual manufacture of the product or part of how it is shipped or handled. For example, a battery with a defect which makes it explode when used as normal would certainly make the cut.
Second, you need to show that the product is dangerous when used as intended. This doesn’t apply to dangers inherent to a product, such as getting cut by an axe when using it as intended. However, if coffee was so hot as to cause third degree burns to your throat when drank that would likely qualify. Similarly, charging a battery for a laptop would be use as intended.
Finally, you need to show that the product hasn’t been changed too much from the condition it was in when sold. If a battery was twenty years old it may well not qualify for strict liability purposes.
Manufacturers and distributors cannot be liable under this theory if the purchaser knew of the defect but used the product anyway.
While this is the source of products liability in the Amazon case, there are two other sources of products liability that are common in state law. First, strict products liability can apply where a product is not defectively manufactured but instead defectively designed.
This is where there in an inherent defect in the intentional design of the product. Second, products liability can apply where there are inadequate warnings of inherent dangers that are not obvious to a user of a product.
On a state by state level, it can get even more complicated than this. What’s more, this is honestly a fairly simplified version of the body of law itself. If you look at the general requirements, a battery that explodes as intended would certainly make the cut for strict products liability. However, fortunately for Amazon, there is one more requirement to all these causes of action–you have to be a manufacturer or distributor of the product in question.
The Case Against Amazon for Product Liability
The exploding battery case took place in New Jersey and New Jersey products liability law applied. New Jersey’s product liability is covered by the creatively named Products Liability Act. Under the act, a party is a distributor only if they reach a certain level of control over the distribution of the product. Under New Jersey law, the focus in this analysis is whether Amazon ever had physical control over the product versus simply arranging for the sale.
This led to questions as to the actual nature of Amazon in sales made on their platform. Amazon does have some storage and shipping services they provide but they provide a marketplace for these batteries–and most products on Amazon–more than they actually control the products.
The court considered the behind the scenes elements of Amazon’s business model. In some cases Amazon directly sells their own products. In these cases they are a distributor and subject to product liability.
Amazon also allows third-party vendors to find and sell their own products to people browsing their marketplace then subsequently have the vendor ship the buyer their goods directly on their own. In these situations the court held that Amazon is certainly not a distributor for products liability purposes. Finally, Amazon also sometimes has vendors sell products to buyers but then Amazon itself holds on to the product in their inventory and then ships the product to the customer. This third situation is what happened with the exploding battery and is the hardest of the three to determine.
If the question is whether a party has physical control over a product, holding the battery in storage then sending it to the buyer certainly seems to make the cut. However, while products liability suits can normally be brought against anybody in the distribution chain, the court determined that Amazon was a facilitator in the process as opposed to an active participant subject to products liability. They said this was because Amazon did not exert enough control over the sales interaction.
Not the First Case of This Type Against Amazon, and Won’t Be the Last
This isn’t the first products liability case against Amazon along these lines; it’s also not the first to lose. In fact, there was a similar case involving a hoverboard burning down a house earlier this year that was dismissed because–just like here–the court determined that Amazon hosted a marketplace as opposed to an actual seller.
In September of last year, a lamp purchased on Amazon, you guessed it, caused a fire and burned down a house. In a case hat trick, the court again ruled that Amazon couldn’t be liable under products liability law. This last case went even further than the other two and ruled that the Communications Decency Act, a law giving websites legal safe harbor from the acts of third parties on their website in most situations, also protected Amazon.
You may wonder if people are simply chasing losing cases here. However, as we’ve mentioned, each state has its own twist on products liability. All the lawsuits discussed above were brought based on a different body of state law. This means that Amazon may yet face more cases in this vein. However, more importantly, it means that it’s crucially important that you’re familiar with how the law works in the state you live in case you find yourself in a situation where a defective product goes wrong.
Jonathan Lurie is a Founding Partner of The Law Offices of Lurie and Ferri (Contact Info). He primarily handles business law, employment law, and intellectual property issues, but works with all types of civil matters. He is a Vice-Chair of the Sports and Entertainment Interest Group of the California Intellectual Property Section and has won awards for his knowledge of intellectual property, start-up business issues, and California civil procedure.