On The Case

Amazon zigs and zags in latest strategy to avoid product liability claims

(Reuters) - Trying to keep up with Amazon’s latest moves in its effort to avoid liability for defective products from third-party sellers is like watching a Ping Pong game.

In August, the company came out in favor of a proposed California law that would make it easier for injured consumers to hold electronic retailers responsible for allowing defective products to reach the marketplace. In a blog post, Amazon said it was willing to accept that liability as long as the law extended to all online marketplaces.

On Tuesday, Amazon disavowed responsibility for defective products sold on its site by other retailers. The company filed a petition asking the California Supreme Court to review an intermediate state appellate ruling in Bolger v. Amazon, which tags Amazon with precisely the liability it agreed to accept in the proposed California statute.

Then on Wednesday, the company showed it’s not actually so eager to hear from state supreme courts on the matter of its responsibility for facilitating the sale of defective products. The Pennsylvania Supreme Court agreed in July to hear Oberdorf v. Amazon, after the 3rd U.S. Circuit Court of Appeals asked for the state high court's view on whether Amazon could be strictly liable for a defective product that was sold on its platform by a third-party vendor. Instead of litigating before the Pennsylvania Supreme Court, though, Amazon and Oberdorf resolved the case, according to a disclosure they filed at the 3rd Circuit. (Oberdorf counsel David Wilk of Lepley, Engelman, Yaw & Wilk did not respond to my phone message.)

So, to recap: Amazon accepts the prospect of liability in California, then tells the California Supreme Court it wants the court to hear its arguments against liability, then decides not to make parallel arguments before the Pennsylvania Supreme Court.

“I’d call the strategy inconsistent,” said Jeremy Robinson of Casey Gerry, who represents California plaintiff Angela Bolger. Bolger was severely burned in the explosion of a laptop battery she purchased on Amazon from a pseudonymous third-party seller. Amazon, he said, waited until the last possible day to file its petition for review of the intermediate appellate ruling allowing Bolger to proceed with her claims, signaling to Robinson that Amazon is trying to figure out how best to manage the risk of product liability exposure.

“I think they see the writing on the wall and want to lose the battle on their own terms,” Robinson said.

An Amazon spokeswoman declined via email to comment on developments in the Bolger and Oberdorf cases or on the company’s strategy. Amazon outside counsel from Perkins Coie did not respond to my email.

Adding to the inconsistency: Amazon told the 5th Circuit in June that the federal appeals court should not certify the question of its liability for defective third-party products to the Texas Supreme Court. But the company is meanwhile waiting for a decision on the same issue from the Ohio Supreme Court, which heard oral arguments in April in Stiner v. Amazon.

“Amazon is going to do whatever is best for Amazon,” said Ohio plaintiffs’ lawyer Brian Balser. Balser’s client, Dennis Stiner, sued over the death of his son, who experienced a seizure and cardiac distress after consuming a caffeine supplement he bought on Amazon. Balser, who said he could not comment on whether the company has offered to settle his client’s case, said he certainly noticed when Amazon posted that blog entry in August, agreeing to back the proposed California law to impose liability on online retailers.

Amazon’s juggling act is on full display in its Sept. 22 petition to the California Supreme Court, requesting review of the Court of Appeal’s ruling in the Bolger case. The company argued that the lower court erroneously extended California’s strict liability law to encompass a retailer that did not actually make or sell the defective product. It also argued, though, that it’s not up to the courts to define the limits of liability. That’s a matter for the California legislature, Amazon said. So, according to the company, the Court of Appeal “usurped the legislature’s role and created entirely new rules of strict liability.”

The Amazon brief described the proposed California bill, which, it said, would “(create) new liability rules for modern e-commerce.” The company noted that the California Senate did not vote on the bill after it was passed by the Assembly, but, according to Amazon, the legislation is expected to be reintroduced in 2021.

The brief did not mention that Amazon backed the bill. Nor did it mention that Amazon’s competitors have argued Amazon’s support of the legislation is actually a strategic play to crush competitors that cannot afford to pay liability costs that Amazon can easily afford. In fact, Amazon portrayed itself in the California Supreme Court petition as a champion of startup online marketplaces that it said would be burned in “the ‘blast radius’ of the Court of Appeal’s reconfiguration of California strict liability law.”

Bolger counsel Robinson said his response to Amazon’s petition, which is due in October, will point out that Amazon is urging the California Supreme Court to reverse a ruling that, according to the company, failed to defer to proposed legislation that would … lead to the same outcome as the supposedly misguided court decision. “How can they say this decision is wrong?” said Robinson.

Under the California Supreme Court’s usual schedule, he said, the state justices will decide before the end of the year whether to hear the case. We will see then if Amazon’s support of the California liability bill comes back to haunt the company in litigation.