Products Liability Law Reporter

A California appellate court held that Amazon may be liable under strict liability and negligence theories to a consumer who was injured as she extinguished a fire that erupted from a hoverboard purchased on the Amazon marketplace from a third-party seller.

Kisha Loomis purchased a hoverboard on the Amazon website in 2015. The Amazon listing identified the hoverboard’s seller as TurnUpUp, a name allegedly used by Chinese company SMILETO to sell its products on Amazon. Loomis gave the hoverboard to her son as a Christmas gift. He plugged it into an outlet in Loomis’s bedroom to charge, and it was later discovered that the hoverboard and Loomis’s bed had caught fire. Loomis suffered burns to her hand and foot extinguishing the fire.

She filed suit against Amazon.com LLC, alleging claims for strict liability and negligence. The trial court granted summary judgment for Amazon.

Reversing, the appellate court first noted that the purpose of strict liability is to ensure that the costs of injuries resulting from defective products are absorbed by the manufacturers that place those products on the market, as opposed to injured consumers. Citing case law, the court said that consumers who are injured by a defective product may sue any business entity in the chain of production and marketing, including a distributor, wholesaler, or retailer. For strict liability to attach, the court noted, the facts of the case must establish a sufficient causative relationship between the defendant and the defective product.

The court cited Bolger v. Amazon.com, LLC, 267 Cal. Rptr. 3d 601 (Cal. Ct. App. 2020), in which another California appellate court found that Amazon had been a link in the chain of distribution between a third-party seller and a purchaser of a laptop replacement battery. The Bolger court determined that public policy supported imposing strict liability on Amazon, the only member of the distribution enterprise that was reasonably available to an injured consumer. The court also held that despite casting itself as a mere online storefront, Amazon had placed itself between TurnUpUp and Loomis in the hoverboard transaction. Amazon took Loomis’s order, processed her payment, and transmitted the order to TurnUpUp, the court said, adding that had the hoverboard been returned, it would have been routed through Amazon. The court rejected Amazon’s argument that it was essentially an online mall. Mall owners do not charge a per-diem fee or accept a percentage of sales, the court said.

The court also noted that under the stream of commerce approach to strict liability, there is a triable issue of fact here as to Amazon’s liability. Under this theory, the court said, a defendant may be strictly liable where it receives a direct financial benefit from its activities and the sale of a product; the defendant’s role was integral to the business enterprise such that the defendant’s conduct was a necessary factor in bringing the product to the consumer market; and the defendant had control over, or a substantial ability to influence, the manufacturing or distribution process. Amazon earned six figures from the sale of TurnUpUp hoverboards at the end of 2015, the court pointed out—noting that at a minimum, this created a triable issue of material fact as to whether Amazon had received a direct financial benefit from its activities surrounding the product and whether its role was integral to the business enterprise.

Moreover, the court said, despite its contention that it had no relationship with the hoverboard manufacturer, Amazon had a substantial ability to influence the manufacturing and distribution process through its ability to require safety certification, indemnification, and insurance before the product was listed.

The court also concluded that Amazon was in the hoverboard’s vertical chain of distribution. The court rejected Amazon’s argument that it had played no role in the hoverboard’s vertical distribution chain or stream of commerce because the online retailer is merely a service provider not subject to strict liability. The fact that Amazon did not hold title to the hoverboard and or have physical possession of the product did not render the company a mere service provider, the court said. Amazon, the court reiterated, listed the product on its website, took Loomis’s order, and passed the order up the chain of distribution.

Addressing the policy considerations behind imposing strict liability, the court pointed out that Amazon plays a role in ensuring product safety and can act as a gatekeeper to maintain enhanced product safety. The company is able to spread loss by adjusting fees, indemnity requirements, and insurance, the court said.

Regarding the plaintiff’s negligence claim, the court continued, Amazon had failed to meet its burden of demonstrating that the plaintiff could not establish one or more elements of her claim. Citing case law, the court said that Amazon also had failed to provide an analysis of how it did not owe Loomis a duty.
Consequently, the court remanded the case and awarded the plaintiff the costs of her appeal.

Citation: Loomis v. Amazon.com LLC, 277 Cal. Rptr. 3d 769 (Cal. Ct. App. 2021).

Plaintiff counsel: AAJ member Christopher B. Dolan, AAJ member Megan Irish, and Dianna Albini, all of San Francisco; Jill McDonell, Los Olivos, Calif.; and AAJ member Jeremy K. Robinson, San Diego.

Comment: In State Farm Fire & Casualty Co. v. Amazon.com, Inc., 2021 WL 930697 (N.D. Miss. Mar. 11, 2021), State Farm brought a products liability subrogation case against Samsung SDI Co. The insurer claimed that the defendant was liable for a fire that occurred in the home of its insureds, Taylor and Laurel Boone, who gifted their children two hoverboards whose batteries allegedly malfunctioned and caused the fire. The insurer also sent a notice of the subrogation claim to Sanway, the seller of one of the hoverboards; however, the delivery driver reported that the address State Farm had provided for Sanway was an empty field in China. Samsung moved for summary judgment. Granting the motion, the district court noted that the only actual evidence that Samsung had manufactured the batteries in either hoverboard was an email receipt from an Amazon listing. The court declined to admit the receipt under the business record hearsay exception, Fed. R. Evid. 803(6), finding that the insurer did not state that it had a qualified witness or other certification method to verify the receipt’s contents. The court also concluded that the receipt was inadmissible under Fed. R. Evid. 807, the residual exception to hearsay. The court found that for evidence to be admitted under that rule, there must be sufficient guarantees of trustworthiness. In this case, the court said, the seller of the item on the receipt had not been located, and the plaintiff had not provided the declarant’s name, thus depriving the defendant of a fair opportunity to depose the declarant. Finally, the court concluded that the plaintiff’s argument that the unidentified hoverboard batteries could have belonged to Samsung amounts to nothing more than speculation