Loomis v. Amazon.com LLC

Citation277 Cal.Rptr.3d 769,63 Cal.App.5th 466
Decision Date26 April 2021
Docket NumberB297995
CourtCalifornia Court of Appeals
Parties Kisha LOOMIS, Plaintiff and Appellant, v. AMAZON.COM LLC, Defendant and Respondent.

The Dolan Law Firm, Christopher B. Dolan, San Francisco, Dianna Albini, Megan Irish, San Francisco, Jill McDonell ; Casey Gerry Schenk Francavilla Blatt & Penfield and Jeremy K. Robinson, San Diego, for Plaintiff and Appellant.

Perkins Coie, Max L. Rothman, Los Angeles, and Brendan Murphy for Defendant and Respondent.

Fred J. Hiestand, Sacramento, for The Civil Justice Association of California as Amicus Curiae on behalf of Defendant and Respondent.

OHTA, J.*

Kisha Loomis brought suit against Amazon.com LLC (Amazon) for injuries she suffered from an allegedly defective hoverboard. The hoverboard was sold by a third party seller named TurnUpUp through the Amazon website. The trial court granted summary judgment in favor of Amazon. The primary issue on appeal is whether Amazon may be held strictly liable for Loomis's injuries from the defective product. Recently, the Fourth District addressed this issue as a matter of first impression in Bolger v. Amazon.com, LLC (2020) 53 Cal.App.5th 431, 267 Cal.Rptr.3d 601 ( Bolger ), review denied November 18, 2020. Bolger held Amazon "is an ‘integral part of the overall producing and marketing enterprise that should bear the cost of injuries resulting from defective products.’ " ( Id. at p. 453, 267 Cal.Rptr.3d 601.) Our own review of California law on strict products liability persuades us that Bolger was correctly decided and that strict liability may attach under the circumstances of this case. We reverse and remand with directions.

I. FACTS

Loomis ordered a hoverboard on Amazon's website on November 28, 2015. The listing identified the seller to be TurnUpUp, a name used by SMILETO to sell its products on Amazon's marketplace. SMILETO is allegedly a company based in China. The hoverboard was shipped to Loomis by Forrinx Technology (USA), Inc. Loomis was notified by Amazon that the product shipped on December 1, 2015. On December 11, 2015, Loomis sent an e-mail inquiring whether the hoverboard would be delivered in time for Christmas. The e-mail was sent through Amazon's website. Loomis received the hoverboard on December 16, 2015. Loomis gifted the hoverboard to her son. On New Year's Eve, he plugged it into an outlet in Loomis's bedroom to charge. Loomis's boyfriend later discovered a fire burning in her bedroom. Her bed and the hoverboard were on fire. Loomis suffered burns to her hand and foot as a result of fighting the fire.

A. Third Party Sales on Amazon.com

Amazon.com is an online marketplace where Amazon and third party sellers list their products for sale. Amazon describes its marketplace as "an online mall" which provides an "online storefront" to third party sellers. Where Amazon is the seller of a product, it is identified as the seller on the product detail page, and it sources the product, sets the price, and holds title to it. This case does not involve an Amazon-listed product. Where a third party is the seller, it is identified as such on the product detail page and again on the order confirmation page before the user places the order. The third party sources the product, sets the price, and holds title to it.

All third party sellers operate under the Amazon Services Business Solutions Agreement (BSA). The BSA requires a seller to "ensure that [it is] the seller of each of [its] Products" and to provide Amazon with accurate, updated product information in a specified format. A third party seller chooses what products to sell and at what price. However, the BSA requires pricing parity, where the price is "at least as favorable to Amazon Site users as the most favorable terms" offered by the seller elsewhere.

Amazon provides payment processing for all third party sales. It remits the purchase price to the third party seller on a set schedule minus any service fees it may charge. Amazon collects a "referral fee," a percentage of the sale price per item sold by the third-party seller, depending on the nature of the item sold. For toys, such as hoverboards, the referral fee is 15 percent of the sale price. The seller is required to route all payments and refunds through Amazon, who may withhold payments, sometimes permanently, from the seller based upon its investigation of any disputes or claims. Refunds due to purchasers are calculated by the seller according to Amazon's refund policies and routed through Amazon. The BSA further required all communications between the seller and buyer to be made through Amazon.

Under the BSA, Amazon expressly reserves the right to control of its website and listings: "We have the right in our sole discretion to determine the content, appearance, design, functionality and all other aspects of the Amazon Sites, including by redesigning, modifying, removing or restricting access to any of them, and by suspending, prohibiting or removing any listing." The BSA also allows Amazon in its sole discretion to refuse to process or cancel any transactions.

The seller must also ensure its materials, products, offers and sales comply with all applicable laws. The BSA advises third party sellers they are "responsible for any non-conformity or defect in, or any public or private recall of, any of [their] Products or other products provided in connection with [the] Products." In addition to Amazon's own efforts to monitor recalls, the BSA requires third party sellers to notify Amazon "promptly" of any public or private recalls of their products.

Sellers also agree to indemnify Amazon from any liability arising from its products. For those sellers whose gross proceeds exceed a specified threshold, which was applicable to TurnUpUp, the BSA also requires them to acquire excess insurance naming Amazon as an additional insured.

Some third party sellers utilize Fulfillment by Amazon (FBA) services, which allow the seller to store its inventory in an Amazon warehouse. If a product is sold under the FBA, Amazon packages and ships the product to the purchaser. TurnUpUp did not elect to utilize the FBA services.

Amazon provides purchasers with what it calls an "A-to-z Guarantee:" "We want you to buy with confidence any time you make a purchase on the Amazon.com Website or use Amazon Pay.... The condition of the item you buy and its timely delivery are guaranteed under the unconditional A-to-z Guarantee." Amazon, however, does not consider the A-to-z Guarantee to constitute a warranty for the products it lists. It instead warns purchasers in its Conditions of Use that third parties sell products through Amazon and that Amazon is "not responsible for examining or evaluating, and [does] not warrant, the offerings of any of these businesses or individuals .... Amazon does not assume any responsibility or liability for the actions, product, and content of all these and any other third parties."

B. The Sale of Hoverboards on Amazon

More than 380,000 hoverboards were purchased through Amazon in 2015. The vast majority were sold by third party sellers. Under the BSA, Amazon charged TurnUpUp various fees for its services, including a $39.99 monthly nonrefundable subscription fee and a 15 percent referral fee that was calculated from the total sales price of each product. For the transaction at issue, Amazon received a referral fee of $55.50 from the $370 sale of the TurnUpUp hoverboard to Loomis. For the period between September 14, 2015, and December 16, 2015, TurnUpUp sold hoverboards totaling $736,366.68 through Amazon. Amazon received $110,645.92 in fees from those sales.

In late November 2015, Amazon's product safety team began investigating hoverboards in response to press reports that hoverboards were involved in fires. It identified 17 reports of fire or smoke allegedly caused by hoverboards sold through Amazon. These 17 reports involved different models and manufacturers.

On December 10, 2015, Amazon decided to remove all third party hoverboard listings from its website. It sent all prior hoverboard purchasers an e-mail notifying them of the reports of safety problems with hoverboards. Loomis testified in her deposition she did not recall receiving such an e-mail from Amazon.

During this time, the Consumer Product Safety Commission (CPSC) conducted its own investigation into hoverboard safety and was in contact with Amazon about it. On February 18, 2016, the CPSC issued a letter stating that it regarded hoverboards that do not comply with a draft Underwriters Laboratories voluntary standard as presenting a potential "substantial product hazard." The CPSC announced recalls of certain hoverboard models in July 2016.

C. The Legal Proceedings

Loomis brought suit against Forrinx1 and Doe defendants for products liability and fraud on September 2, 2016. In a form complaint, Loomis alleged three "counts" related to the product liability cause of action. Count one alleged strict products liability, count two alleged negligence, and count three alleged a breach of warranty. Loomis later amended her complaint to substitute Amazon into the lawsuit for a Doe defendant.

Amazon moved for summary judgment on a number of grounds, including that it did not fall within the chain of distribution for product liability purposes, it could not be liable under the "marketing enterprise theory" for those entities that fell outside the chain of distribution, and the federal Communications Decency Act ( 47 U.S.C. § 230 ) (CDA) barred Loomis's claims.2 The trial court granted Amazon's motion for summary judgment. Loomis timely appealed.

II. DISCUSSION

At issue in this appeal are Loomis's strict and negligent product liability claims.3 She contends summary adjudication was improperly granted due to Amazon's participation in the vertical chain of distribution for the product. Amazon disclaims any liability on the ground it is neither a manufacturer nor seller of the hoverboard. We...

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