NJ District Court Finds Amazon Not Liable For Selling Third Party's Defective Laptop Battery

In its recent unpublished decision Allstate New Jersey Insurance Co. v Amazon.com, Inc., No. 3:2017cv02738 (D. N. J. July 24, 2018), the U.S. District Court for the District of New Jersey ruled that Amazon, Inc. was not liable as the seller of a laptop battery that allegedly caught fire and destroyed the customer’s home.

According to the Complaint, the customer ordered the battery from a third-party seller on Amazon’s website. An Amazon employee packaged and shipped the battery from an Amazon warehouse in Virginia. The battery arrived in a cardboard box with tape, both of which displayed Amazon’s logo. Amazon’s name appeared on the customer’s credit card statement. One month later, the battery caught fire in a charging laptop, and burned the entire house down.

The customer’s insurer, Allstate New Jersey Insurance Company, filed a products liability suit against Amazon as a “product seller” under the Product Liability Act, seeking to recover money it paid out in insurance claims on the fire. Allstate alleged that Amazon “marketed sold, shipped, assembled, packaged, distributed and/or was otherwise involved in placing the defective battery in the stream of commerce”; shipped a battery that “was not reasonably fit, suitable, or safe for its intended purpose”; and “had a duty to warn the insured that the battery was in an unreasonably dangerous condition.” The Court ruled in favor of Amazon.

The Court’s finding pivoted on whether Amazon was in fact “product seller” as defined by Products Liability Act (PLA). The PLA contains a broad definition of “product seller” including “any party involved in placing a product in the line of commerce”. While Amazon is generally considered a “product seller” in the course of direct sales of Amazon-branded products to consumers, it argues that it is not a “product seller” in the course of a sale from a third-party vendor to a consumer, witch Amazon only fulfilling the transaction by holding the product in its inventory and shipping it to the customer.

The Court found that Amazon was not a “product seller” because it did not decide what product to sell; nor did it procure the product from the manufacturer or upstream distributor or ensure that it complied with applicable laws. In particular, the court indicated that the focus must be on whether the intermediary “[ever] had physical control of the product [or] had merely arranged the sale.” Amazon’s storage and shipping services did not impart any such control.

The Court concluded that even if Amazon had exerted more control over the product, Allstate had not presented any authority holding that the level of control exerted by Amazon in the current case brought it within the bounds of strict liability.