Ninth Circuit Says Amazon Isn’t “Seller” of Marketplace Items–State Farm v. Amazon

December 26, 2020 · by · in Derivative Liability, E-Commerce

This is another Amazon marketplace hoverboard case. The majority summarizes its conclusion:

While Amazon provides a website for third-party sellers and facilitates sales for those sellers, it is not a “seller” under Arizona’s strict liability law for the third-party hoverboard sales at issue here.

The majority reached that conclusion by applying a multi-factor test for determining who is a seller (I added bullets to this quotation–it was a giant paragraph in the opinion):

  • First, Amazon expressly disclaims any warranties in its Business Services Agreement, which applied to the third-party seller of the allegedly defective hoverboards here. Not providing a warranty indicates that Amazon does not take responsibility for the quality of the product.
  • Second, while Amazon facilitated the shipping of the third-party seller’s hoverboards from the warehouse to the consumer, this did not make Amazon the seller of the product any more than the U.S. Postal Service or United Parcel Service are when they take possession of an item and transport it to a customer.
  • Third, while Amazon could theoretically use its market power to inspect third-party sellers’ products, in practice it does not. Instead, Amazon relies on sellers’ representations regarding the contents of the packages it stores before placing them in an Amazon box for shipping.
  • Fourth, while Amazon did store and then mail the hoverboards to the customer on behalf of the third-party seller, at no time did Amazon take title to the hoverboards, which supports the conclusion that it is not the seller of the product.
  • Fifth, Amazon derives only a small benefit from each of the transactions of the third-party sellers that use its services, suggesting that Amazon’s interest in the transaction is limited.
  • Sixth, while Amazon undoubtedly has the capacity, due to its market power, to influence third-party sellers’ design and manufacturing decisions, State Farm shows little to support the conclusion that Amazon does so in practice.
  • Seventh, the consumer reliance factor weighs in Amazon’s favor because the third party is listed as the seller on the website and receipt, and State Farm does not cite to any cases that support its contention that an injured party’s subjective belief about the identity of the seller weighs in favor of finding that entity strictly liable.

A dissent would have certified the question to the Arizona Supreme Court.

Case citation: State Farm Fire and Casualty Company v. Amazon.com, Inc., 2020 WL 6746745 (9th Cir. Nov. 17, 2020)

BONUS: Compare this ruling from Texas: McMillan v. Amazon.Com, Inc., 2020 U.S. Dist. LEXIS 102025 (S.D. Tex. June 8, 2020): “The fact that Amazon is a service provider does not preclude Defendant from also being a seller… Amazon is integrally involved in and exerts control over the sales of third-party products such that it qualifies as a seller under Chapter 82.”

Regarding Section 230: “Amazon cannot be held liable for taking insufficient precautions to prevent a third-party vendor from lying, or omitting information, about the defect or dangers of the Remote…. Insofar as Plaintiff’s claims might relate to Amazon’s editorial control over the product detail page and failure to provide adequate warning on the page, those claims would be barred by the CDA and Defendant’s Motion is granted on those claims. As to Plaintiff’s claims that relate only to Amazon’s involvement in the sales process of third-party products, the CDA does not apply and Defendant’s Motion is denied as to those claims.”

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