Section 230 Doesn’t Protect Amazon From Products Liability Claims–McDonald v. LG

This case involves an exploding cellphone battery. LG manufactured the battery and an Amazon marketplace vendor Safetymind sold it to the buyer. In addition to suing LG, the injured buyer sued Amazon for negligent failure to warn, negligence, and breach of implied warranty. Amazon asserted a Section 230 defense because its marketplace vendor sold the battery. Amazon wins a motion to dismiss, but Section 230 takes a hit along the way.

To get around Section 230, the plaintiff argued that “the issue pivots around the battery itself, Amazon’s involvement in the sale of same, and Amazon’s guarantee regarding its condition, regardless of how the battery was posted on Amazon’s website.” The court likes this argument:

to the extent that a plaintiff may prove that an interactive computer service played a direct role in tortious conduct—through its involvement in the sale or distribution of the defective product—Section 230 does not immunize defendants from all products liability claims.

The court says that’s what the negligence and breach of implied warranty claims do, so Section 230 doesn’t immunize them. Nevertheless, the court dismisses those claims because operating the Amazon marketplace doesn’t make Amazon the actual seller.

With the negligent failure to warn claim, the plaintiff “seeks to impose upon Amazon either (1) a duty to edit and filter content posted by third parties on Amazon’s website or (2) a duty to speak alongside content posted by third parties.” Zeran clearly forecloses the first prong. Regarding the second prong, the court notes the tension between the Fifth Circuit’s Doe v. MySpace and Ninth Circuit’s Internet Brands rulings. The court thinks the Fourth Circuit would not follow the Ninth Circuit’s Internet Brands ruling, so Section 230 immunizes that claim (without leave to amend). Plus, the plaintiff didn’t allege that Amazon knew its third party vendor was selling unsafe goods. While this is a surprisingly good ruling in light of the unfortunate Internet Brands ruling, it provides some evidence of a circuit split about Section 230’s application to failure-to-warn claims, increasing the odds the issue will eventually reach the Supreme Court.

So the net result is unsurprising: Amazon avoids liability for its marketplace vendors’ sales. However, excluding Section 230’s applicability to negligence and implied warranty claims (at least, in the marketplace context) exposes another hole in Section 230’s coverage. Historically, marketplaces like eBay and Amazon have enjoyed substantial Section 230 protection, going back to turn-of-the-century cases like the Stoner and Gentry cases against eBay and including more recent cases such as the Hinton case involving liability for selling recalled goods (which the court distinguishes because that court said the “claims against eBay arise or stem from the publication of information on created by third parties”) and the Inman case, which rejected similar products liability claims (which the court unpersuasively distinguishes by saying the plaintiff only sought to hold eBay liable for its vendor’s tortious conduct). Apparently, at least according to this court, it’s now easy to plead around Section 230 in products liability cases simply by saying the claims seek to hold the marketplace liable for running the marketplace where harmful goods can be sold. Furthermore, when combined with the Airbnb ruling (which I’ll blog Monday), marketplaces taking a cut of revenue are facing increasingly tough scrutiny for Section 230 immunity. So although Amazon won this ruling, I’ll cite this case as another contribution to Section 230’s year of woe.

Case citation: McDonald v. LG Electronics USA, Inc., 2016 WL 6648751 (D. Md. Nov. 10, 2016)