Amazon.com (NASDAQ: AMZN) suffered a critical blow on Thursday after a California Appeals Court ruled against it in a lawsuit involving a consumer who alleged causes of action for strict products liability, breach of an implied warranty, and negligent undertaking.”

The lawsuit arises after consumer Angela Borger suffered severe burns when a replacement laptop computer battery she bought on Amazon exploded. The product was sold by a third-party seller, E-Life, fictitious name used by Lenoge Technology (HK) Ltd. on the e-commerce giant’s platform.  Bolger also sued Lenoge and other defendants in the case.

In the trial court, Amazon argued that the doctrine of strict products liability and any similar tort theory did not apply to it in this case. The company explained that it did not distribute, manufacture, or sell the replacement laptop battery in question. The e-commerce giant claimed that its website is an online marketplace and the seller was Lenoge. The trial court judge agreed and dismissed the case.

Borger appealed the trial court’s ruling to the California Fourth District Court of Appeals. She argued that Amazon is “strictly liable for defective products” being sold on its website by third-party sellers.

Amazon played a “pivotal role” between the consumer and seller

On Thursday, the Appeals Court agreed with Borge and ruled that Amazon can be held liable for damages caused by the defective replacement laptop battery she bought on the company’s online marketplace.

In its ruling, the Appeals Court found that Amazon played a significant role between Bolger and Lenoge in the chain of distribution of the defective replacement laptop battery.  The e-commerce giant accepted the product from Lenoge, stored it at its warehouse, attracted the consumer to its website, provided listing, and accepted her payment for the product.

“As a factual and legal matter, Amazon placed itself between Lenoge and Bolger in the chain of distribution of the product at issue here…Whatever term we use to describe Amazon’s role, be it “retailer,” “distributor,” or merely “facilitator,” it was pivotal in bringing the product here to the consumer,” according to the Appeals Court.

Strict products liability was created to protect consumers

Additionally, the Appeals Court explained that strict products liability “was created judicially because of the economic and social need for the protection of consumers in an increasingly complex and mechanized society, and because of the limitations in the negligence and warranty remedies...”

The Appeals Court further clarified that the scope of strict liability “has been expanded where necessary to account for market realities” and to “cover new transactions…in today’s business world.”

“Under established principles of strict liability, Amazon should be held liable if a product sold through its website turns out to be defective. Strict liability here “affords maximum protection to the injured plaintiff and works no injustice to the defendants, for they can adjust the costs of such protection between them in the course of their continuing business relationship,” the Appeals Court ruled, reversing the trial court’s judgment.

Jeremy Robinson, the lawyer representing Bolger in the case, commented, “Consumers across the nation will feel the impact of this.”

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