Amazon held liable based on past precedent
In Pickard v. Amazon.com, Inc., 2023-01596, 2024 WL 3218633, decided in June of 2024, the Louisiana Supreme Court held that, under Louisiana’s products liability law, (1) Amazon is a “seller” of defective products sold by third parties on its website; and (2) Amazon can be liable under a theory of negligent undertaking for third-party products sold on its website.
Case Background
In the case, plaintiff, Archie Pickard, purchased an allegedly defective battery charger through Amazon.com. The charger allegedly malfunctioned, igniting a fire that spread throughout Pickard’s home and severely burned him. He ultimately died from his injuries. Pickard’s family filed a lawsuit in the Western District Court of Louisiana against Amazon.com, Inc. and related entities asserting claims under the Louisiana Products Liability Act and negligent undertaking.
The subject charger was sold by a third party identified as “Jisell” on Amazon’s website. In order to use Amazon’s website, Jisell paid Amazon a fee and provided a description of the product, the price, and any required labels and warnings. Jisell was responsible for importing and properly packaging the product. Jisell also paid an additional fee for an optional service called “Fulfillment by Amazon,” in which products are sent to an Amazon warehouse for storage and processing. With this optional service, Amazon would retrieve the pre-packaged product from its warehouse, place it in a shipping container or apply a shipping label to the box, and deliver or arrange for delivery of the product to the buyer. Essentially, Amazon listed the product on its website, physically stored the product, received payment, and delivered the product to the buyer.
Amazon Files Motion for Summary Judgment
Amazon filed a motion for summary judgment, which prompted the Western District Court to certify two questions to the Louisiana Supreme Court:
In answering the first certified question, the Louisiana Supreme Court analyzed the statutory provisions of Louisiana Products Liability Act (LPLA) to determine the circumstances under which a “seller” can be held liable as a manufacturer. The LPLA specifies only two such circumstances: (1) when the seller exercises control over a characteristic of the product’s design, construction or quality; and (2) when the seller imports and distributes products of a foreign manufacturer if the seller is the manufacturer’s alter ego. The LPLA also defines a “seller” as “[A] person or entity who is not a manufacturer and who is in the business of conveying title to or possession of a product to another person or entity in exchange for anything of value.” La. R.S. 9:2800.53(2).
In concluding that Amazon could be a “seller” of third-party products sold on its website, the court’s analysis turned on the meaning of the word “possession” in the statutory definition, in light of the word’s ordinary “dictionary meaning,” its context in the LPLA’s statutory scheme, and the LPLA’s statutory purpose. The court’s conclusion was that “possession” in the statutory scheme meant “physical custody and control of the product, without regard to ownership.” Further, the “custody and control of the product need not be accompanied by an intent to own” the product.
The court stated that determining Amazon’s status as a “seller” does not “alone” establish liability under the LPLA:
To be liable, a seller must meet the additional statutory requirements of the applicable “manufacturer” definition. See La. R.S. 9:2800.52; 9:2800.53(1)(b) and (d). The scope of the Act is thus ultimately controlled and limited by the more restrictive “manufacturer” definition. Id., 2023-01596, p. 4, 387 So.3d at 519.
Accordingly, the court held that the operator, like Amazon, of an online marketplace is a “seller” of third-party products sold in its marketplace when the operator did not hold title to the product but: (i) had physical custody of the product in its distribution warehouse; and (ii) controlled the process of the transaction and delivery through its product fulfillment program. But the court cautioned that its holding was limited to the term “seller” and expressed “no opinion” whether the operator is a “seller in any other context.” (2023-01596, p. 11, 387 So.3d at 523).
With respect to the second certified question, the Louisiana Supreme Court held that Amazon could be liable for a negligent undertaking if it meets the standards outlined in Section 324A of the Restatement (Second) of Torts related to negligent undertaking. A claim for “negligent undertaking” arises when a party, who does not owe a duty, assumes a duty by acting, either gratuitously or for consideration. Once the duty is assumed, it must be properly performed with reasonable care to avoid physical harm to the party who is relying upon the undertaking.
Looking to Past Precedent
The court looked to Bujol v. Entergy Servs., Inc., 03-0492 (La. 5/25/04), 922 So.2d 113, 1128-29, adhered to on reh’g (11/19/06), which has been called “a definitive Louisiana analysis” of Section 324A and the assumption of duty. We note with certain amount of justifiable pride that Joseph L. McReynolds, Robert E. Kerrigan, Jr. and the late Marian M. Berkett of this firm represented the French corporation Air Liquide, S.A. in the appeal that reversed a $154 million jury verdict following the Supreme Court’s determination that Air Liquide did not assume a duty to provide a safe working environment at the plant of its American subsidiary.
In Bujol, the Louisiana Supreme Court established the legal standards and necessary proof to establish what constitutes an assumption of a duty and liability for the breach of that duty. The court is required first to determine whether a defendant has assumed a duty. The defendant assumes a duty under Section 324A when undertaking the rendition of services to another, which the defendant should recognize as necessary for the protection of a third person. Bujol, 922 So.2d at 1129. An affirmative or positive undertaking is required, and the court should consider the scope of the defendant’s involvement, the extent of the defendant’s authority, and the defendant’s underlying intent. Bujol, 922 So.2d 1113, 1131.
If plaintiff proves the defendant assumed a duty and failed to exercise reasonable care to perform that duty, then plaintiff must prove one of the following: (a) defendant’s failure to exercise reasonable care increased the risk of harm to plaintiff, (b) defendant undertook to perform a duty owed by another to plaintiff, or (c) plaintiff’ s harm was suffered because plaintiff or the person who originally had the duty relied on defendant to perform the duty. Bujol, 922 So.2d at 1129.
In Pickard, the plaintiffs argued that Amazon has multiple tools to scan customer reviews and other feedback for product listings to identify and prevent unsafe or non-compliant products from being listed. Amazon countered that while it uses scanning tools to identify and remove unsafe products, the evidence does not establish that:
“Amazon screens all products for safety before they are sold, that investigations will result in any particular outcome, that Amazon will remove products after certain triggering events, or that Amazon requires compliance documentation to list a product.” Id.
The Louisiana Supreme Court held that Section 324A, as detailed in Bujol, applies to determine if Amazon assumed a duty owed by the third-party seller and is liable for any damages caused by the breach of that duty. The Supreme Court did not speculate about “what circumstances may trigger liability under Section 324A when the operator of an online marketplace voluntarily adopts safety procedures” and specifically explained that “[a]ny fact-finding responsibility is reserved to the federal court.”
This article originally appeared on Deutsch Kerrigan.
About the Author:
Megan Demouy Champagne is a partner at Deutsch Kerrigan. mchampagne@deutschkerrigan.com
Megan Demouy Champagne is a partner at Deutsch Kerrigan. mchampagne@deutschkerrigan.com
