Bolger v. Amazon.Com, LLC

53 Cal. App. 5th 431 (2020)

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Nature of the Case

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Facts

Products sold on D's website fall into two general categories. In one category are the products D itself selects, buys from manufacturers or distributors, and sells to consumers at a price established by D. These products make up approximately 40 percent of the website's sales and are not at issue in this appeal. In the second category are the products sold by third parties through D's website. These “third-party sellers” select their own products, source them from manufacturers or distributors, set the purchase price, and use D's website [to reach consumers. They pay either a monthly fee or a per-item fee for the opportunity to sell on D's website. The products not sold directly by D include the words “Sold by” and the name of the third party seller instead of D. At checkout, the order confirmation page again identifies the product as “Sold by” the third party seller. To complete the purchase, Amazon charges the customer's credit card or other payment information in its files. D informs sellers it will “collect all Sales Proceeds for each of these transactions and will have the exclusive rights to do so.” D accepts the risk that the customer's payment information will turn out to be fraudulent. After D collects the payment, it deducts a referral fee (and other potential fees), aggregates the remaining proceeds with those from other purchases, and remits them to the third party seller on a periodic basis. Some third party sellers participate in the “Fulfilled by Amazon” (FBA). program. FBA allows third party sellers to reach customers on a global basis. Third party sellers must apply to register any product included in the FBA program, and D may refuse registration for various reasons. FBA allows third party sellers to store and ship their products from D's warehouses. D controls the packaging for the shipment, which may include D branding and D-specific messaging. Returns for FBA products are also handled by D. “D ‘owns’ the customer. This means that D owns and controls the relationship with the buyer; the individual or company supplying products to the FBA program does not. The supplier has no direct relationship with the buyer, and indeed in most cases does not even have an indirect relationship with the buyer. In most cases there are no communications between FBA supplier and buyer; the FBA supplier simply discovers in a report or some other form of notification that a product has been sold to the buyer.” D does not contact the seller for approval of the purchase; D itself decides whether to allow the transaction to go through. If an interface must occur between the FBA company and the customer, D provides a message console on the Amazon Marketplace Web site that sends messages between the two parties['] e-mail addresses, though neither party is provided with the other party's actual email address.” D requires third party sellers to use only the tools and methods designated by Amazon to communicate with Amazon customers. D prohibits all third party sellers from contacting customers to collect payments or influence their purchasing decisions. No third party seller may not use D customer or transaction information “for any marketing or promotional purposes whatsoever.” D's business solutions agreement (BSA), which Amazon requires all third party sellers to accept, states that D and a third party seller are independent contractors, with no agency or employment relationship. A third party seller must indemnify D for any claim related to its products sold through D. If its sales are above a certain threshold, a third party seller must obtain general commercial liability insurance, listing D as an additional named insured. The BSA prohibits third party sellers from offering certain products through the Amazon website. It also prohibits sellers from listing a product at a higher price than the seller offers through other channels. If a third party seller violates D's policies or applicable law, D may take corrective action, including suspending the seller, destroying inventory without compensation, and permanently withholding payments. D provides its customers with an “A-to-Z Guarantee” for purchases made on its website, including from third party sellers. The guarantee states, “We want you to buy with confidence anytime you make a purchase on the Amazon.com website or use Amazon Pay; that's why we guarantee purchases from third-party sellers when payment is made via the Amazon.com website … . The condition of the item you buy and its timely delivery are guaranteed under the Amazon A-to-z Guarantee.” The A-to-z Guarantee covers defective products sold by third party sellers. If a customer encounters a problem, he or she is required to attempt to contact the third party seller through D, but if the third party seller does not respond, D will refund the customer the product cost, the original shipping cost, and the return shipping cost. D may seek reimbursement of this refund from the third party seller. When a third-party seller signs up to sell on the platform, they have to agree to the [BSA], which contains, very clearly, language that says they have to sell products that meet all the compliance requirements for the jurisdictions that they're going to be selling the product in. D also tracks safety issues daily and makes reports to the Consumer Products Safety Commission. Lenoge registered with Amazon as a third party seller in December 2012. It chose to use the name “E-Life.” Lenoge participated in D's FBA program. P purchased a Lenoge battery through D. P was an Amazon Prime member. D sent her the battery via free two-day shipping. She received the battery in Amazon packaging, including a D-branded box with D-branded shipping tape. P had no contact with Lenoge or anyone other than D. P believed D sold her the battery. D's total fee for the transaction was $4.87, or approximately 40 percent of the purchase price. The next month, D suspended Lenoge's selling privileges because it became aware of safety reports on Lenoge's laptop batteries. Lenoge did not respond and three weeks later, D permanently blocked Lenoge's account. About a month after D blocked Lenoge's account, the replacement battery exploded. P suffered serious burns and was hospitalized for two weeks. P sued D for strict products liability, negligent products liability, breach of implied warranty, breach of express warranty, and “negligence/negligent undertaking.” She named D and several other companies allegedly involved in the design, manufacture, distribution, or sale of the battery as defendants. Bolger added Lenoge but it did not appear. The trial court entered its default. Herocell Inc. was also served and defaulted. YShenzhen Uni-Sun Electronics Co., located in the People's Republic of China was to be served but P was informed it could take two to three years to complete. After almost two years of litigation, D filed its motion for summary judgment. D claimed that it did not manufacture, distribute, or sell the battery and that it was merely a provider of services, namely an online marketplace and logistics operation. D also argued that the CDA shielded it from liability because P's causes of action were based on D's publication of Lenoge's sales listing. P argued that D was part of the chain of production and distribution and therefore strictly liable for any defects. P also argued that D was liable under California's marketing enterprise doctrine. P disagreed that the CDA applied to shield D from liability. The trial court granted D's motion for summary judgment. It ruled that D was a “provider of services by maintaining an online marketplace, warehousing and shipping goods, and processing payments.” P appealed.