Loomis v. Amazon.Com LLC

63 Cal. App. 5th 466 (2021)

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Nature of the Case

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Facts

P ordered a hoverboard on D's website. The listing identified the seller to be TurnUpUp, a name used by SMILETO to sell its products on D's marketplace. SMILETO is allegedly a company based in China. The hoverboard was shipped to P by Forrinx Technology (USA), Inc. P was notified by D that the product shipped on December 1, 2015. P received the hoverboard on December 16, 2015. P gifted the hoverboard to her son. On New Year's Eve, he plugged it into an outlet in P's bedroom to charge. P's boyfriend later discovered a fire burning in her bedroom. Her bed and the hoverboard were on fire. P suffered burns to her hand and foot as a result of fighting the fire. D runs an online marketplace where D and third party sellers list their products for sale. Where D is the seller of a product, it is identified as the seller on the product detail page, and it sources the product, sets the price, and holds title to it. Where a third party is the seller, it is identified as such on the product detail page and again on the order confirmation page before the user places the order. The third party sources the product, sets the price and holds title to it. D's business solutions agreement (BSA) requires a seller to “ensure that [it is] the seller of each of [its] Products” and to provide D with accurate, updated product information in a specified format. A third party seller chooses what products to sell and at what price. the BSA requires pricing parity, where the price is “at least as favorable to D Site users as the most favorable terms” offered by the seller elsewhere. D provides payment processing for all third party sales. It remits the purchase price to the third party seller on a set schedule minus any service fees it may charge. D collects a “referral fee,” a percentage of the sale price per item sold by the third party seller, depending on the nature of the item sold. For toys, such as hoverboards, the referral fee is 15 percent of the sale price. The seller is required to route all payments and refunds through d, who may withhold payments, sometimes permanently, from the seller based upon its investigation of any disputes or claims. Refunds due to purchasers are calculated by the seller according to d's refund policies and routed through D. The BSA further required all communications between the seller and buyer to be made through D. D has the right in its sole discretion to determine the content, appearance, design, functionality and all other aspects of the D Sites, including by redesigning, modifying, removing or restricting access to any of them, and by suspending, prohibiting or removing any listing.” The BSA also allows D in its sole discretion to refuse to process or cancel any transactions. The seller must also ensure its materials, products, offers, and sales comply with all applicable laws. Third party sellers are “responsible for any non-conformity or defect in, or any public or private recall of, any of [their] Products or other products provided in connection with [the] Products. Sellers also agree to indemnify D from any liability arising from its products. For those sellers whose gross proceeds exceed a specified threshold, which was applicable to TurnUpUp, the BSA also requires them to acquire excess insurance naming D as an additional insured. Fulfillment by Amazon (FBA) allows the seller to store its inventory in a D warehouse. If a product is sold under the FBA, D packages and ships the product to the purchaser. TurnUpUp did not elect to utilize the FBA services. D provides purchasers with an “A-to-z Guarantee:” “We want you to buy with confidence any time you make a purchase on the Amazon.com Website or use Amazon Pay. … The condition of the item you buy and its timely delivery are guaranteed under the unconditional A-to-z Guarantee.” D does not consider the A-to-z Guarantee to constitute a warranty for the products it lists. It warns purchasers in its Conditions of Use that third parties sell products through D and that D is “not responsible for examining or evaluating, and [does] not warrant, the offerings of any of these businesses or individuals … . D does not assume any responsibility or liability for the actions, product, and content of all these and any other third parties.” More than 380,000 hoverboards were purchased through D in 2015 almost all sold by third party sellers. D received a referral fee of $55.50 from the $370 sale of the TurnUpUp hoverboard to P. For the period between September 14, 2015, and December 16, 2015, TurnUpUp sold hoverboards totaling $736,366.68 through D. D received $110,645.92 in fees from those sales. In late November 2015, D's product safety team identified 17 reports of fire or smoke allegedly caused by hoverboards sold through D. They involved different models and manufacturers. On December 10, 2015, D decided to remove all third party hoverboard listings from its website. The Consumer Product Safety Commission (CPSC) conducted its own investigation and was in contact with D. On February 18, 2016, the CPSC issued a letter that hoverboards that do not comply with a draft Underwriters Laboratories voluntary standard present a “substantial product hazard.” The CPSC announced recalls of certain hoverboard models in July 2016. P sued Forrinx (D) and Doe defendants for products liability and fraud. Count one alleged strict products liability, count two alleged negligence, and count three alleged a breach of warranty. P eventually substitute D into the lawsuit for a Doe defendant. D moved for summary judgment because it could not be liable under the “marketing enterprise theory” for those entities that fell outside the chain of distribution, and the federal Communications Decency Act of 1996 (47 U.S.C. § 230) (CDA) barred P's claims. The court granted P's motion for summary judgment. P appealed. D disclaims any liability on the ground it is neither a manufacturer nor seller of the hoverboard.