Wade Clark Mulcahy LLP

<p style="text-align: justify;">Who is responsible when you order a defective product from the middleman? Due to the COVID-19 pandemic, the world has seen the importance of online shopping. Websites such as Amazon have thrived during this time while in person shopping remains impossible in certain parts of the globe. But what happens when that item you ordered from Amazon is defective in some way and the buyer sustains damages to person or property?</p>
<p style="text-align: justify;">New York has seen a growing number of cases regarding this exact topic. At the outset, Amazon sells its goods in three ways: (1) Amazon sells, processes, and ships the products; (2) a third-party sells, processes and ships the product but Amazon does not take possession of the product; and (3) a third-party sells the product and Amazon fulfills the order by storing, processing, and shipping the product through its “Fulfillment by Amazon” logistical program. It is through this last scenario that Amazon has found trouble with liability within the courts of New York. The “Fulfillment by Amazon” program allows sellers to store their inventory at Amazon’s warehouse until the product is purchased, upon which time Amazon retrieves the product, packages it, and ships it, giving Amazon significant control over these products.</p>
<p style="text-align: justify;">According to New York law, anyone in the distribution chain of a defective product may be liable, including retailers and distributors. In the recent case, <em><a href="https://www.wcmlaw.com/wp-content/uploads/2021/01/State-Farm-Fire-and-Casualty-Company-v-Amazoncom-Services-Inc.pdf">State Farm Fire and Casualty Company v Amazon.com Services Inc</a>.</em>, 2020 N.Y. Misc. LEXIS 10352, 2020 NY Slip Op 20326 (Sup. Ct.), a subrogating carrier brought suit against Amazon for property damages sustained as a result of a fire caused by a defective thermostat ordered through Amazon. The thermostat was ordered through the above mentioned “Fulfillment by Amazon” program. Amazon argued that it merely stored the product rather than took control of it. However, the court determined that Amazon exercised sufficient control through this program by storing the product and maintain possession at its warehouse. However, because Amazon’s contract with the seller included an indemnification clause, Amazon could seek indemnification from the seller.</p>
<p style="text-align: justify;">While this case was decided in the trial court of New York and is contradictory to two federal decisions in New York, this case connotes the shift in how courts are viewing Amazon and other websites in products liability cases when such sellers maintain sufficient control over third-party products. As similar cases loom on the horizon in Texas and Pennsylvania, courts are leaning more towards holding these internet giants accountable for defects.</p>
Thanks to Gabriella Scarmato for her contribution to this post.  Please email <a href="mailto:gcoats@wcmlaw.com">Georgia Coats</a> with any questions.