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October 2, 2020

Ohio Supreme Court Holds Amazon Not Liable Under Products Liability Law

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The Ohio Supreme Court ruled recently that Amazon.com, Inc. cannot be held liable for the death of a teenager caused by the ingestion of a fatal dose of caffeine powder purchased on the Amazon Marketplace because Amazon never had possession or control of the product.

Crucial to the Court’s decision was the fact that the powder was purchased from a third-party seller on Amazon’s marketplace who sold “Fulfilled by Merchant” (or “FBM”)—meaning that the seller stored and shipped the product. This is in contrast to the “Fulfillment by Amazon” (or FBA) service, where a seller agrees to permit Amazon to store the seller’s products in its warehouses and Amazon ships the products once they are purchased by customers without further input from the seller.

In part because Amazon did not hold the product in its warehouses, the Court held that Amazon did not “participate[ ] in the placing of a product in the stream of commerce” and therefore did not qualify under the Ohio Products Liability Act as a “supplier.” As a result, it could not be held liable for the purchase of the product.

Specifically, the Court noted that the third-party seller who sold the caffeine powder “had sole responsibility for the fulfillment, packaging, labeling, and shipping of the product directly to customers.” The seller, not Amazon, “decided what to sell on Amazon, and by agreement, took on the responsibility of sourcing the product from the manufacturer until it reached the end user.” Additionally, Amazon never physically touched the product.

Although the Court recognized that Amazon controls how sellers contact customers, moderates the design and content of its marketplace website and product descriptions, and imposes restrictions on pricing, in the Court’s view, these factors all established Amazon’s control over its relationship with sellers, not its control over the products themselves. When urged by the appellant (the teenager’s father) to consider the policy implications of not holding Amazon liable, the Court held that the appellant “ha[d] not demonstrated that holding Amazon liable would promote product safety” because Amazon lacks control over product safety in FBM situations. The Court’s decision affirmed the decisions of the lower trial and appellate courts in the case.

One justice, Justice Donnelly, concurred in the judgment only, and opined that the Ohio Products Liability Act was designed for the “1980s retail-sales paradigm” and could not equitably be applied to modern eCommerce. He wrote that “[t]he divide between the pre-Internet age and the current age is so profound that laws like this Act might as well have been written in the stone age.” Although he agreed that the law as written shielded Amazon from liability, he opined that the fundamental purposes behind products-liability should not, explaining:

Even if Amazon cannot be considered a supplier in the traditional, pre-Internet sense, I believe that its all-encompassing participation in the sales transactions of its third-party merchants places Amazon squarely on the supply chain, between the seller and the consumer. . . . Because Amazon is so deeply involved in the chain of distribution leading to the Amazon customer, Amazon is well positioned to monitor third-party sellers and their products and to limit its e-commerce services to reputable third-party sellers that select safer products, just as sellers are in a position to select safer products that are sourced from reputable wholesalers or manufacturers.

Notably, Justice Donnelly observed, “the Act does not address many of the contemporary standards in technology, communications, and commerce—standards that have changed radically since 1988,” when the law became effective. In fact, the purchase that led to the teenager’s death was made in 2014, and the case has been in litigation since. All the while, Amazon and other online marketplaces have continued to modify their sales, pricing, storage, and shipping practices.

Just as the online marketplaces have to adapt to a rapid growth in online sales, brands have to adapt to the frequent changes in the practices of online marketplaces and their third-party sellers, and have to take steps to control the sources from which third-party sellers select their products.

Vorys eControl has worked with hundreds of manufacturers and brands to implement efficient, effective and legally compliant online sales control solutions that drive business value. Our eCommerce litigation team has handled more eCommerce-related matters than any other team of which we are aware, including over 150 actions brought against unauthorized marketplace sellers. For more information, please see www.vorysecontrol.com or contact us.

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