On certified questions from the Western District of Louisiana, the Louisiana Supreme Court decided that:

1. Under the Louisiana Products Liability Act, the operator of an online marketplace can be a “seller” of third-party products sold in its marketplace, even when the operator did not hold title to the product, but where it: (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; and,
2. Restatement Section 324A, as interpreted in Bujol v. Entergy Services, 03-0492 (La. 5/25/04), 922 So.2d 1113, applies to determine if an operator of an online marketplace assumed a duty owed by a third-party seller and is liable for any damages caused by the breach of that duty.

With respect to the first issue, the Court found that the operator of an online marketplace who, as described in the certified question, “had physical custody of the product in its distribution warehouse” and “controlled the process of the transaction and delivery” necessary to convey ownership and possession of the product to the buyer can perform a similar role. Like the distributor in the pre-LPLA Media Production case, the operator’s involvement can form a substantial and material part of the transaction. “If, as the Act requires for liability, the operator is the alter-ego of a foreign manufacturer, the operator should bear the loss for any injury caused by a defective product, not the consumer.”

The Court, at the same time, rejected Amazon’s argument that the common-usage interpretation of possession leads to absurd results because it would sweep numerous service providers within the scope of liability, including the Postal Service. “While a delivery service may have temporary possession or transient control of a product, that is not sufficient to subject the service provider to liability under the Act. As noted above and in the certified question, Amazon, for a fee, provided a service that included collecting the payment for Jisell. To the extent that is relevant to determining seller status, that fact would distinguish Amazon from the Postal Service. Further, even if the delivery service was a seller, that status would not subject it to the Products Liability Act. The delivery service would have to be a seller-manufacturer, meaning it is the alter ego of a foreign manufacturer or exercised control or influence over a characteristic of the design, construction or quality of the product. In today’s stream of commerce, the typical delivery service, including the U.S. Postal Service, satisfies none of those requirements.

“The focus on the manufacturer, rather than the seller, is a distinguishing characteristic of our Act. Liability is imposed on a seller when it acts as a de facto manufacturer. For this reason, unlike some jurisdictions, we do not incorporate a title requirement into the definition of ‘seller’. A title requirement limits a seller to a person who owned the product and (1) conveyed that ownership through a sale, or (2) otherwise transferred possession of the product through a non-sale transaction, such as a lease. In defining a seller, Subsection 9:2800.53(2) refers to a ‘person’ and does not require the person be the owner of the product, nor is such a requirement necessary where the only sellers subject to the Act are de facto manufacturers.”

With respect to the second issue, the Court explained that, under Bujol, when the plaintiff proves that the defendant assumed a duty and failed to exercise reasonable care to perform that duty, the analysis moves to the second step where 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.

“Petitioners maintain Amazon assumed and breached a duty to identify, remove, and warn customers about unsafe products on its marketplace, including the subject battery charger. The evidence consists of dozens of exhibits comprising over a thousand pages, including depositions, expert reports, tests, protocols, policies from Amazon, and other information. According to plaintiffs, this evidence establishes Amazon employs multiple tools to scan customer reviews and other feedback for product listings to identify and prevent unsafe or non-compliant products from being listed. Each identified product is investigated, and, in some instances, Amazon requests testing documentation or other information about the product from the seller. Amazon may remove a product, immediately suspend or terminate the seller’s privileges, and notify purchasers of the safety concerns. Although the subject four-battery charger did not have any safety-related reviews, a similar six-battery charger listed by the same seller had reviews identifying safety issues.”

Amazon, on the other hand, counters that while it uses scanning tools to identify and remove unsafe products, “the evidence does not establish 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. The record, according to Amazon, establishes sellers are responsible for the safety of their products, and Amazon does not vet sellers’ products before sale. Amazon’s policies did not require compliance documentation before the subject product was sold. In short, Amazon maintains petitioner’s description of Amazon’s purported duty is not grounded in anything Amazon stated to Pickard or in statements about the product he bought. Amazon further argues petitioners mischaracterize the corporate representative’s testimony, which concerned Amazon’s seller registration process.

“When a certified question is accepted” the Court explained, “this court’s role is to render a judgment or opinion concerning questions or propositions of Louisiana law. This court may only render a judgment or opinion concerning such questions or propositions of Louisiana law, not resolve factual issues. Any fact-finding responsibility is reserved to the federal court. We will not speculate about what circumstances may trigger liability under Section 324A when the operator of an online marketplace voluntary adopts safety procedures.”

 

Pickard v. Amazon.com, Inc., 2023-1596 (La. 6/28/2024), 2024 WL 3218633.