Does Amazon qualify as a product seller?

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Although the attached opinion has not been published and does not bind a court in New Jersey, product liability practitioners and contractors should take note of New Jersey Manufacturers Insurance Group A/ N/A Angela Sigismondi c. Amazon.com Inc., (DNJ 2022). In that notice, the federal district court, interpreting New Jersey law, held, in the circumstances, that Amazon qualified as a seller of products under the tort law’s definition of “product seller.” of New Jersey Products (NJPLA), which includes “any person who, in the course of commercial activities conducted for this purpose: *** is otherwise involved in the placement of a product in the line of commerce. He further held that Amazon could not escape strict liability on summary judgment under the “innocent seller” section of the NJPLA by identifying the manufacturer of the allegedly defective product because Amazon was an NJSA 2A seller: 58C-9(d)(2) who “knew or ought to have known of the defect.

As discussed by the Court, the NJPLA provides that:

A manufacturer or seller of a product is liable in a product liability action only if the plaintiff proves by a preponderance of evidence that the product causing the damage was not reasonably fit, suitable[,] or safe for its intended use because it: a. deviate from the manufacturer’s design specifications, formulas or performance standards or otherwise identical units manufactured to the same manufacturing specifications or formulas, or b. does not contain adequate warnings or instructions, or c. was defectively designed.

NJSA § 2A:58C-2. In NJSA § 2A:58C-8, a related section of the same chapter on product liability, the terms “manufacturer” and “seller of the product” are defined. A “product seller” is defined therein as follows:

Any person who, in the course of a business carried on for this purpose: sells; distributed; leases; install; prepares or assembles a manufacturer’s product according to the manufacturer’s plan, intent, design, specifications or formulations; mixtures; packets; Labels; markets; repairs; maintains or is otherwise involved in placing a product in the line of commerce.

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The term “product seller” does not include:

  1. A seller of real estate; Where

  2. A professional service provider in any case where the sale or use of a product is incidental to the transaction and the essence of the transaction is the provision of judgment, skill or service; Where

  3. Anyone who acts solely in a financial capacity in relation to the sale of a product.

NJSA § 2A:58C-8 (emphasis added).

Opinion at pp. 8-9. The district court here found that because “Amazon sold hoverboards and was involved in their marketing, *** Amazon was a ‘vendor of products’ under the NJPLA ***.” Opinion at p. 16.

The NJPLA provides a potential defense to an innocent product seller that positively identifies the actual manufacturer, unless:

(1) The identity of the manufacturer given to the claimant by the seller of the product was incorrect.

(2) Manufacturer has no known agents, facilities, or other presence in the United States.

(3) The manufacturer has no seizable assets or has been declared bankrupt and a judgment is not otherwise recoverable on the assets of the bankruptcy estate.

(4) The seller of the product exercised substantial control over the design, manufacture, packaging or labeling of the product with respect to the alleged defect in the product which caused the injury, death or damage.

(5) The seller of the product knew or should have known of the defect in the product which caused the injury, death or damage or the plaintiff can affirmatively show that the seller of the product was in possession of facts from which a person would reasonably conclude that the product the seller knew or should have known of the alleged defect in the product which caused the injury, death or damage; Where

(6) The seller of the product created the defect in the product which caused the injury, death or damage.

See generally NJSA 2A:58C-9.

Here, because the Court found that Amazon met NJSA 2A:58C-9(d)(2) criteria, it could not grant Amazon’s motion for summary judgment. Presumably, the Court did not consider the other NJPLA Section 9 “innocent seller” exceptions, as it found that Amazon was an NJSA 2A:58C-9(d)(2) seller. Although the identity of a manufacturer was not discussed by the Court, the third-party seller was a “Chinese company, located in Shenzhen.” Guangzhou”. Notice on p.2. This case leaves an important potential lesson for distributors, sellers, retailers, and anyone “involved in placing a product in the line of commerce.” Among other things, you must take additional and diligent steps to ensure that you can recover a claim against the manufacturer or upstream seller(s) of the product. An indemnity is only as good as the ability to collect on it. If you cannot enforce and collect indemnity on assets in the United States, you should consider alternative protections and strategies to avoid assuming the de facto role of another’s insurance company. You just want to avoid being the deep-pocketed easy target with no practical recourse.

©2022 Norris McLaughlin PA, All Rights ReservedNational Law Review, Volume XII, Number 201

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