Is Amazon a distributor of products sold by third parties on its marketplace? American judges are changing.

Note: this article was translated from French by an automated tool In 2018, the survey American Confidence Pollmade by the Knight Foundationand   Baker Center for Leadership & Governancefrom Georgetown University has shown that Amazon is the second most trusted organization among US citizens, just behind the military and just ahead of… Google. Amazon even climbs to the top of the most trusted organizations when only Democratic voters are polled. Republican voters reserve for him a third place, after the army and the police, but before the federal executive power.

Is such confidence justified? Most recently, Wall Street Journal reporters (A. Berzon, S. Shifflett and J. Scheck, “Amazon Has Ceded Control of Its Site. The Result: Thousands of Banned, Unsafe or “Mislabeled Products” ”, The Wall Street Journal, August 24, 2019) managed to isolate 4152 products offered on the platform whose presentation had been deemed misleading by federal authorities, which had been declared unsafe or had been subject to a ban. The consequences can be very serious, as illustrated by the example of the death of the purchaser of a motorcycle helmet falsely presented as certified by the Federal Department of Transport. About 150 of these products were falsely advertised as having been removed from the platform. After communication to Amazon of the list of all the products concerned, more than half of them (57%) were withdrawn or were the subject of a different presentation. The newspaper found, however, that nearly 130 products reappeared within two weeks at the initiative of third-party sellers, most often under a new name.

In fact, a large portion of the products offered on Amazon come from third-party sellers, which today represent nearly 60% of its overall revenue. In France, the share of third-party sellers in sales made on the platform is increased from 44% in 2016 to 58% in 2018. However, many of these third-party sellers are either impossible to locate - as was the case with the motorcycle helmet that caused the death of a motorcyclist - or established in distant countries. Thus nearly 40% of third-party sellers (47% in France) are based in China. It is therefore understandable that victims of a defective product turn to Amazon on the grounds that the platform has made it possible to sell these products online. And this especially since Amazon also ensures, in some cases, their shipment from its warehouses: 46% of illegal products identified by the Wall Street Journal, for example, passed through Amazon warehouses.

The question of Amazon's liability for products supplied by these third-party sellers is currently an acute issue in the United States, where litigation is increasing. This circumstance also raises questions about the situation in France.

In the United States, Amazon is, in principle, not responsible for any damage caused by a product sold by a third party on the platform.

In the United States, several laws may apply to Amazon. It is, first of all, section 230 of the Communications Decency Act 1996, that online platforms are not responsible for the content they host. This text, which only targets content, is regularly invoked by Amazon to insist on its status as a simple platform and decline all responsibility. It most certainly leads to exonerate Amazon in the event of misleading presentation of a product by a third party sellers. In any event, it cannot be applied when anything other than online content is involved, for example the safety of the product sold.

This is the reason why victims choose to act on the basis of state laws relating to defective products which are, in the United States, relatively close to each other because often inspired by section 402A of the Restatement (Second) of Torts (1965), and make it possible to engage the responsibility of the seller. However, Amazon generally invokes the fact that it is not the seller of the product when it comes from a third party, even if it was stored in an Amazon warehouse from where it was shipped. To put it another way, making a marketplace available does not make Amazon a reseller or distributor.

The argument convinces the judges. It has been ruled on several occasions that Amazon cannot be considered as a seller of products offered by third-party sellers for lack of any ownership rights in these products, even if they have been sold and paid for on the platform, or even shipped by Amazon from its warehouses. This analysis was adopted by first degree judges in the case of a mobile phone battery that exploded in the pocket of the consumer who acquired it on the platform (McDonald v. LG Electronics USA, Inc. et al., District Court of Maryland, November 10, 2016) or hoverboards causing fires (Garberv. Amazon, US District Court, ND Illinois Eastern Div., March 31, 2019; Carpenter c. Amazon, US District Court, ND California, March 19, 2019). Several courts of appeal have ruled in the same direction. This was the case with a young man who died after ingesting a caffeine powder imported from China (Stiner v. Amazon, Ohio Court of Appeals, 9th District, February 19, 2019). Amazon was also excluded from liability for a faulty headlamp, packaged and shipped by Amazon from one of its warehouses but sold by a third party, which caused a fire. The Court of Appeal of 4^e Circuit ruled out being a seller on the grounds that Amazon did not own the defective lamp (Erie Insurance v. Amazon, 4th Circuit Court of Appeal, May 22, 2019).

However, several American jurisdictions are now ready to qualify Amazon as a seller of products offered by third parties on its marketplace.

Although in principle excluded for now, Amazon's liability may well be recognized more and more widely in the future. In July, a federal court of appeal ruled that Amazon can be qualified as a seller and be liable as such (Oberdorf c. Amazon, 3rd Circuit Court of Appeal, July 3, 2019). In this case, a woman had lost the use of one eye due to a defect in a retractable dog leash which broke and struck her in the face. As the victim was unable to locate the third-party seller, she chose to sue Amazon and had her claim rejected at first instance. The judge of the first degree had considered that the Amazon market place could be assimilated to a section of classified ads appearing in a newspaper, so that Amazon could in no way be identified with a seller. This judgment was overturned on appeal.

The appeal judgment is particularly interesting because the Court examined the situation in it with regard to the various factors traditionally used in the law of the State of Pennsylvania to determine which one is the seller: being the only member of the distribution chain able to compensate the victim, the fact of being better placed than the consumer to prevent the circulation of the defective product, the incentive to safety resulting from a conviction, the possibility of passing on the charge of the repair on its prices. In this regard, the decision underlines that Amazon has complete freedom to refuse a seller and may, under the terms of the contract concluded with the sellers, discretionary remove or suspend a product on the platform. In addition, sellers undertake to communicate with customers only on the site. The platform therefore enjoys the possibility of exercising control over the transaction and combating dangerous products. The court concludes that she can indeed be characterized as a seller. The judges thus choose to disregard the clause providing that the seller protects Amazon against any dispute arising from the sale of its products. It is interesting to note the insistence of this judgment on the great power that Amazon has. The judges also note that the marketplace allows third-party sellers to conceal themselves and deplore the fact that Amazon has not put in place any procedure to provide customers with an effective remedy, for example by verifying that third-party sellers are sufficiently identifiable and accessible to be able to be prosecuted in the event of problem.

Another appeals court, which ruled last June on a new case of fire caused by the sudden explosion of a hoverboard purchased from a seller based in China (Fox v. Amazon, 6th Circuit Court of Appeal, June 10, 2019), seems to have also changed the traditional analysis. In this case, the federal judge of first instance considered that Amazon's role in the transaction was simply to facilitate the exchange between the two parties and concluded that Amazon could not be held to any obligation of relative information. to a product sold by a third party, nor held responsible for the defect of this product. On appeal, the 6th Circuit Court of Appeal adopted an interesting position in ruling that the seller can be defined as the one who exercises control over the sale of the product (" regularly engaged in exercising sufficient control over a product in connection with its sale "). The court held, however, that Amazon had not exercised sufficient control in this case to be considered a seller, for example, having failed to set the price of the product or to have intervened in the development of the presentation. product line. The Court of Appeal however admitted that Amazon owed an obligation to warn of the risks of the product, in a context where an internal investigation had been opened precisely concerning the safety of the products. hoverboards, and where Amazon had informed its customers of security concerns without giving further details.

US courts are not the only ones to hold Amazon liable for products sold on its website. marketplace. In February 2018, the federal environmental protection agency fined the company for letting third-party sellers sell unauthorized pesticides. Amazon accepted an amicable agreement with the federal agency without, however, acknowledging his guilt. In May 2019, another chord of settlement was concluded with theattorney general from Washington State regarding the sale on the platform of school supplies from China containing lead and cadmium in excess of the authorized limits. In this agreement, Amazon committed to requiring third-party sellers to provide certificates establishing the safety of their products and their compliance with U.S. regulations.

Can Amazon be responsible for products sold by third parties in France?

In France, it is generally believed that Amazon plays the role of a web host and broker. In other words, the Amazon marketplace offers an intermediation service aimed at bringing sellers and consumers together. Amazon, on the other hand, is not a party to the contract concluded and cannot be qualified as a supplier or distributor. The general conditions of the Amazon marketplace in France are, on this point, quite clear. " Although Amazon, as a web host, facilitates transactions carried out on the marketplace (or Marketplace) of Amazon, Amazon is not neither the buyer nor the seller of the products third-party sellers. Amazon provides a meeting place where buyers and sellers complete and finalize their transactions. Accordingly, for the sale of such products from third party sellers, a sales contract is formed only between the buyer and the third party seller. Amazon is not not party to such a contract and assumes no liability arising from such a contract or arising from this contract of sale. Amazon is neither the agent nor the agent of the third-party sellers. The third-party seller is responsible product sales and claims or any other problem arising or related to the sales contract between him and the buyer. Any dispute relating to the purchase of a product from a third party seller must be resolved directly between the buyer and this third party seller ". Only two temperaments to this principle are foreseen. On the one hand, Amazon takes care of customer service and processes returns for items sold by third parties but shipped by Amazon. On the other hand, it is possible to request, within a certain time, the refund of a product sold and shipped by a third party seller in the event of a defect, change of mind or late shipment (Guarantee A to Z). On the other hand, there are no plans to compensate the victims for the damage they may have suffered.

If we stick to the qualification of brokerage, Amazon can not be considered directly responsible for the products sold on its marketplace. Article 1245-6 al. 1 of the Civil Code provides that only professional sellers or suppliers are responsible for the safety defect of the products they sell. The fact remains that French law expects a broker to ensure "the accuracy of the information and the seriousness of the conditions relating to the proposed transaction" (Cass. 1st civ. March 15, 2005, n ° 03-17.835, Bull. civ. I, n ° 129). In addition, the current article L111-7 II of the Consumer Code provides for a very reinforced information obligation for platform operators who must not only clearly specify the conditions of the service but also the quality of the advertiser and the obligations. parties in civil and tax matters. And case law generally expects platforms to carry out checks and controls in order to prevent the appearance of illegal content or activities, as illustrated for example by the condemnation of AirBnB to compensate the owner of an apartment under - illegally rented (Paris Court of Instance, 6 Feb. 2018, n ° 11-17000190), fault, for the platform, of having informed the lessor of its obligations of declaration or prior authorization, obtained from it a sworn statement regarding compliance with its obligations and ensured that the accommodation is not rented for more than 120 days per year (article L.342-2-1 of the Tourism Code). In such a context, one could no doubt expect Amazon to verify the identity of third-party sellers, the availability of the products presented, or even the veracity of the information given on the product. One could also consider that it is up to Amazon to ensure that the third-party seller is able to be the subject of an action brought by a French consumer, or even insured in civil liability. Overall, the control and transparency obligations imposed on platforms in France are, much more than in the United States, likely to protect consumers.

However, we should not believe that an evolution similar to the one underway on the other side of the Atlantic would be impossible here. A few years ago, the online auction platform Ebay saw its liability incurred due to the sale, on its site, of many counterfeit products. To do this, the European courts (CJEU n ° 0312 July 2011, show C-324/09, L'Oréal c / Ebay) and French (Cass. Com., May 3, 2012, No. 11-10505 ; No. 11-10507; No. 11-10508 ) were based not on the fact that the platform hosted illegal sales offers but on EBay's active role in the dissemination of this illegal content: help in the description of objects, assistance to sellers, messages to potential buyers for encourage to buy etc…. In this context, Ebay was considered to offer more than a simple hosting service, thus not being able to benefit from the immunity guaranteed to hosts by article 14 of the E Commerce Directive 2000/31 / EC. More recently, the Court of Justice of the European Union ruled that the company Uber did not offer a simple intermediation service but organized a real transport offer given the control carried out by this platform on the transport service (ECJ Dec 20 2017, aff. C-434/15 Uber France). It would therefore not be improbable to see Amazon qualified as a supplier, given the extraordinary power the platform enjoys to organize relations between sellers and consumers and influence transactions. Undoubtedly, for this, it would be necessary to demonstrate the important role played by Amazon in the completion of the transaction. In any case, the exercise invites us to question, once again, the characteristics of a completely new business model, which traditional legal rules are struggling to grasp.

In any case, if, for the time being, no litigation seems to have arisen in France about defective products sold by third parties on Amazon, it is likely that the platform's obligations on this point will be, at the same time. future, to be specified. Amazon has not finished anyway: after the liability for products sold by third parties, it is the responsibility for the fact of the subcontractors responsible for transporting the goods which is now singled out, following of surveys carried out by ProPublica et BuzzFeed News (see P. Maillé, "In the United States, Amazon" express deliveries "cause fatal accidents", Usbek and Rica, September 6, 2019).