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Z. Papataros v. Amazon.Com, Inc.

United States District Court, D. New Jersey

August 26, 2019

Z. PAPATAROS, A MINOR and NICOLE PAPATAROS g/a/1, Plaintiffs,
v.
AMAZON.COM, INC., LERAY GROUP LTD., COOLREALL TECHNOLOGY LLC, ABC CORP 1-5, and DEF CORP 1-5, Defendants.

          OPINION

          KEVIN MCNULTY UNITED STATES DISTRICT JUDGE

         Plaintiff Z. Papataros, a minor, by his guardian Nicole Papataros ("Papataros"), has Filed a products liability complaint against defendants Amazon.com, Inc. ("Amazon"), Leray Group Ltd. ("Leray Group"), and Coolreall Technology LLC ("Coolreall"). Papataros sues for injuries allegedly caused by a defective scooter that she purchased from Coolreall on the interactive website Amazon.com.

         Leray and Coolreall have not answered the complaint. Amazon has brought a motion for summary judgment (DE 27) on the issues of whether it is a "seller" under the New Jersey Products Liability Act ("NJPLA"), N.J. Stat. Ann. § 2A;58C-1, and whether it is immune from liability under Section 230 of the Communications Decency Act ("CDA"), 47 U.S.C. § 230(c)(1). Amazon also moves for summary judgment on claims of breach of express and implied warranty. For the reasons stated below, I will grant Amazon's motion in part and deny it in part.

         My analysis is fundamentally structured by a recent relevant decision by the U.S. Court of Appeals for the Third Circuit, Oberdorfv. Amazon.com, 930 F.3d 136, 2019 WL 2849153 (3d Cir. July 3, 2019).

         First, Oberdorf held that Amazon is a "seller" for purposes of Pennsylvania strict products liability law. The issue before me, then, is narrowed to the question of whether any feature of New Jersey law distinguishes it from Pennsylvania law in a way that requires a different result. I answer that question in the negative, and hold that Amazon is a seller under the NJPLA.

         Second, Oberdorf interpreted Section 230 of the federal CDA, which provides that an interactive computer service shall not be treated as the "publisher or speaker of any information provided by" a third party, such as a third-party vendor on Amazon.com. Oberdorf drew what amounted to a distinction between liability based on Amazon's status as "speaker" and its status as "seller." Claims of defective warnings or failure to warn, the Court held, were "speaker" claims based on the content of the seller's posting, and hence were barred; claims of strict products liability under the NJPLA, on the other hand, were "seller" claims, and therefore not barred. Here, I follow the lead of Oberdorf and dismiss the failure-to-warn claims, while preserving the NJPLA strict liability claim.

         Background [1]

         a. Facts On September 28, 2015, Nicole Papataros purchased a scooter through the Amazon website from Coolreall. (DSOF, PRSOF ¶ 5). On the listing page for the scooter, between the "in stock" link and the "add to cart" link, the website stated, "Sold by Coolreall and Fulfilled by Amazon." (PSSOF, DRSOF ¶ 25). Amazon.com, not Coolreall, later appeared on Papataros's credit card statement. (Id. ¶ 26). After making her purchase, Papataros received an e-mail confirmation from Amazon that read "Thank you for shopping with us." (Id. ¶ 28).

         i. Amazon and Coolreall

         Amazon.com[2] is an information service and system designed so that multiple users across the world can access the servers and browse the Amazon marketplace at the same time. (DSOF, PRSOF ¶ 1). Third parties who wish to sell on the marketplace must set up an account and accept a Business Solutions Agreement ("BSA"). (Id. ¶ 3; see also PSSOF, DRSOF ¶ 2). Coolreall was a third-party seller that listed and sold products on the Amazon.com marketplace. (DSOF, PRSOF ¶ 4). Coolreall and Amazon entered into the BSA on or around November 2014, and Coolreall sold its first product on the Amazon.com website in February 2015. (PSSOF, DRSOF ¶ 31).

         ii. The agreements between Amazon and Coolreall

         The BSA grants Amazon a "royalty-free, non-exclusive, worldwide, perpetual, irrevocable right and license to use, reproduce, perform, display, distribute, adapt, modify, re-format, create derivative works of, and otherwise commercially or non-commercially exploit in any and all" of the third-party seller's "materials", which consists of "all Technology, . . . Trademarks, Content, . . . Product information, data materials, and other items or information provided or made available by" the third-party seller. (PSSOF, DRSOF ¶ 3).

         The BSA requires that third-party sellers "provide in the format [Amazon] require[s] accurate and complete required product information for each product or service that you offer through any Amazon site." (Id. ¶ 4).

         The BSA also requires third-party sellers to indemnify Amazon for any claims or losses arising out of the sales of their products. (Id. ¶ 5).

         After Papataros filed this suit, Amazon made an indemnification demand on Coolreall but received no response. (Id. ¶ 24).

         The BSA requires third-party sellers to maintain liability insurance naming Amazon as an insured upon reaching the "insurance threshold," i.e., over $10, 000 worth of merchandise sold for three consecutive months. (Id. ¶ 6). It is undisputed that Coolreall surpassed that insurance threshold. (Id. ¶ 7). However, Amazon does not check whether its third-party sellers which meet the threshold are actually in compliance with the BSA's insurance requirement. (Id. ¶ 8).

         The BSA contains a "most favored nation" provision (terminology mine) which mandates that third-parry sellers' pricing for any product be "at least as favorable to Amazon Site users as the most favorable terms upon which a product is offered or sold" via other channels. (Id. ¶ 9). Amazon asserts that Coolreall set the price for the scooter. (DSOF ¶ 12). Papataros disputes that assertion to some extent; the "most favored nation" provision of the BSA, she says, does give Amazon some control over the price. (PRSOF ¶ 4) (citing PL Ex.1).

         Amazon's customers cannot pay third-party sellers directly. (PSSOF, DRSOF ¶ 18). All payments are processed by Amazon. (Id.). Customers may communicate with third-party sellers via the Amazon messaging system or may post public questions, but Amazon does not require third-party sellers to list their contact information on Amazon's website. (Id. ¶ 20). Amazon does not require third-party sellers to identify the manufacturers of the products they sell. (Id. ¶ 21).

         The BSA gives Amazon "the right in [Amazon's] sole discretion to determine the content, appearance, design, functionality and all other aspects of the Amazon sites, including by redesigning, modifying, removing or restricting access to any of them, and by suspending, prohibiting or removing any listing." (PSSOF, DRSOF ¶ 10). Coolreall, however, provided the content for the product listing and offer displayed on the scooter's product detail page. (DSOF; PRSOF ¶ 6). Amazon asserts that it did not contribute to the content of the product offer or listing for the scooter. (DSOF ¶ 7). According to Amazon, it merely published the offer and detail pages. (Id.). In response, Papataros asserts that, pursuant to its agreements, Amazon retains the absolute right to modify the product listing and requires that sellers provide product information in a particular format. (PRSOF ¶¶ 6, 7).

         Amazon asserts that Coolreall sourced the scooter from the manufacturer or upstream distributors. (DSOF ¶ 8) According to Amazon, Coolreall or others upstream in the distribution chain prepared, assembled, and packaged the scooter. (Id. ¶ 9). Amazon also asserts that Coolreall or others upstream in the chain of commerce made the decisions as to what warnings, instructions, and labeling would accompany the scooter. (Id. ¶ 10). Papataros disputes those foregoing assertions, saying they lack supporting evidence. (PRSOF ¶¶ 8-10). Here, Amazon relies in part on the declaration of Charles Wright, its own Associate General Counsel. (DSOF ¶¶ 8-10). I accept Papataros's argument that Wright has not established that he has personal knowledge of Coolreall's operations. (PRSOF ¶¶ 8-10) (citing Fed.R.Civ.P. 56(c)(4)). I will, however, take Wright's declaration as evidence that Amazon did not participate in sourcing, preparing, assembling, or packaging the scooter, or in creating the scooter's warnings, instructions, or labels. Amazon's reliance on the BSA I will treat similarly. (DSOF ¶¶ 8-11). Papataros is correct that the BSA does not provide "proof of how Coolreall or others upstream sourced, prepared, assembled, packaged, warned, instructed, or labeled the product. (PSOF ¶¶ 8-11). Papataros does not dispute, however, that the BSA demonstrates that Coolreall agreed that either itself or others, but not Amazon, was responsible for these activities. (Id.). So limited, these exhibits do not raise a disputed issue of fact.

         Amazon asserts that Coolreall marketed the scooter and chose to offer it for sale. (DSOF ¶¶ 11). Papataros again disputes Amazon's basis for knowledge and, in addition, asserts that Amazon markets the items on its website and charges sellers like Coolreall for those services. (PRSOF ¶¶ 11). Here, too, I find that Wright lacks personal knowledge of what Coolreall did or did not do, but his declaration is competent evidence that Amazon did not market or choose to offer the scooter. Further, the BSA may serve as evidence of the business relationship between Amazon and Coolreall.

         All that said, Papataros asserts that Amazon actually did participate in marketing the product. In support, Papataros cites excerpts from the deposition of Amazon's representative Christopher M. Poad, conducted on November 28, 2017 in Allstate New Jersey Insurance Co. v. Amazon.com, Inc., Civ. No. 3:17-2738. (PRSOF ¶ 11 (citing PL Ex. 3); PSSOF ¶ 15). Amazon points to some difficulties with reliance on this extrinsic deposition.[3] Amazon does not dispute, however, that third-party sellers who wish to sell on Amazon's website must pay a variety of fees "for the advantages of selling their products on Amazon.com." (PSSOF, DRSOF ¶ 14).

         ORDER

         Amazon asserts that any warranty for the scooter was provided not by itself but by Coolreall. (DSOF ¶ 13). Papataros replies, however, that Amazon does provide a warranty for the scooter via its "A-to-Z" Guarantee. (PRSOF ¶ 13 (citing PI. Ex. 4)). Plaintiffs Exhibit 4 suggests that Amazon's A-to-Z Guarantee applies to "purchases from third-party sellers when payment is made via the Amazon.com website or when you use Amazon Pay for qualified purchases on third-party websites." (PI. Ex. 4). However, this exhibit does not provide the terms of the A-to-Z Guarantee, so the coverage of that guarantee remains an unsettled issue of fact. (Id.).

         Many third-party sellers take advantage of the Fulfillment by Amazon ("FBA") program. Under FBA, the third-party seller sends its inventory to an Amazon fulfillment center, where it is stocked until the fulfillment center retrieves it, places it in a shipping container, and delivers it to a shipping carrier for delivery to a customer. (PSSOF, DRSOF ¶ 16). To use the FBA program, third-party sellers pay additional fees, including a monthly storage fee. (Id. ¶ 17).

         In relation to the FBA program, the BSA requires third-party sellers to provide goods that are suitable for sale. The BSA gives Amazon the right to return or dispose of any products which create "a safety, health or liability risk to Amazon, its personnel, or any third party." (PSSOF, DRSOF ¶ 11).

         Coolreall participated in the FBA program. (DSOF, PRSOF ¶I5). The scooter was fully assembled and packaged before Coolreall sent it to an Amazon fulfillment center for storage. (Id.) Amazon asserts that Coolreall was solely responsible for ensuring that the scooter was properly packaged and complied with all applicable laws. (DSOF ¶ 14).[4]

         Amazon did not design or manufacture the scooter. (DSOF, PRSOF ¶¶ 17, 18). Coolreall retained legal title to the scooter until it was sold to Papataros. (Id. ¶ 16). Amazon never held legal title to the scooter. [Id. ¶ 19).

         At this point, issues of fact start to shade into questions of law. As discussed herein, the major issue here is whether Amazon is considered a "seller" of the scooter under the NJPLA. (Id. ¶ 16, 19, 20). Amazon stresses that it "never listed an offer for the scooter." (DSOF ¶ 2). Papataros responds that Amazon is quibbling; it is undisputed that the scooter was ordered through the Amazon.com website. (PRSOF ¶ 2). Further, Amazon asserts that it did not "assemble, blend, package, label, market, repair, or maintain" the scooter. (DSOF ¶ 21). Papataros responds that those denials, like Amazon's ultimate denial that it is a "seller," are legally and factually conclusory. (PRSOF ¶ 21).

         b. Procedural History

         On September 22, 2017, Z. Papataros, a minor, by his guardian, Nicole Papataros, filed this complaint against Amazon, Coolreall, and Leray Group (as well as John Does) in New Jersey Superior Court, Bergen County. (Cplt).

         On October 27, 2017, Amazon removed the case, invoking this court's diversity jurisdiction. (DE 1; see also28 U.S.C. § 1331(a)). On November 16, 2017, Amazon filed an answer to the complaint and asserted cross-claims against Coolreall and Leray Group. (DE 5). Coolreall and Leray Group have not responded to the complaint or the cross-claims.

         The parties conducted discovery targeted to Amazon's anticipated summary judgment motion. Discovery focused on the issues of whether Amazon was a seller under the New Jersey Product Liability Act and whether the Communications Decency Act ("CDA") precludes Papataros's claims. (DE 11, 12, 16).

         On July 25, 2018, Amazon wrote to Magistrate Judge Hammer seeking to apply for a stay of the action pending the Third Circuit's decision in Oberdorf v. Amazon.com, Inc., No. 18-1041. Oberdorf was an appeal from a decision of the U.S. District Court for the Middle District of Pennsylvania which dismissed claims against Amazon because (1) Amazon was not a seller under Pennsylvania's strict liability law, and (2) the plaintiffs negligence claims were barred by the CDA, 47 U.S.C. § 230. Amazon also cited a potential appeal from a decision of Judge Wolfson in Amazon's favor, Allstate New Jersey Insurance Co. ao Kathleen Cancel v. Amazon, Inc., Civ. No. 17-2738. (DE 17). After a telephone conference, Magistrate Judge Hammer denied Amazon's request for leave to apply for a stay. (DE 22).[5]

         On December 21, 2018, Amazon filed its motion for summary judgment in this case. (DE 27). On March 4, 2019, Papataros filed its opposition. (PL Opp.). On March 11, 2019, Amazon filed a reply brief. (DE 32). On May 31, 2019, Amazon filed a notice of supplemental authority alerting this Court to Erie Insurance Co, v. Amazon.com, Inc., No. 18-1198, 2019 WL 2195146 (4th Cir. May 22, 2019), an opinion in which the Fourth Circuit held that (1) Amazon is not a seller, and therefore not liable, under Maryland law, and (2) plaintiffs claims against Amazon were not barred by the CDA. (DE 33).

         On July 3, 2019, the U.S. Court of Appeals for the Third Circuit filed its decision in Oberdorfu. Amazon.com, 930 F.3d 136 (3d Cir. 2019). The Oberdorf majority held that Amazon is a seller for purposes of Pennsylvania strict products liability law and that Oberdorf s claims against Amazon were not barred by the CDA. Id. Judge Scirica wrote a concurrence and dissent, agreeing with the CDA analysis but concluding that Pennsylvania products liability law precluded treating Amazon as a seller. Id.

         On July 12, 2019, Papataros cited the newly-decided Oberdorf opinion to this Court, arguing that Pennsylvania strict products liability law and New Jersey strict products liability law are similar and that the CDA should not bar the claims against Amazon. (DE 34). On July 23, 2019, Amazon responded, arguing that Oberdorf's holding regarding Pennsylvania product liability law is an outlier, that the result should be different under the NJPLA, and that the CDA shields it from liability. (DE 35). Further, Amazon cited Judge Wolfson's opinion in Allstate, and directed the Court to the recent case of Fox v. Amazon.com, Inc., No. 18-5661, 2019 WL 2896326 (6th Cir. July 5, 2019), in which the Sixth Circuit held that Amazon was not a seller under the Tennessee Product Liability Act. (Id.).

         Discussion

         A. Legal standard

         Federal Rule of Civil Procedure 56(a) provides that summary judgment should be granted "if the movant shows that there is no genuine dispute as to any material fact and die movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-10 (1986); Kreschollek v. S. Stevedoring Co., 223 F.3d 202, 204 (3d Cir. 2000).

         "When the moving party has the burden of proof at trial, that party must show affirmatively the absence of a genuine issue of material fact." In re Bressman, 327 F.3d 229, 238 (3d Cir. 2003) (quoting United States v. Four Parcels of Real Property, 941 F.2d 1428, 1438 (11th Cir. 1991)). That is, the moving party must demonstrate that "on all the essential elements of its case on which it bears the burden of proof at trial, no reasonable jury could find for the non-moving party." Id.

         On the other hand, "with respect to an issue on which the nonmoving party bears the burden of proof ... the burden on the moving party may be discharged by 'showing'-that is, pointing out to the district court-that there is an absence of evidence to support the nonmoving parry's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554 (1986). If the nonmoving party has failed "to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial, ... there can be 'no genuine issue of material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Katz v. Aetna Cas. & Sur. Co., 972 F.2d 53, 55 (3d Cir. 1992) (quoting Celotex, 477 U.S. at 322-23, 106 S.Ct. at 2552).

         To demonstrate the existence of a genuine issue, a party "must do more than simply show that there is some metaphysical doubt as to material facts." Matsushita Elec. Indus, Co., Ltd. v. Zenith Radio Corp,, 475 U.S. 574, 586, 106 S.Ct. 1348, 1356 (1986). Likewise, "unsupported allegations ... and pleadings are insufficient to repel summary judgment." Schoch v. First Fid. Bancorporation, 912 F.2d 654, 657 (3d Cir. 1990). Rather, a party must present evidence sufficient to create a triable issue. Anderson, 477 U.S. at 248-49, 106 S.Ct. at 2510; Gleason v. Norwest Mortg., Inc., 243 F.3d 130, 138 (3d Cir. 2001) ("A nonmoving party has created a genuine issue of material fact if it has provided sufficient evidence to allow a jury to find in its favor at trial."). By evidence, the Rule means "materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials." Fed.R.Civ.P. 56(c)(1)(A). In construing such evidence, however, the court must draw inferences in the light most favorable to the nonmoving party. See Boyle v. County of Allegheny Pa., 139 F.3d 386, 393 (3d Cir. 1998).

         In deciding a motion for summary judgment, the court's role is not to evaluate the evidence and decide the truth of the matter, but to determine whether there is a genuine issue for trial. Anderson, 477 U.S. at 248-49, 106 S.Ct. at 2510. Credibility determinations are the province of the fact finder. Big Apple BMW, Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir. 1992).

         B. The Oberdorf decision

         In Oberdorf, supra, the Third Circuit considered whether Amazon was strictly liable for injuries from an allegedly defective dog collar purchased on the Amazon.com website. The collar broke, the leash snapped and recoiled, and the plaintiff was blinded in one eye. 930 F.3d at 142.

         Oberdorfs strict product liability claim against Amazon was based on two theories: failure to warn and defective design. Id. at 142-43. The Pennsylvania district court held that Amazon was not liable because it is not a "seller" under Pennsylvania law and because Oberdorfs claims were barred by the CDA. Id. at 143. The Third Circuit for the most part disagreed and reversed, over a dissent as to the Pennsylvania law issue.

         The Third Circuit began by discussing Amazon's role in the sale of products on its website, basing its ruling on the following facts. Id. at 140-42. Amazon, one of the world's most valuable retail companies, has a website, Amazon.com, that serves as an online marketplace. Id. In general, third-party vendors that sell their products on Amazon.com decide what to sell, select the means of shipping, and set prices for their products. Id. Amazon lists the products on its website, collects order information, and processes payments in exchange for fees from the third-party vendors. Id. In general, Amazon collects two types of fees: commission (usually between 7-15% of sales price) and either a per-item or monthly fee. Id. at 142.

         Each third-party vendor, the Court noted, must assent to the BSA, which "governs every step of the sales process." Id. at 141. Having agreed to the terms of the BSA, the vendor then selects the products it would like to sell (within some broad limits-e.g., no illegal products), and provides Amazon with a description and images of the product. Id. Under the BSA, the third-party vendor must also furnish shipping options, availability, and other information reasonably requested by Amazon. Id. Based on that information, Amazon formats the product listing on Amazon.com. Id. Under the BSA, Amazon retains the rights to determine the content and other aspects of the services it will provide, and it retains broad rights to license and exploit the information provided by the third-party vendors. Id. The third-party vendors also have the option to sign up for additional services, such as Fulfillment by Amazon ("FBA"), discussed at p.7, supra.

         The third-party vendor chooses the price at which to list the product, subject to the "most favored nation" provision that the price and other terms may be no less favorable than those offered on other sales channels. Id. The third-party vendors may not communicate directly with customers except via Amazon's platform. Id.

         Amazon requires that all shipping commitments to the customer must be met; accordingly, Amazon requires the third-party vendor to send Amazon shipping information for each order. Id. at 142. The Court also noted that timely delivery is incentivized by Amazon's public rating system. Id.

         Throughout the sales process, Amazon may cease to provide any services at its discretion. Id. Amazon may also withhold payment if a vendor behaves in a way that poses a risk Amazon or third parties, and Amazon can require vendors to stop or cancel orders. Id. Further, Amazon requires that the third-party vendors "release it and agree to indemnify, defend, and hold it harmless against any claim, loss, damage, settlement, cost, expense, or other liability." Id.

         Turning to the specific transaction at issue, the Court described Oberdorfs purchase of the dog collar, beginning with her search using the Amazon.com search term box. Id. The dog collar was sold by a third-party vendor, "The Furry Gang," which shipped the collar directly to Oberdorf from Nevada. Id. The Court noted that neither Amazon nor Oberdorf had been able to contact The Furry Gang.[6] The Furry Gang has not had an active Amazon account since May 2016. Id.

         Moving to its legal analysis, the Court considered Amazon's argument that it was not subject to Oberdorfs strict liability claim under Pennsylvania common law. 930 F.3d at 143-51. Pennsylvania applies the Second Restatement of Torts § 4O2A to strict liability claims. Under Section 4O2A, liability is limited to "sellers" of products. Id. at 144.

         Of the Pennsylvania "seller" cases, the Oberdorf court particularly relied on Musser v. Vilsmeier Auction Co., 562 A.2d 279 (1989). See Oberdorf, 930 F.3d at 144. In Musser, the Pennsylvania Supreme Court held that an auction house, which "merely provided a market as the agent of the seller" was not liable for injuries caused by a tractor purchased at auction. 562 A.2d at 282. In doing so, Musser relied heavily on the policy rationale articulated in comment f of Restatement § 4O2A.[7] Following Musser, Oberdorfhe\d that a court considering seller status under Pennsylvania law should consider four factors:

(1) Whether the actor is the "only member of the marketing chain available to the injured plaintiff for ...

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