Berkley Regional Insurance Company v. Shenzhenshi Yishengda Dianzi Youxian…

Background

Berkley Regional Insurance Company insured Schoeneckers, Inc., doing business as BI Worldwide. In November 2018, BI Worldwide employee Rochelle Zappa bought a replacement cell phone battery through Amazon’s online marketplace from Shenzhenshi Yishengda Dianzi Youxian Gongsi, doing business as Yishda. Zappa’s phone later caught fire and damaged BI Worldwide’s office. Berkley paid BI Worldwide more than $3 million under the insurance policy.

Berkley brought a products-liability lawsuit against the battery’s manufacturer and later added a strict-products-liability claim against Amazon.com, Inc. Amazon moved for summary judgment, which is a decision entered without a trial when the record shows no genuine dispute over a material fact and the moving party is entitled to judgment as a matter of law. Berkley opposed the motion and asked the court to certify a legal question to the Minnesota Supreme Court about whether an online marketplace could face strict liability for a defective product sold by a third-party merchant when the manufacturer could not satisfy a judgment.

Amazon’s Summary-Judgment Motion

The court applied Minnesota law. It explained that Minnesota recognizes strict products liability against manufacturers and commercial sellers of defective products. Under the legal authorities discussed by the court, selling a product requires transferring ownership in a commercial transaction. A distributor may also face liability in some circumstances, but the relevant definition concerns commercial transactions other than a sale or transactions functionally equivalent to sales.

The undisputed evidence showed that Yishda retained responsibility for sourcing, pricing, packaging, labeling, describing, and warranting its products. Amazon’s website identified Yishda as the third-party seller, and the order identified the battery as “Sold by: YiSHDA” and “Fulfilled by: Amazon.” Amazon obtained possession of Yishda’s products through its optional fulfillment services, but the record did not show that Amazon obtained legal title or ownership. Yishda could request the return of its products, and Amazon did not have the right to give away or lend them to customers.

The court therefore concluded that Yishda transferred ownership of the battery to Zappa, while Amazon merely facilitated the transfer of possession. The court found that possession was not the same as ownership and that Berkley had presented no evidence that Amazon ever obtained or transferred an ownership interest in the battery.

The court also rejected Berkley’s argument that Amazon was liable as a distributor. The battery was sold through a commercial transaction, rather than distributed through a lease, bailment, promotional giveaway, loan, or similar arrangement. The court further concluded that Amazon was a “product distribution facilitator” because it provided an online storefront, payment processing, and fulfillment services without assuming responsibility for the battery’s sourcing, pricing, packaging, labeling, description, warranty, quality, or functionality.

Because Amazon did not manufacture the battery, did not sell it by transferring ownership, and did not otherwise distribute it in a way that triggered strict liability, the court granted Amazon’s motion for summary judgment.

Motion to Certify a Question

The court denied Berkley’s request to certify the issue to the Minnesota Supreme Court. The court acknowledged that Minnesota courts had not decided the precise question involving an online marketplace and a product sold by a third-party merchant. But it determined that existing Minnesota statutes, decisions, and the Restatements of Torts provided enough guidance to reach a sound decision without speculation. The court concluded that it was not genuinely uncertain about the relevant Minnesota-law question.

Disposition

The court ordered that Amazon.com, Inc.’s motion for summary judgment was GRANTED. It also ordered that Berkley Regional Insurance Company’s motion to certify a question to the Minnesota Supreme Court was DENIED.