Product Liability's Amazon Problem

Abstract

Throughout its rise from startup bookseller to the world’s most valuable company, Amazon has managed to disrupt nearly every aspect of the twentieth-century retail model. Its website now accounts for over half of all online shopping in the United States, acting as a literal “Everything Store” for the millions of customers who browse its virtual catalog each day. But Amazon is more than just a store - in addition to directly selling merchandise, its marketplace also lists the offerings of hundreds of thousands of independent merchants. By some estimates these third-party sellers now account for over 60% of Amazon’s transactions, and the fees collected from these sales now make up one of the company’s most important revenue streams. As Amazon has reinvented retail, tort law has struggled to keep up. Modern product liability doctrines were developed at a time when supply chains were linear and market participants could be neatly cabined into roles like “seller” or “manufacturer.” By design, Amazon’s business model disrupts that paradigm, removing the middlemen between manufacturers and consumers while reducing the friction that might keep foreign (or otherwise judgment-proof) manufacturers from putting dangerous products on the market. And while courts have readily held its third-party merchants strictly liable when they sell defective products through Amazon’s website, Amazon’s own role in these transactions is far less clear. This Article proceeds in three parts. Part I begins with an overview of contemporary product liability law, discussing the origins of the strict liability rule and the rise of the Second Restatement’s approach to no fault recovery. Part II focuses on the doctrine’s application to Amazon, tracking the outcome of every product liability lawsuit filed against the company between January 2015 and December 2020. Finally, Part III is prescriptive, discussing both why and how courts should respond to Amazon’s disruption of product liability law.