Product Liability Addressed over Injuries Received From Online Purchases

On February 18, Assemblyman Mark Stone (D-Monterey) introduced Assembly Bill 1182 to address injuries consumers may receive from the entities that manufactured, distributed, or sold the products. The bill would add Section 1714.46 to the Civil Code.

Section One of the bill would make numerous legislative findings and declarations including that there has been a significant increase in online sales of consumer goods, and that online retailers play a substantial role in the distribution of goods to consumers in the State of California, whether or not they ever take physical possession of those goods. It explains the elements of a strict liability civil action under current state law.

The legislative findings and declarations also explain that there is uncertainty how to apply strict product liability law to products that are purchased or sold through an electronic place pursuant to contracts, agreements, or other arrangements with third parties. As a result, some injured consumers who purchase products online are unable to obtain compensation for their injuries from the entities that manufactured, distributed, or sold the products, thereby defeating the compensatory purpose of strict liability law.

In addition, it specifies that uncertainty in the law should be addressed in favor of compensating injured consumers. Finally, strict liability on the manufacturer, retailer, and entity that sells goods through an electronic place pursuant to contract, agreements, or other arrangements with third parties alike affords maximum protection to the injured plaintiff and works no injustice to the electronic retail marketplace or manufacturer as they can adjust the costs of such protection between them in the course of their business relationship.

Section Two of the bill would add Civil Code Section 1714.46. It would provide that, in any strict products liability action, an electronic place that, by contract or other arrangement with one or more third parties, does both does specified activities will be strictly liable for all damages proximately caused by a defective product that is purchased or sold through the electronic place to the same extent as a retailer would be liable for selling the defective product in the retailer’s physical store, regardless of whether the electronic place ever takes physical possession of, or title to, the defective product.

In order to be subject to this strict liability, the electronic place would have to (1) transmits or otherwise communicates between a third party and purchaser an offer for the sale or purchase of the defective product that is accepted by the purchaser, or (2) processes, collects, or administers the payment for the purchase or sale of the defective product.

In addition, the bill specifies that it is not be construed to affect any of the following:

• Existing law related to strict products liability other than to clarify the law governing products that are purchased or sold through an electronic place pursuant to contract or other arrangements with third parties.
• Defenses to, and exemptions from, strict liability currently available under California law, other than those changed by this section, which remain available in transactions subject to this section.
• State or federal health or safety laws that prohibit the sale, offer for sale, or distribution of dangerous products.

The bill would define the term “electronic place” to include, but not be limited to, an internet website, online catalog, or software application, and “product” to mean a tangible good that is subject to strict product liability law. The bill is expected to be heard in its first policy committee in March.