California’s Supreme Court Opens Gates to Prop. 65 Lawsuits Against Amazon.com
Last month, the California Supreme Court created some e-commerce waves when it declined to review a Court of Appeals decision allowing California Proposition 65 (“Prop. 65”) lawsuits against retail giant Amazon.com. The decision arguably allows customers to sue Amazon.com and similar e-commerce companies for failing to warn buyers that products sold by third parties over their platforms contain Prop. 65-listed substances.
By way of background, a 2019 Prop. 65 lawsuit against Amazon.com held that the federal Communications Decency Act (47 U.S.C. §§ 230(c)(1), 230(e)(3)) shielded Amazon.com from Prop. 65 liability as to products sold over the platform by third-party sellers. Thereafter, a California Court of Appeals overturned that ruling, finding that Amazon.com is more than a sales platform—Amazon actively warehouses, sells, and ships merchandise, among other activities. Lee v. Amazon.com, Inc., 76 Cal. App. 5th 200, 218 (2022), as modified on denial of reh'g (Apr. 8, 2022), review denied (June 15, 2022). Last month, the California Supreme Court then declined to review that ruling, essentially cementing binding precedent.
The import of Lee v. Amazon.com is enormous. Amazon.com is indisputably the largest e-commerce participant (I’ll decline to refer to Amazon.com as a “retailer” because that was at issue in the decision). According to estimates, “Approximately 2.5 million third parties list and sell approximately 600 million unique products on the Amazon Web site. In 2018, the total value of products sold on the Amazon Web site worldwide was approximately $300 to $350 billion, 50 to 55 percent of which ($150 to $175 billion) were sales by third parties.” Amazon.com, Id. at 218. Requiring a company as large as Amazon.com to comply with Prop. 65 as to third-party product listings could prove infinitely costly and challenging.
It will be interesting to see how Amazon.com responds to this important e-commerce decision. Companies like Amazon.com will need a clear understanding of Prop. 65’s puzzling provisions and the full impact of Lee v. Amazon.com, Inc.