When is a Seller a "Seller" for Products Liability Purposes?
It turns out that an auctioneer's selling things (for a fee) does not make you a "seller" under Arizona product liability law.
Last week Division Two handed down Antone v. Greater Arizona Auto Auction, Inc..
The Court observed that a "[s]eller" is defined by the Arizona products statute as "a person or entity, including a wholesaler, distributor, retailer or lessor, that is engaged in the business of leasing any product or selling any product for resale, use or consumption." Â§ 12-681(9).
The trial court ruled that GAAA was not a seller under Â§ 12-681(9) after finding that "GAAA's sole contact with the vehicle was to conduct the sale" and that GAAA charged a flat fee, never took ownership or title of the vehicle in its name, and "conspicuously" designated the sale "as-is" with no warranty as to quality. The trial court further noted that strict liability policies are not satisfied when the entity only plays a "passive role in contributing to the product's presence in the stream of commerce."
I know, I was scratching my head too.
Yet Division Two affirmed. Despite reciting platitudes about those who place products into the "stream of commerce" without regard to fault, the Court held that strict liability will not be imposed on an entity that "bear[s] no causal connection to the production or distribution of the product." In sum, the Court noted that, since strict liability had not been applied to "product brokers" or "salvage yard operators," it was also inappropriate to apply strict liability to "commercial auctioneers" due to the limited opportunity to exercise control over the product.
After reading the Court's opinion, I have to admit they had to deal with a difficult issue and they probably got the right result; I am also surprised the folks at eBay did not file an amicus brief! Still, it is fairly artificial distinction and certainly a continued erosion of the traditional principles of strict liability attaching to anyone in the distribution chain, regardless of "fault" - hence, the term "strict liability." But in this case and others like it, the courts seem to be do just that - looking at "fault" to determine whether to apply strict liability. It's circular and contrary to the broad definition that applies the term "seller" to any person or entity "engaged in the business . . . [of] selling any product for resale, use or consumption."
Seems pretty clear to me, if you charge a fee to sell a product to the public, you are "engaged in the business" of selling "for resale, use or consumption."