With COVID-19 pandemic losses bearing down on businesses, a new bill that would expand strict product liability to internet commerce is opposed by industry groups who say it will drive up costs and stifle economic growth.
AB 3262 passed the state Assembly last month and remains before the Senate Judiciary Committee.
“Now more than ever, online marketplaces are a popular and vital means for Californians to access and sell goods and services in a safe, socially distanced way,” Kyla Christoffersen Powell, President and CEO of the Civil Justice Association of California (CJAC), told the Northern California Record by email. “AB 3262 will stifle online commerce at exactly the wrong time by making it easier to bring frivolous lawsuits against online marketplaces, increasing their costs and ultimately causing smaller ones to shut down.”
A letter to Assembly members from CJAC, with more than a dozen signatories, states the bill would arbitrarily subject online marketplaces to a departure from long-held legal standards.
“AB 3262 unfairly singles out online marketplaces and makes them strictly liable for defective products sold by sellers on their platform,” Powell told the Record. “Online marketplaces bring buyers and sellers together just like physical marketplaces such as shopping malls, flea markets, and auction houses, but AB 3262 targets only the online marketplaces.”
Powell noted that California is known as a national leader in consumer protections.
“Under current law, sellers, both online and offline, are already strictly liable for product defects, meaning that injured or wronged consumers are already entitled to recovery,” Powell said. “Rewriting the rules to go after companies who aren’t responsible for product defects runs afoul of well-established public policy and does nothing to change or improve consumer protections.”
E-commerce has empowered smaller businesses to compete and survive in the current economy, Powell said.
“Strict liability for online marketplaces will put a higher burden on these small businesses and consumers as costs are passed along to them, ultimately cutting down on marketplace diversity and chilling the economy,” Powell added. “AB 3262’s arbitrary assignment of liability sets a bad precedent for our legal climate and our economy and should be rejected.”