A defective battery, a $3.9 million fire, and Amazon in the middle – now insurers are watching to see who pays.
The Eighth Circuit Court of Appeals, in a decision filed on April 27, 2026, punted a potentially industry-shaping question to the Minnesota Supreme Court: can Amazon be held strictly liable for a defective product it stored and shipped but never actually sold?
It started with a replacement cellphone battery. Rochelle Zappa searched Amazon for one after her phone stopped holding a charge. She picked one sold by Yishda, a Chinese company participating in Amazon's Fulfillment by Amazon program. The listing was advertised on Amazon as "Amazon's Choice."
Under the fulfillment arrangement, Amazon warehoused the battery, processed the order, handled customer service, and dispatched it in an Amazon bag via an Amazon driver. Yishda was the seller. Amazon did everything else.
About two weeks later, Zappa plugged in her phone at work. The battery fizzled, sparked, and caught fire. By the time firefighters were done, the damage totaled $3,881,280.
Berkley Regional Insurance Company, which insured Zappa's employer, Schnoeckers, Inc. (doing business as BI Worldwide), covered the loss and then did what insurers do – it went after the responsible party. Through subrogation, Berkley stepped into its insured's shoes and sued Amazon, Yishda, and the unknown manufacturer in Minnesota state court. After Amazon moved the case to federal court, Berkley dropped the other defendants and zeroed in on Amazon alone.
At the district court level, the answer was no. The lower court predicted that Minnesota's highest court would not extend strict liability to online marketplaces that fulfill orders for third parties. Berkley appealed and asked the Eighth Circuit to send the question directly to the Minnesota Supreme Court instead.
This time, the court agreed.
Writing for the panel, Circuit Judge Stras laid out three reasons. First, the question is genuinely new. Minnesota's last major strict liability case involving a retailer in the chain of commerce dates to 1970, well before online marketplaces existed. Amazon launched in 1994, its online marketplace opened in 2000, and Fulfillment by Amazon started in 2006. Minnesota courts have never applied their product liability framework to this kind of transaction.
Second, courts around the country are split. Louisiana, California, New York, and a federal court in Wisconsin have found Amazon strictly liable for products ordered through its fulfillment service. Texas and the Fourth Circuit, applying Maryland law, have gone the other way. The Eighth Circuit acknowledged that attempting to predict Minnesota's answer would mean wading into uncertain territory.
Third, the question involves policy tradeoffs that a state supreme court – not a federal appeals court making an educated guess – is best positioned to weigh. On one side sits consumer protection: the principle that people harmed by defective products should have a viable path to recovery. On the other sits the risk that abruptly imposing strict liability could carry severe economic consequences.
The court also noted that this type of case may rarely reach state courts on its own, given the interstate and often global nature of e-commerce. A certified answer from the Minnesota Supreme Court would be binding not just here, but in future cases as well.
The court asked the Minnesota Supreme Court to decide whether, under Minnesota law, an e-commerce company that allows an unrelated party to sell a defective product through its website and provides order-fulfillment services is strictly liable for harm caused by the defect. The Minnesota Supreme Court may reformulate the question as it sees fit. The Eighth Circuit has stayed its proceedings in the meantime. The case is not resolved.
For insurers, the stakes are straightforward. If the answer is yes, Amazon and platforms like it become viable subrogation targets whenever a fulfilled product causes damage – a potentially significant shift in recovery prospects for property and casualty carriers. If the answer is no, insurers dealing with defective products from overseas sellers may continue to face the familiar problem of chasing defendants who are difficult or impossible to collect from.
Either way, the Minnesota Supreme Court's response will send a signal well beyond this single case. Carriers, subrogation counsel, and underwriters across the country will be paying attention.
