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Amazon Found Subject to Strict Products Liability

A Third Circuit panel of Judges held that a products liability lawsuit may continue against the global giant Amazon.  Over the past couple of years, Amazon has faced products liability lawsuits and has been successful in arguing that they are not liable for products liability actions stemming from sales of their third-party sellers. While most products liability claims are typically determined by state law, Amazon’s safe haven with regards to products liability claims is now under fire in several states.

Most recently, the Third Circuit Court of Appeals held that a Pennsylvania lawsuit may continue against the company under a theory of strict products liability for defective goods that cause injury or damage.  The case of Oberdorf v. Amazon was commenced after a consumer purchased a dog leash on Amazon which recoiled back and struck the consumer in the face, causing her to become completely blind in her left eye.  Her claims were initially dismissed by the United States federal district court on summary judgment, finding that the third-party merchant, rather than Amazon, was the strictly liable seller under Pennsylvania law.

While Amazon is the world’s most valuable retail company, they do not supply and process all of the orders on their website.  In addition to the millions of products that Amazon sells as a retailer, their website is also comprised of more than one million “third-party vendors.”  The vendors sell their own products at their decided prices and Amazon lists the products, collects the order information and processes payments.  In return, Amazon collects fees from each third-party vendor.  The question in the case of Oberdorf v. Amazon, along with numerous other lawsuits, is whether Amazon can be found to be a “seller” in the context of the sales made by third-party vendors.

Before the commencement of the suit, the Plaintiff in Oberdorf discovered that the third-party seller which they purchased the dog leash from was no longer active.  Instead, the Plaintiff brought suit against Amazon under the theory of strict products liability. On review, the Circuit Court applied a Pennsylvania four-factor test, which is used to determine whether an actor is a “seller” for the purposes of products liability. After a substantial review of each factor, the Circuit Court found that Amazon was considered a seller under Pennsylvania law.

More importantly, the Court reviewed one of Amazon’s arguments that will have country-wide implications.  Amazon claimed that they could not be subject to product liability under the Communications Decency Act’s safe harbor provision. The Communications Decency Act (CDA) is a federal law which limits the liability of a website’s publisher for content posted by third parties.  The CDA defense argument raised by Amazon was that the strict liability claims should be barred because Amazon is the publisher or speaker of material provided by the real sellers (the vendors).  With this argument, the Court distinguished the types of strict products liability claims that can be brought against Amazon.  As to claims such as the one at bar, the Court found that the CDA did not bar claims made against Amazon’s role as an actor in the sales process.  However, they did find that the CDA would protect against Amazon’s failure to provide or to edit adequate warnings regarding the products sold.

While the Third Circuit Court primarily relied on Pennsylvania law in holding that Amazon may be subject to a strict products liability claim, the decision may be persuasive towards an analysis in another jurisdiction.  While Amazon has routinely dodged products liability claims in the past, this case may signal the door opening for other similar cases.

To read a full copy of the decision, click here.

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