Is Amazon liable for defective products sold by third-party vendors?

Amazon has asked for a court to reexamine a panel decision that said the online retail giant can be held liable under products liability laws for defective products sold by third-party vendors.

Amazon filed its request last week in Oberdorf v. Amazon requesting a fresh look at the case, saying the latest ruling in the case could have wide-ranging implications for online retailers in Pennsylvania.

As part of its argument, the online retailer contended that the three-judge panel decision from early July, which said the company should be considered a “seller” under Pennsylvania law, went beyond the bounds of appropriate judicial review and made “a sweeping change in Pennsylvania tort law that will alter vast swaths of commerce.”

“The majority’s new rule was not grounded on clear and unmistakable precedent from any Pennsylvania court. Rather, the majority relied on a host of policy considerations — acting, in effect, as a super-legislature,” the motion, which was filed on behalf of Amazon by Perkins Coie attorney Brendan Murphy, said.

The dog leash lawsuit

The lawsuit stemmed from an eye injury Heather Oberdorf sustained while walking her dog in early 2015. According to the allegations, she was using a leash she’d purchased a month earlier through Amazon.com from a company called The Furry Gang. When the leash malfunctioned it snapped backward and struck her in the face, allegedly leaving her with permanent loss of vision.

After the incident, Oberdorf was unable to locate The Furry Gang or contact the manufacturer directly. She subsequently sued Amazon.com alleging products liability, breach of warranty and duty, and negligence.

The July ruling

On July 3, the Philadelphia-based U.S. Court of Appeals for the Third Circuit ruled that Amazon is a “seller” as the term is defined in the Second Restatement of Torts, and therefore subject to Pennsylvania’s strict liability laws. The 2-1 panel decision reversed a ruling from the U.S. District Court for the Middle District of Pennsylvania, which predicted that the state Supreme Court would not consider the company to be a “seller” for strict liability purposes.

Amazon had contended that, under the test outlined in a 1989 Pennsylvania Supreme Court decision, it could not be held liable as a “seller,” but Senior Judge Jane Richards Roth, who wrote the majority opinion, determined that questions in that test regarding whether the company was in a position to prevent the circulation of defective products and whether imposing liability would incentivize safety weighed in favor of designating the company as a “seller” under 402A of the Second Restatement of Torts.

“Amazon’s customers are particularly vulnerable in situations like the present case,” Roth said. “Neither the [plaintiffs] nor Amazon has been able to locate the third-party vendor, The Furry Gang. Conversely, had there been an incentive for Amazon to keep track of its third-party vendors, it might have done so.”

Judge Patty Shwartz joined Roth, but Judge Anthony Scirica dissented, saying the company was not a “seller” under Pennsylvania law.

“Like an auctioneer, Amazon Marketplace never owns, operates, or controls the product when it assists in a sale,” Scirica said.

In its request for further review by an expanded (en banc) panel, Amazon credited Scirica’s position and further noted that other courts, including the Fourth Circuit, the Northern District of California and the Southern District of New York, have determined Amazon was not a “seller” for strict liability purposes.

Amazon further contended that courts cannot “act as a judicial pioneer,” and should instead rule based on the law, rather than policy.

Potential implications

“The majority’s decision “substantially widen[s]” the scope of liability for online stores and marketplaces operating in Pennsylvania, including Amazon, eBay, Walmart Marketplace, and smaller businesses like Etsy, Bonanza, and Jet,” Amazon said. “Moreover, the majority’s policy analysis has no practical limit. Many service providers, including advertisers and credit-card processors, help sellers sell products. Those service providers may have some ability to vet sellers and their products, and to shut off services to those deemed unsuitable, but such entities have never been regarded as ‘sellers’ for failing to do so.”

David Wilk of Lepley, Engelman, Yaw & Wilk in Williamsport, Pennsylvania, who represented the plaintiffs, said it appeared Amazon was trying to “shoehorn” its arguments to make it fit under the factors courts use to determine whether en banc review is merited.

“It’s really up to the court,” Wilk said. “But if they decide to grant reargument, I’ll be there.”

Murphy declined to comment for the story.

This piece first published at law.com.

Related: Taking a closer look at liability