Third Circuit Holds Amazon Liable As a Product Seller – Communications Decency Act Not Applicable to Sale and Distribution Strict Liability Claims

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Defective products harm consumers. Courts have consistently held, however, that Amazon is not liable for defective products acquired through its on-line marketplace because the company is not a “seller” and is otherwise protected by the Communications Decency Act (CDA). The United States Court of Appeals for the Third Circuit, applying Pennsylvania law, rejected both defenses in Oberdorf v. Inc. No.18-1041 (3rd Cir. July 3, 2019).

In Oberdorf, one of the plaintiffs, Heather Oberdorf (Oberdorf), purchased a dog collar through sold by third party vendor “The Furry Gang.” The collar broke five weeks later. The retractable leash attached to the collar recoiled, stuck Oberdorf, and caused blindness in one eye. Oberdorf sued Amazon seeking compensation. The United States District Court for the Middle District of Pennsylvania granted summary judgment in Amazon’s favor, finding that Amazon was not a “seller” under Pennsylvania law and that the plaintiffs’ claims were barred by the CDA. The Third Circuit reversed.

The Third Circuit applied the Pennsylvania Supreme Court’s four factor test from Musser v. Vilsmeier Auction Co, Inc., 562 A.2d 279 (Pa. 1989), to initially find that Amazon was a product “seller” under Section 402A of the Second Restatement of Torts. All four factors, and the reasoning of other Pennsylvania decisions, weighed in favor of imposing liability. More specifically, the court found that: (1) because Oberdorf and Amazon could not locate the third-party vendor, “Amazon stands as the only member of the marketing chain available to the injured party for redress;” (2) the imposition of liability acts as an incentive for Amazon to remove unsafe products from its website; (3) Amazon “is in a better position than the consumer to prevent the circulation of defective products;” and (4) Amazon, through indemnification and vendor fees, can distribute the cost of defective products.

The court next turned its attention to the CDA. Amazon argued that the CDA precluded liability for the publication of third party content. Oberdorf argued that the CDA did not preclude liability for Amazon’s role in selling and distributing a defective product. The Third Circuit held that the CDA only precluded claims related to Amazon’s editorial functions, i.e., claims based on Amazon failing to provide or to edit adequate warnings. The CDA did not preclude claims related to Amazon’s “direct role in the sales and distribution processes.”

The Oberdorf decision is significant to those harmed by a defective product sold on, especially where the third-party vendor no longer exists, is not subject to service of process, or is insolvent. In jurisdictions that follow Section 402A of the Second Restatement of Torts or have state statutes with similar language, injured parties, and their subrogating insurance carriers, can now point to the Oberdorf holding as authoritative precedent when pursuing Amazon for their losses.

Editor’s Note: On August 23, 2019, the United States Court of Appeals for the Third Circuit issued a decision granting Inc.’s Petition for Rehearing En Banc. See Oberdorf v. Inc., No. 18-1041, 2019 U.S. App. LEXIS 25309 (3d Cir.). The Third Circuit also vacated the opinion and judgment discussed in this post, which the Third Circuit entered on July 3, 2019.

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