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News / Jul 31, 2019

Amazon Held Liable for Defective Product Sold by a Merchant

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Article by Dotan Hammer

A consumer from Pennsylvania purchased a dog leash on Amazon, that when put to use, broke, recoiled back and hit the consumer’s face and eyeglasses, turning her permanently blind in her left eye. She sued Amazon for strict product liability. Her claims were 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.

A majority opinion of the Court of Appeals for the Third Circuit reversed, finding Amazon strictly liable for the defective product as a “seller”, based on its role in effectuating sales of physical products offered by third-party merchants. The court found that Amazon meets Pennsylvania law’s four-factor test for identifying a “seller” for strict liability purposes.

First, Amazon was found to be the only member of the marketing chain available to the injured plaintiff for redress. The court found that third-party merchants on Amazon can conceal themselves from the consumer and that numerous cases exist in which neither Amazon nor the party injured by a defective product sold by Amazon.com, were able to locate the product’s third-party merchant or manufacturer.

Second, the court found that imposition of strict liability upon Amazon serves as an incentive to safety, because Amazon exerts substantial control over third-party merchants. Third, the court found Amazon to be in a better position than the consumer to prevent the circulation of defective products, because Amazon can receive reports of defective products, which in turn can lead to such products being removed from circulation. Finally, the court concluded that Amazon can distribute the cost of compensating for injuries resulting from defects by charging for it in its business, through its indemnity clause with the merchants and by adjusting the commission-based fees that Amazon charges third-party merchants based on the risk that the third-party merchant presents.

The majority opinion’s sentiment in the case was expressed in a footnote stating that they “do not believe that Pennsylvania law shields a company from strict liability simply because it adheres to a business model that fails to prioritize consumer safety”.


CLICK HERE to read the Third Circuit’s opinion in Oberdorf v. Amazon.com Inc.

 

This article was published in the Internet, Cyber and Copyright Group’s July 2019 Newsletter.

For more information, please contact Haim Ravia – Senior Partner and Chair of the Internet, Cyber and Copyright Group. HRavia@pearlcohen.com

 

 

 

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