The Third Circuit in an interesting new case, reversed a
district court's grant of summary judgment for Amazon finding
that the on-line retailer could be strictly liable for products
liability because it qualified as a "seller" of a
defective dog leash under Pennsylvania law. The court also reversed
a finding that Section 230 of the Communications Decency Act
("CDA") barred other claims against Amazon, and said that
the giant retailer could be liable if it was an "actor"
in the sales process and not just acting as a publisher of the
third-party seller's content. The court expressly found that
under Pennsylvania law an actor need not hold the title to the
property to be considered a seller. This is important as many cases
ruling in favor of Amazon in similar contexts have based their
rulings on the concept that since Amazon doesn't hold title to
the products it cannot therefore be a seller.
In analyzing the case and finding that Amazon could be strictly
liable the court applied a four-factor test and found all four
factors weighed in favor of holding Amazon liable:
(1) Whether the actor is the "only member of the marketing
chain available to the injured plaintiff for redress"; The
court found this factor present as the third-party seller who sold
the defective product could not be found by Amazon or by the
Plaintiff.
(2) Whether "imposition of strict liability upon the [actor]
serves as an incentive to safety"; The court found that
"although Amazon does not have direct influence over the
design and manufacture of third-party products, Amazon exerts
substantial control over third-party vendors. Third-party vendors
have signed on to Amazon's Agreement, which grants Amazon
"the right in [its] sole discretion to . . . suspend[],
prohibit[], or remov[e] any [product] listing," "withhold
any payments" to third-party vendors, "impose transaction
limits," and "terminate or suspend . . . any Service [to
a third-party-vendor] for any reason at any time." Therefore,
Amazon is fully capable, in its sole discretion, of removing unsafe
products from its website."
(3) Whether the actor is "in a better position than the
consumer to prevent the circulation of defective products";
Here the court reasoned that "while Amazon may at times lack
continuous relationships with a third-party vendor, the potential
for continuing sales encourages an on-going relationship between
Amazon and the third-party vendors." The court also found that
"Amazon is uniquely positioned to receive reports of defective
products, which in turn can lead to such products being removed
from circulation. Amazon's website, which Amazon in its sole
discretion has the right to manage, serves as the public-facing
forum for products listed by third-party vendors. In its contract
with third-party vendors, Amazon already retains the ability to
collect customer feedback." Finding third-party vendors
"ill-equipped to fulfill this function, because Amazon
specifically curtails the channels that third-party vendors may use
to communicate with customers" the court found Amazon in a
better position than the consumer to prevent circulation of the
defective products.
(4) Whether "[t]he [actor] can distribute the cost of
compensating for injuries resulting from defects by charging for it
in his business, i.e., by adjustment of the rental terms." The
court found this factor weighed in favor of holding Amazon liable
as Amazon includes provisions in all of its contracts with its
third-party sellers, which require the sellers to indemnify
Amazon.
With regard to the CDA argument, the court explained that
"unlike the first issue, this is a question of federal
law" and concluded that "the CDA bars some, but not all,
of Oberdorf's claims". According to the court, "[t]he
CDA states, in relevant part, that "[n]o provider or user of
an interactive computer service shall be treated as the publisher
or speaker of any information provided by another information
content provider . . ." and that the CDA "bars lawsuits
seeking to hold a service provider liable for its exercise of a
publisher's traditional editorial functions—such as
deciding whether to publish, withdraw, postpone, or alter
content." The court explained that the "CDA is intended
to allow interactive computer services companies "to perform
some editing on user-generated content without thereby becoming
liable for all defamatory or otherwise unlawful messages that they
didn't edit or delete." The court went on "to the
extent that Oberdorf is alleging that Amazon failed to provide or
to edit adequate warnings regarding the use of the dog collar, we
conclude that that activity falls within the publisher's
editorial function. That is, Amazon failed to add necessary
information to content of the website. For that reason, these
failure to warn claims are barred by the CDA. However, because the
District Court did not parse Oberdorf's claims in order to
distinguish between "failure to warn" claims and claims
premised on other actions or failures in the sales or distribution
processes, we will vacate its holding that Oberdorf's claims
are barred by the CDA."
In remanding the issue back to the trial court for additional
analysis, the Third Circuit disagreed that all of Oberdorf's
claims sought to treat Amazon as the publisher or speaker of
information provided by another information content provider. The
court found that "Amazon is a "seller" of products
on its website, even though the products are sourced and shipped by
third-party vendors" and that "Amazon's involvement
in transactions extends beyond a mere editorial function; it plays
a large role in the actual sales process." The court ruled
that "to the extent that Oberdorf's claims rely on
allegations relating to selling, inspecting, marketing,
distributing, failing to test, or designing, they pertain to
Amazon's direct role in the sales and distribution processes
and are therefore not barred by the CDA safe harbor
provision."
In bringing claims against Amazon relating to sales on its website,
litigants would do well to hi-light what role Amazon played in the
sales process and to focus allegations on Amazon's role in
"selling, inspecting, marketing, distributing, failing to
test, or designing" to ensure getting around Section 230 of
the Communications Decency Act.
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