On August 25, 2016, the United States Court of Appeals for the Second Circuit ruled that a consumer class action lawsuit against Amazon.com brought under the Consumer Product Safety Act arising from the sale of a diet pill that contained a banned stimulant would be allowed to proceed in the federal court, rejecting Amazon's contention that the suit was barred by the website's conditions of use, which required arbitration of such disputes.
The plaintiff in this case, Dean Nicosia, allegedly began using the Amazon website in 2008, at which time there was no condition of use requiring arbitration of claims against Amazon. Amazon added a provision requiring arbitration in 2012. Plaintiff denied that he had ever registered for an account, and also pointed out that as of 2008 the website contained a choice of forum clause that required customer disputes to be resolved in the Washington state and federal courts, not in arbitration.
Plaintiff had filed suit in the Eastern District of New York. The district judge granted Amazon's motion to dismiss based on her conclusion that plaintiff had bound himself to arbitrate the claim and further denied his motion for a preliminary injunction based on lack of standing. The Second Circuit overturned the first ruling, but upheld the second.
Turning to the merits, the Court concluded that plaintiff was not entitled to the injunction he sought to bar sales of the offending product. The product in question, sibutramine, is classified as a Schedule IV stimulant. The FDA withdrew it from the market in 2010 after revelations that the product was associated with increased risk of heart attack and stroke. Amazon stopped selling the product, but it did not issue a notice to past purchasers such as plaintiff that the product contained a banned substance and it did not offer any refunds to consumers. Plaintiff could not show that he was under real or immediate threat of injury because Amazon had ceased selling the product and plaintiff did not allege his intent to use Amazon in the future for any purchases. Nevertheless, plaintiff's putative class action seeking damages will proceed.
A link to the decision is here.
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