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

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. Amazon.com Inc. No.18-1041 (3rd Cir. July 3, 2019).

Oberdorf purchased a dog collar through Amazon.com 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 District Court granted summary judgment finding Amazon was not a “seller” under Pennsylvania law and the claims barred by the CDA.  The Third Circuit reversed. 

The Court applied the Pennsylvania Supreme Court four factor test in 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: (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 Court held that the CDA only precluded claims related to Amazon’s editorial functions – failure to adequately warn.  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 Amazon.com, 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.

Thank you to Chris Konzelmann from White and Williams for authoring this summary.

Hobie Hind, Chair

NASP Amicus Committee