Upcoming 2nd Circuit En Banc Appeal Scares E-Commerce Giants
November 19, 2019Almost everyone has bought something online that didn’t turn out to function like we had hoped: a pair of headphones that fell apart in three days, a book stand that turned out to be cumbersome and flimsy, or a crockpot that lasted only 3 batches of chili. Often, we simply take the loss and realize that sometimes when we purchase a product at low price point through an online retailer, we’re taking a risk that the product we’ve purchased did not work as advertised. It’s unfortunately one of those things that becomes increasingly difficult online, as we’re unable to effectively vet what we’re purchasing and who we’re purchasing it from, especially when there’s little information about the manufacturer of the product or when there are few product reviews.
It can even be difficult to vet a product when it is purchased on a trusted platform like Amazon, but the product comes from an independent third-party seller on Amazon Marketplace. Does that mean Amazon entrusts this product to be of a certain quality, or more importantly, is safe to use? And if a product not made by Amazon is placed on Amazon Marketplace, can Amazon be held liable when a product is dangerous and is being sold on Amazon’s platform? That’s what the 3rd Circuit will need to answer in an upcoming en banc review of the recent Oberdorf v. Amazon decision that has attracted attention due to the widespread impact it could have on e-commerce retailers. In the 3rd Circuit’s original decision, the majority found that a section of a federal law called the Communications Decency Act barred Amazon for liability from a sale of a product on Amazon Marketplace by a third-party seller called The Furry Gang. The plaintiff in Oberdorf bought a dog lease that snapped back and blinded them in one eye.
It’s a perfect case for en bancreview.Oberdorf involves perhaps the most important company currentlyin America, owned by the world’s richest man, and involves a majority anddissent that fundamentally disagree on what Amazon’s role was in the sale ofthe dog leash. This would satisfy bothinstances that federal rules consider the two reasons to hear en banc appeals: to achieve uniformity in decisionsand when cases involve something of particular importance.
The en banc review will focusheavily on whether not Amazon was a “seller” in the sale of a product from athird-party seller. Amazon often stores its Marketplace products, and ships itto customers, but Amazon had no part in manufacturing the dog leash thatblinded the plaintiff. The majority and dissent vehemently disagreed whether Amazon was a seller ofthe dog leash for the purposes of the Communications Decency Act. The 2ndCircuit chose to, in the dissent’s view, depart from precedent to find thatAmazon’s conduct in the Marketplace makes them a seller.
If Amazon is a seller, it cannot usethe CDA’s “safe harbor” provision to protect themselves from a suit againstFurry Gang. The safe harbor provision “intended to allow interactive computerservices companies ‘to perform some editing on user-generated content withoutthereby becoming liable for all defamatory or otherwise unlawful messages thatthey didn’t edit or delete’” according to the 2nd Circuit. In thedissent’s view of the case, that’s exactly what Amazon is doing: they are notselling but rather hosting user (Furry Gang) content on Amazon Marketplace andshould not be held liable for the actions of Furry Gang. The majority presentsAmazon’s role as extending far beyond the mere “editorial” platform of theproduct, as it has a far more active role in the sale of items such as FurryGang’s dog leash.
An interpretation of Amazon as aseller has large-scale implications for the e-commerce industry at large. Anamicus brief recently filed by the Computer Communications Industry Associationand Technet raised significant fears about the potential liability for thee-commerce industry at large, with growth being the primary concern, as aruling here could open the floodgates for other courts to buy the same argumentabout Amazon and other e-commerce giants that provide similar services asAmazon’s marketplace.
Despite the concern for a flood ofnew claims against e-commerce giants, there are significant reasons that aruling against Amazon feels like the right thing to do. Here, the blindedplaintiff would have tried to sue Furry Gang, but Furry Gang has completelydisappeared off the face of the map, not selling on Amazon since 2016 andtherefore avoiding any blame or lawsuit for what ended up being a terribleinjury.
Given there are good reasons to hold Amazon responsible for injuries caused by products placed on its website, the upcoming appeal looks to be a difficult question worth getting right, invoking consumer rights policy and economic questions that could hamper one of the largest industries in America. Until a clear answer arrives from the 2nd Circuit, Amazon is no doubt holding its breath.
Andy Tabeling
November 19, 2019