Heather Oberdorf v. Amazon.com Inc
Heather Oberdorf v. Amazon.com Inc
Opinion of the Court
On January 12, 2015, Heather Oberdorf returned home from work, put a retractable leash on her dog, and took the dog for a walk. Unexpectedly, the dog lunged, causing the D-ring on the collar to break and the leash to recoil back and hit Oberdorf's face and eyeglasses. As a result, Oberdorf is permanently blind in her left eye.
Oberdorf bought the collar on Amazon.com. As a result of the accident, she sued Amazon.com, including claims for strict products liability and negligence. The District Court found that, under Pennsylvania law, Amazon was not liable for Oberdorf's injuries. In its opinion, the District Court emphasized that a third-party vendor-rather than Amazon itself-listed the collar on Amazon's online marketplace and shipped the collar directly to Oberdorf. Those facts were the basis for the District Court's two main rulings.
First, the District Court found that Amazon is not subject to strict products liability claims because Amazon is not a "seller" under Pennsylvania law. Second, the District Court found that Oberdorf's claims are barred by the Communications Decency Act (CDA) because she seeks to hold Amazon liable for its role as the online publisher of third-party content.
I
Both issues in this case pertain to Amazon's role in effectuating the sale of products offered by third-party vendors. Therefore, we begin by describing the anatomy of a sale on Amazon.com.
Amazon Marketplace
Amazon is the world's most valuable retail company.
In order to use Amazon's services, a third-party vendor must assent to Amazon's Services Business Solutions Agreement. This Agreement governs every step of the sales process.
Once a third-party vendor has assented to the Agreement, the vendor chooses which product or products it would like to sell using Amazon's website. This choice is, with some notable exceptions, left to the discretion of the vendor. Among the exceptions are products that Amazon determines are illegal, sexually explicit, defamatory, or obscene.
When the third-party vendor has chosen a product that it wants to offer on Amazon's website, the vendor provides Amazon with a description of the product, including its brand, model, dimensions, and weight. Pursuant to the Agreement, the vendor must also provide Amazon with digital images of the product, as well as other information such as shipping and handling options, product availability, in-stock status, and any other information reasonably requested by Amazon.
Based on this information, Amazon formats the product's listing on its website. This function, too, is provided for in the Agreement, by which Amazon retains the right in its sole discretion to determine the content, appearance, design, functionality, and all other aspects of the Services, including by redesigning, modifying, removing, or restricting access to any of them. In fact, the Agreement grants Amazon a royalty-free, non-exclusive, worldwide, perpetual, irrevocable right and license to commercially or non-commercially exploit in any manner, the information provided by third-party vendors.
The third-party vendor can then choose which, if any, of Amazon's other services it will use in conjunction with listing its product on Amazon's website. For example, Amazon offers "Amazon Clicks," an advertising service in which Amazon highlights and promotes the vendor's product to customers. Amazon also offers a "Fulfillment by Amazon" service, in which it takes physical possession of third-party vendors' products and ships those products to consumers. Otherwise, the vendor itself is responsible for shipping products directly to consumers.
The listed price for the product is chosen by the third-party vendor, subject to one exception: Vendors may not charge more on Amazon than they charge in other sales channels. Nor, according to the Agreement, may third-party vendors offer inferior customer service or provide lower quality information about products than in other sales channels. To the extent that third-party vendors need to communicate with customers regarding their orders on Amazon, they must do so through the Amazon platform.
With these preliminaries completed, Amazon lists the product online and sales begin. As customers make purchases on Amazon's website, Amazon collects payment and delivers order information to the third-party vendor. At checkout, the customer can choose any shipping method offered by the third-party vendor, and any promises made by the vendor with respect to shipping date must be met. Amazon ensures compliance with this obligation by requiring the vendor to send Amazon shipping information for each order. In addition, vendors have a powerful interest in providing quality products and ensuring timely delivery, as Amazon allows shoppers to publicly rate the vendors and their products.
In exchange for its role in the transaction, Amazon collects two types of fees: one is a commission, typically between seven and fifteen percent of the overall sales price; the other is either a per-item or monthly fee, depending on the third-party vendor's preference. At least once every two weeks, Amazon remits all sales proceeds, minus fees, to the vendor. Pursuant to the Agreement, Amazon is classified as the third-party vendor's "agent for purposes of processing payments, refunds, and adjustments ... receiving and holding Sales Proceeds on your behalf, remitting Sales Proceeds to Your Bank Account, charging your Credit Card, and paying Amazon and its Affiliates amounts you owe ...."
Throughout each step of the sales process, Amazon may at any time cease providing any or all of the Services at its sole discretion and without notice, including suspending, prohibiting, or removing any listing. Amazon also retains other important privileges. For example, Amazon can require vendors to stop or cancel orders of any product. If Amazon determines that a vendor's actions or performance may result in risks to Amazon or third parties, it may in its sole discretion withhold any payments to the vendor. Furthermore, Amazon requires that its vendors release it and agree to indemnify, defend, and hold it harmless against any claim, loss, damage, settlement, cost, expense, or other liability.
The Dog Collar
On December 2, 2014, Heather Oberdorf logged onto Amazon's website. She typed search information for dog collars into Amazon's search terms box. She decided to purchase the dog collar at issue, which was sold by a third-party vendor, "The Furry Gang." The Furry Gang shipped the dog collar directly from Nevada to Oberdorf, who put the collar on her dog, Sadie. Then, on January 12, 2015, while Oberdorf was walking Sadie, the D-ring on the collar broke and the retractable leash recoiled into Oberdorf's eyeglasses, injuring her and permanently blinding her in her left eye.
Neither Amazon nor Oberdorf has been able to locate a representative of The Furry Gang, which has not had an active account on Amazon.com since May 2016.
Procedural History
Oberdorf filed a complaint in the United States District Court for the Middle District of Pennsylvania, bringing claims for strict product liability, negligence, breach of warranty, misrepresentation, and loss of consortium.
The District Court granted Amazon's motion for summary judgment, finding that (1) Amazon cannot be sued under Pennsylvania's strict products liability law because it does not constitute a "seller" within the meaning of Pennsylvania strict liability law, and (2) Oberdorf's claims are barred by the CDA because she seeks to hold Amazon liable for its role as the online publisher of a third party's content.
II
The District Court had jurisdiction pursuant to
III
We begin our analysis by addressing Amazon's contention that it is not subject to Oberdorf's strict products liability claims.
Because our subject matter jurisdiction stems from the parties' diverse citizenship, we apply Pennsylvania law in deciding whether the District Court properly dismissed Oberdorf's strict products liability claim.
A
Amazon relies heavily on the Pennsylvania Supreme Court's decision in
Musser v. Vilsmeier Auction Co, Inc.
The plaintiff in
Musser
was injured by a tractor that his father had bought at an auction house. Following his injury, he sought to hold the auction house strictly liable as a "seller" of the allegedly defective tractor. The Pennsylvania Supreme Court held that the auction house could not be considered a "seller," and thus that the plaintiff must prove that the auction house acted unreasonably (i.e., bring a negligence claim) in order to hold it liable.
The basis of the rule is the ancient one of the special responsibility for the safety of the public undertaken by one who enters into the business of supplying human beings with products which may endanger the safety of their persons and property, and the forced reliance upon that undertaking on the part of those who purchase such goods. This basis is lacking in the case of the ordinary individual who makes the isolated sale, and he is not liable to a third person or even to his buyer in the absence of his negligence.14
The court noted that, when the above policy rationale "will not be served, persons whose implication in supplying products is tangential to that undertaking will not be subjected to strict liability for the harms caused by defects in the products."
In its opinion, the Pennsylvania Supreme Court made clear that courts later tasked with determining whether an actor is a "seller" should consider whether the following four factors apply:
(1) Whether the actor is the "only member of the marketing chain available to the injured plaintiff for redress";
(2) Whether "imposition of strict liability upon the [actor] serves as an incentive to safety";
(3) Whether the actor is "in a better position than the consumer to prevent the circulation of defective products"; and
(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."17
We consider below each of the four factors articulated in Musser .
1
The first factor is whether Amazon "may be the only member of the marketing
chain available to the injured plaintiff for redress."
Amazon contends that, just as every item offered at an auction house can be traced to a seller who may be amenable to suit, every item on Amazon's website can be traced to a third-party vendor. However, Amazon fails to account for the fact that under the Agreement, third-party vendors can communicate with the customer only through Amazon. This enables third-party vendors to conceal themselves from the customer, leaving customers injured by defective products with no direct recourse to the third-party vendor. There are numerous cases 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 vendor or manufacturer.
In this case, Amazon's Vice President of Marketing Business admitted that Amazon generally takes no precautions to ensure that third-party vendors are in good standing under the laws of the country in which their business is registered. In addition, Amazon had no vetting process in place to ensure, for example, that third-party vendors were amenable to legal process. After Oberdorf was injured by the defective collar, neither she nor Amazon was able to locate The Furry Gang. As a result, Amazon now stands as the only member of the marketing chain available to the injured plaintiff for redress.
The first factor weighs in favor of imposing strict liability on Amazon.
2
The second factor we consider is whether "imposition of strict liability upon the [actor would] serve[ ] as an incentive to safety."
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,"
The second factor favors imposing strict liability on Amazon.
3
The third factor we consider is whether Amazon is "in a better position than the consumer to prevent the circulation of defective products."
In
Musser
, the court indicated that the auctioneer was not in a better position than the consumer to prevent the circulation of defective products because it lacked an "ongoing relationship with the manufacturer from which some financial advantage inures to [its] benefit ...."
Moreover, 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: "We may use mechanisms that rate, or allow shoppers to rate, Your Products and your performance as a seller and Amazon may make these ratings and feedback publicly available."
The third factor also weighs in favor of imposing strict liability on Amazon.
4
The fourth factor we consider is whether Amazon can distribute the cost of compensating for injuries resulting from defects.
In
Musser
, the court "acknowledge[d] that it would be possible for the auctioneer to pass on the costs of imposing strict liability upon him; possibly as [the injured plaintiff] suggests, by indemnity agreements between the auctioneer and the seller."
In this case, however, Amazon has already provided for indemnification by virtue of a provision in the Agreement:
You release us and agree to indemnify, defend, and hold harmless us, our Affiliates, and our and their respective officers, directors, employees, representatives, and agents against any claim, loss, damage, settlement, cost, expense, or other liability (including, without limitation, attorneys' fees) ....38
Moreover, Amazon can adjust the commission-based fees that it charges to third-party vendors based on the risk that the third-party vendor presents.
Amazon's customers are particularly vulnerable in situations like the present case. Neither the Oberdorfs nor Amazon has been able to locate the third-party vendor, The Furry Gang. Conversely, had there been an incentive for Amazon to keep track of its third-party vendors, it might have done so.
The fourth factor also weighs in favor of imposing strict liability on Amazon. Thus, although the four-factor test yielded a different result when applied by the
Musser
court to an auction house, all four factors
in this case weigh in favor of imposing strict liability on Amazon.
B
We do not rely exclusively upon the four-factor test to reach our conclusion that Amazon is subject to strict products liability claims for sales involving third-party vendors. Our reasoning is consistent with that in other Pennsylvania cases.
Notably, in
Hoffman v. Loos & Dilworth, Inc.
,
Hoffman
involved bulk sales of linseed oil. The manufacturer's sales agent, E.W. Kaufmann Co., would transmit orders for linseed oil from the packager to the distributor. That was Kaufmann's only role in the sales process. As part of the summary judgment briefing in
Hoffman
, Kaufmann submitted an affidavit from its principal executive, stating that it did not take title, possession, or ownership of any of the relevant linseed oil during the distribution or sales process.
In reaching this conclusion, the court discussed two prior Pennsylvania Supreme Court cases, both of which also inform our judgment that Amazon is subject to strict liability. The first of these is
Francioni v. Gibsonia Truck Corp.
,
Four years later, in
Nath v. National Equipment Leasing Corp.
,
In this case, Amazon's role extends beyond that of the
Hoffman
sales agent, who in exchange for a commission merely accepted orders and arranged for product shipments. Amazon not only accepts orders and arranges for product shipments, but it also exerts substantial market control over product sales by restricting product pricing, customer service, and communications with customers.
At oral argument, Amazon contended that it should not be likened to a sales agent because it lists products and collects payment on behalf of various third-party vendors, whereas a sales agent typically represents a single seller or manufacturer. This is a distinction without a difference. Pennsylvania state courts have repeatedly found that large retailers who offer a range of different products are "sellers" within the meaning of § 402A.
C
Amazon's remaining arguments similarly fail to demonstrate that it is not subject to strict product liability in Pennsylvania.
For example, Amazon asks that we look to dictionary definitions of the word "seller" for support. However, comment f to § 402A makes clear that the term "seller" is not limited by its dictionary definition, as it "applies to any manufacturer of such a product, to any wholesale or retail dealer or distributor, and to the operator of a restaurant."
Amazon also relies heavily on non-controlling case law from jurisdictions other than Pennsylvania. However, in deciding whether Amazon is a "seller" within the meaning of § 402A, we must predict what the Pennsylvania Supreme Court would decide under Pennsylvania law interpreting the Second Restatement of Torts.
Therefore, having concluded that Amazon should be considered a "seller" under § 402A of the Second Restatement of Torts, we hold that under Pennsylvania law, Amazon is strictly liable for consumer injuries caused by defective goods purchased on Amazon.com.
IV
The second issue in this appeal is whether Oberdorf's claims, both for negligence and for strict liability, including failure to provide adequate warnings regarding the use of the dog collar, are barred by § 230 of the CDA.
The 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."
The CDA safe harbor provision was passed by Congress in the wake of a controversial New York state court decision allowing defamation claims to proceed against a website host.
The crux of Amazon's argument is that Oberdorf's negligence and strict liability
claims are barred because she seeks to treat Amazon as the publisher or speaker of material provided by The Furry Gang, an information content provider.
Courts throughout the country have interpreted the CDA safe harbor provision broadly.
Other federal appellate courts have addressed related questions. For example, the First Circuit barred sex trafficking claims against a classified advertisement website because the allegations centered on the website's role in failing to regulate third-party content that led to the plaintiffs' injuries.
These cases demonstrate that claims are precluded whenever "the duty that the plaintiff alleges the defendant violated derives from the defendant's status or conduct as a 'publisher or speaker.' "
While we recognize that Amazon exercises online editorial functions, we do not agree that all of Oberdorf's claims seek to treat Amazon as the publisher or speaker of information provided by another information content provider. As previously discussed, Amazon is a "seller" of products on its website, even though the products are sourced and shipped by third-party vendors such as The Furry Gang.
Therefore, to the extent that Oberdorf's negligence and strict liability claims rely on Amazon's role as an actor in the sales process, they are not barred by the CDA. However, 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.
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. 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.
V
For the above reasons, we hold that (1) Amazon is a "seller" for purposes of § 402A of the Second Restatement of Torts and thus subject to the Pennsylvania strict products liability law, and (2) Oberdorf's claims against Amazon are not barred by § 230 of the CDA except as they rely upon a "failure to warn" theory of liability. We will therefore affirm the dismissal under the CDA of the failure to warn claims. We will vacate the remainder of the judgment of the District Court and remand this matter for further proceedings consistent with this opinion.
Throughout this opinion, we use the more complete company name, "Amazon.com," to refer to Amazon's website, but use the shorter name, "Amazon" to refer to the company itself.
David Streitfeld, Amazon Is Now Second to Cross $1 Trillion Line , N.Y. Times , Sept. 5, 2018, at B1.
To remain consistent throughout this opinion, and to avoid using the term "seller," which has legal significance under Pennsylvania strict products liability law, we refer to the third parties who offer products on Amazon.com as "third-party vendors" or "vendors."
JA195.
The breach of warranty and misrepresentation claims and Michael Oberdorf's loss of consortium claim are not relevant to the present appeal.
Fed. R. Civ. P. 56(a) ;
see
Mylan Inc. v. SmithKline Beecham Corp.
,
Hugh v. Butler Cty. Family YMCA
,
Erie R.R. Co. v. Tompkins
,
Webb v. Zern
,
Restatement (Second) of Torts § 402A (Am. Law. Inst. 1965) (an actor can only be subject to strict liability for selling a defective product if he is a "seller ... engaged in the business of selling such a product").
Our decision, guided by Pennsylvania law, is limited to the question of whether Amazon is a "seller" based on its role in effectuating sales of physical products offered by third-party vendors. We express no view, for example, on whether other companies providing online marketplaces are considered "sellers."
Id. at 282-83.
Id. at 281 (quoting Restatement (Second) of Torts § 402A cmt. f).
Id. at 282.
Id.
(citations omitted). Note that the four-factor test articulated in
Musser
was applied earlier in the context of determining whether a lessor should be considered a "seller" for purposes of § 402A.
See
Nath v. Nat'l Equip. Leasing Corp.
,
Musser
,
See, e.g.
,
Allstate N.J. Ins. Co. v. Amazon.com, Inc.
, 17-cv-2738,
The dissent concludes that the first factor weighs in favor of Amazon because "[t]o assign liability for no reason other than the ability to pay damages is inconsistent with our jurisprudence."
Cafazzo
, 668 A.2d at 526. This contention overlooks the extensive record evidence that Amazon fails to vet third-party vendors for amenability to legal process. The first factor weighs in favor of strict liability not because The Furry Gang cannot be located and/or may be insolvent, but rather because Amazon enables third-party vendors such as The Furry Gang to structure and/or conceal themselves from liability altogether. As a result, Amazon remains "the only member of the marketing chain available to the injured plaintiff for redress."
Musser
,
Musser
,
JA168.
JA150.
The dissent contends that holding Amazon strictly liable for defective products will require them to "enter a fundamentally new business model" because "the company does not undertake to curate its selection of products, nor generally to police them for dangerousness." Dissent at 164-65. We 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. The dissent's reasoning would give an incentive to companies to design business models, like that of Amazon, that do nothing to protect consumers from defective products.
Musser
,
Id. at 636.
JA163.
JA154.
Musser
,
Musser
,
JA267.
The dissent contends that the Pennsylvania Supreme Court's decision in
Cafazzo
upended the Commonwealth's well-established four-factor analysis, thereby rendering the
Francioni
factors secondary to a threshold question of whether a particular defendant is a supplier/seller of the product.
Cafazzo v. Cent. Med. Health. Servs., Inc.
,
Id. at 1354-55.
See
Wisniewski v. Johns-Manville Corp.,
See
Id. at 1354.
Id. at 738.
Id. at 636.
JA111, JA114, JA154, JA166.
See, e.g.
,
Barton v. Lowe's Home Centers, Inc.
The dissent characterizes
Hoffman
as a "narrow exception" to the general rule that a " 'seller' in Pennsylvania is almost always an actor who transfers ownership from itself to the customer." Even assuming
arguendo
that
Hoffman
represents an "exception," Amazon falls within said exception, which Pennsylvania courts have never labeled as "narrow." The dissent claims that the
Hoffman
exception applies only to "exclusive sales representatives or exclusive agents," with "exclusive agents" often considered sellers because the agent (1) "trafficks intimately in [the products],"
Brumbaugh
, 152 A.D. 2d at 72,
Restatement (Second) of Torts § 402A, cmt. f.
See e.g.
,
Hoffman
,
Berrier v. Simplicity Mfg., Inc.
,
The dissent also cites approvingly to out-of-jurisdiction case law determining that Amazon was not subject to strict liability as a "seller." In particular, the dissent highlights cases from the Fourth Circuit, Sixth Circuit, Southern District of New York, and Northern District of Illinois, none of which should shape our analysis here.
See
Erie Ins. Co. v. Amazon.com
,
See
See, e.g.
,
Zango, Inc. v. Kaspersky Lab, Inc.
,
Green v. America Online
,
Fair Housing Council of San Fernando Valley v. Roommates.com, LLC
,
See
Stratton Oakmont, Inc. v. Prodigy Servs. Co.
, No. 31063/94,
See
See
Jane Doe No. 1 v. Backpage.com, LLC
,
Id . at 471.
Jane Doe No. 1 v. Backpage.com, LLC
,
Doe v. MySpace, Inc.
,
Chicago Lawyers' Comm. for Civil Rights Under Law, Inc. v. Craigslist, Inc.
,
Barnes v. Yahoo!, Inc.
,
Fed. Trade Comm'n v. Accusearch Inc.
,
See supra Part III.
The Fourth Circuit has similarly held that the CDA does not insulate Amazon against claims based on its participation in the sale of a defective product.
See
Erie Ins. Co.
,
Concurring in Part
This case implicates an important yet relatively uncharted area of law. No Pennsylvania court has yet examined the product liability of an online marketplace like Amazon's for sales made by third parties through its platform. Our task, as a federal court applying state law, is to predict how the Pennsylvania Supreme Court would decide the case.
Berrier v. Simplicity Mfg., Inc.
,
The plaintiffs weigh in detail policy reasons for allowing them to sue Amazon. Plaintiffs' theory would substantially widen what has previously been a narrow exception to the typical rule for identifying products liability defendants sufficiently within the chain of distribution. A "seller" in Pennsylvania is almost always an actor who transfers ownership from itself to the customer, something Amazon does not do for Marketplace sellers like The Furry Gang.
I.
Amazon is a multinational technology company. Among other ventures, it hosts online sales. Products are offered for sale at Amazon.com in three primary ways. First, Amazon sources, sells, and ships some products as seller of its own goods. Second, third-party sellers sell products through Amazon Marketplace "fulfilled by Amazon," purchasing Amazon's services in storing and shipping their products. Third, at issue here, third-party sellers sell products through Amazon Marketplace without additional "fulfillment" services. These sellers, like The Furry Gang, supply and ship products directly to consumers without ever placing the items in Amazon's possession.
Amazon Marketplace has grown enormously in recent years. Over a million businesses of all sizes sell products on Amazon Marketplace, according to Amazon's own figures, and "small and medium-sized businesses selling in Amazon's stores now account for 58 percent of [Amazon's] sales." Amazon, 2019 Amazon SMB Impact Report 1, 3, https://d39w7f4ix9f5s9.cloudfront.net/61/3b/1f0c2cd24f37bd0e3794c284cd2f/2019-amazon-smb-impact-report.pdf (last accessed June 17, 2019). These businesses and their products are diverse: a recent profile of highly successful Amazon Marketplace sellers included businesses offering beauty products, indoor gardening kits, and an educational toy teaching coding. Kiri Masters, 4 Companies Founded By Millennials That Are Making Millions on Amazon , Forbes (Aug. 9, 2018), http://www.forbes.com/sites/kirimasters/2018/08/09/4-companies-founded-by-millennials-who-are-selling-millions-on-amazon. Amazon Marketplace and other online platforms give consumers the ability to buy from small and large businesses whose products they may never have encountered in an ordinary physical store.
Amazon envisions its Marketplace as an open one. It reserves the right to remove sellers' listings or terminate Marketplace services for any reason and requires sellers to represent they are in good legal standing, but it does not apply a general vetting process to all sellers to identify those who do not in fact meet that standard. Amazon also does not narrow the Marketplace's offerings by limiting the number of sellers who may offer each type of product: any number of sellers may register. In displaying products to customers, Amazon distinguishes products sold through the Marketplace from those sold directly by Amazon, identifying the seller responsible for the item in a "sold by" line placed prominently next to the price and shipping information. App. 211. The seller's name also appears on the order confirmation page, before the customer clicks
"place your order" to finalize the purchase.
A customer on Amazon Marketplace buys a product that has been chosen, sourced, and priced by the third-party seller. The seller contractually commits to "ensure that [it is] the seller of each of [its] Products" listed for sale. App. 164. In exchange for Amazon's services including listing the product and managing payments, the seller is charged a monthly fee, as well as a referral fee of a percentage of each sale made. The relationship reflected in the agreement between Amazon and the seller is one of "independent contractors." Id. at 270. The agreement specifically disclaims other potential relationships: it does not mean to create relationships of "partnership, joint venture, agency, franchise, sales representative, or employment," nor does it create an "exclusive relationship" constraining either Amazon or the third-party seller from other sales relationships. Id.
For each new listing a seller creates, the seller identifies the product it plans to sell, designates a price, and writes a product description. Amazon requires the description include certain minimum information about the product, and requires the seller to offer a price as favorable as the one it offers in any other sales channels. Amazon also automatically formats the information provided into a product listing page matching others on the Marketplace, and it sometimes modifies listings to streamline user experience: for example, by grouping together the pages of multiple sellers who offer the identical product sourced in different ways. The seller may choose to offer, or not to offer, a warranty on its product. Regardless, the agreement makes the seller "responsible for any nonconformity or defect in, or any public or private recall of, any of [its] products." Id. at 173.
II.
When a product is sold on Amazon Marketplace, the third-party seller offering the product for sale, as well as the product's original manufacturer, may each be sued in product liability if the product is defective. This case raises the question whether Amazon, too, can be liable as a "seller" of such a product, because of the assistance it gives to the third-party seller that provided the product to the customer. Plaintiffs answer this question in part by invoking a set of four policy factors laid out in
Francioni v. Gibsonia Truck Corp.
,
A.
A seller under Pennsylvania product liability law is one "engaged in the business of selling ... a product."
Transfer of a right to possession is so typical to "sellers" that exceptions are rare. There is one primary exception in Pennsylvania caselaw: the "manufacturer's representative."
See
Hoffman v. Loos & Dilworth, Inc.
,
But in no other scenario has a Pennsylvania court imposed "seller" liability on a defendant whose role in the sale did not include transferring ownership or possession of the product. For example, the Pennsylvania Supreme Court considered and rejected "seller" liability for an auctioneer who "never owned, operated or controlled the equipment which was to be auctioned."
Musser v. Vilsmeier Auction Co.
,
Amazon Marketplace, like the auctioneer in
Musser
, takes an important part in assisting
sales, but is "tangential" to the actual exchange between customer and third-party seller.
Amazon Marketplace's similarities to the auctioneer emphasize it has little in common with
Hoffman
's manufacturer's representative, the only kind of "seller" held liable despite not having made a transfer of ownership or possession rights.
Hoffman
,
Under Pennsylvania law, then, Amazon was not the seller of The Furry Gang's product and therefore is not liable for any product defect. Because established Pennsylvania law precludes holding Amazon strictly liable here, I respectfully dissent.
B.
While Pennsylvania law alone dictates this outcome, it is reinforced by "analogous decisions" and "other reliable data."
McKenna
,
The Sixth Circuit found Amazon Marketplace was not a "seller" after consulting a variety of sources to clarify the term's expansive but ambiguous meaning within the Tennessee Products Liability Act.
Fox v. Amazon.com, Inc.
,
Even where Amazon Marketplace did fulfill the product at issue, the Fourth Circuit held Amazon was not the product's
"seller" under Maryland common law.
Erie Ins. Co. v. Amazon.com, Inc.
,
Other federal courts have reached the same outcome. Courts have declined to treat Amazon Marketplace as a "sales agent," as plaintiffs ask us to do. In dismissing a products liability lawsuit against Amazon essentially identical to this one, the District Court for the Southern District of New York considered a New York case that, like Pennsylvania's
Hoffman
decision, held a sales agent liable as a "seller."
Eberhart v. Amazon.com, Inc.
,
The Northern District of Illinois adopted similar reasoning in rejecting Amazon's liability.
Garber v. Amazon.com, Inc.
,
The Third Restatement of Torts' § 20, defining "seller," captures state law trends in Pennsylvania, common also to New York, Illinois, and other states, as federal courts considering product liability suits against Amazon Marketplace have noted.
See
Restatement (Third) of Torts: Prod. Liab. § 20 (Am. Law Inst. 1998) ;
see also, e.g.
,
Eberhart
,
In explaining the parameters of seller liability, § 20 reinforces and builds on the Second Restatement's analogous definition. Under the Second Restatement, a seller is one who is "engaged in the business of selling products for use or consumption." Restatement (Second) of Torts § 402A cmt. f. This definition distinguishes the non-liable occasional seller from the liable regular seller, but it offers no help in determining what kind of involvement in a sale might be considered selling. The Third Restatement analyzes intervening case law to specify that a seller is one who "transfers ownership ... either for use or consumption," or, alternately, one who "otherwise distributes a product" by providing that product "in a commercial transaction other than a sale." Restatement (Third) of Torts: Prod. Liab. § 20.
The Third Restatement includes the
Hoffman
exception to the general rule for product distribution facilitators: exclusive sales representatives or exclusive agents are often considered sellers because the agent "trafficks intimately in [the products],"
Brumbaugh
,
The Pennsylvania Supreme Court explained in
Tincher v. Omego Flex, Inc.
that it would "adopt[ ] ... sections of a restatement ... if the cause of action and its contours are consistent with the nature of the tort and Pennsylvania's traditional common law formulation."
In Pennsylvania, as in states across the country including New York and Illinois, a business assisting a sale is not a "seller" for products liability purposes unless it takes on the particularly involved retail relationship of sales agent/manufacturer's representative.
III.
To deem Amazon a "seller" of Marketplace products, plaintiffs rely in large part on a four-factor policy test first articulated in
Francioni v. Gibsonia Truck Corp.
,
A.
As the Pennsylvania Supreme Court has explained, the
Francioni
test guides "whether a particular supplier of products, whose status as a supplier is already determined, is to be held liable for damages caused by defects in the products supplied."
No one disputed that the
Francioni
defendant, who was a lessor of hauling equipment, had supplied the equipment that
caused the plaintiff's injury.
(1) In some instances the lessor, like the seller, may be the only member of the marketing chain available to the injured plaintiff for redress; (2) As in the case of the seller, imposition of strict liability upon the lessor serves as an incentive to safety; (3) The lessor will be in a better position than the consumer to prevent the circulation of defective products; and (4) The lessor 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.
Id. at 739.
Because the equipment leasing company was in the business of supplying products via lease, and because of the four identified policy factors, the court held the equipment leasing company should be considered a "seller."
Id.
at 739-40. Similarly, though reaching the opposite outcome, the Pennsylvania Supreme Court applied the
Francioni
test to a pharmacy defendant, holding, although the pharmacy had supplied drugs to patients, policy factors would counsel against imposing strict product liability on the pharmacy.
Coyle v. Richardson-Merrell, Inc.
,
The Pennsylvania Supreme Court has also cited the
Francioni
test as additional support for its holding, after determining that a potential defendant was not a "supplier."
See
Musser
,
Cafazzo
clarifies the relationship between the two holdings present in each of these cases, establishing that policy factors alone cannot create seller liability. In
Cafazzo
, the court held a hospital and physician were not suppliers of a medical device they provided to a patient, accompanied by a surcharge for the device, because "the relationship of hospital and/or doctor to patients is not dictated by the distribution of such products, even if there is some surcharge on the price of the product."
As
Cafazzo
makes evident, once a court has determined a defendant is too "tangential" to be considered a supplier of the product at issue, applying the
Francioni
policy factors is unnecessary.
B.
Even if Amazon Marketplace could be considered a supplier, application of the
Francioni
factors would not result in liability. Indeed, the policy outcomes produced
by liability for Amazon Marketplace closely resemble those produced by liability for an auctioneer, as in
Musser
.
See
The first factor, availability of other members of the distribution chain, weighs in Amazon's favor, just as in
Musser
. The
Musser
court found the first factor did not support liability for the auctioneer because, "in an auction there is a seller, who is served by the auctioneer."
Id.
at 282 (footnote omitted). Whereas in
Francioni
, the defendant lessor leased the product directly to the customer and the court identified no other member of the marketing chain,
see
The second two factors, the potential incentive to safety and the defendant's relative ability to prevent circulation of the products, weigh in favor of Amazon, as they did in
Musser
. In
Musser
, the court considered the auctioneer's current business model, finding the auctioneer was "not in the business of designing and/or manufacturing any particular product," nor did the auctioneer attempt to create the kind of "ongoing relationship" with any of its large catalogue of sellers "which might equip the auctioneer to influence the manufacturing process."
Just as in Musser , the final factor, Amazon's ability to pass on the costs of product liability suits by charging all sellers more, is the only one weighing in favor of imposing liability. But because a variety of market participants could take on this insurer role if they chose, even if only peripherally involved in the sale, the fourth factor is not determinative. As the Musser court explained, where the other three policy factors are not present, imposing strict liability "would be related to the purpose of the policy considerations underlying the [ Second Restatement of Torts § 402A ] only marginally." Id.
Because Amazon Marketplace is not a "supplier" of third-party products, our inquiry must end there under
Cafazzo
.
IV.
For these reasons, I respectfully dissent from the majority opinion as to plaintiffs' products liability claims not barred by § 230 of the CDA and would affirm the District Court's dismissal of those claims.
For purposes of this opinion, "ownership" includes, in addition to legal title, other rights to possess such as lease and bailment.
For determination under Restatement-derived common law definition of "seller,"
see
Erie Ins. Co. v. Amazon.com, Inc.
,
See A Dictionary of Business and Management 377 (Jonathan Law ed., 6th ed. 2016) (defining "manufacturer's agent" as "[a] commission agent who usually has a franchise to sell a particular manufacturer's products in a particular country or region for a given period"); Charles Cohon, Top Considerations When Hiring Manufacturers' Reps , Manufacturers' Agents National Association, http://www.manaonline.org/manufacturers/topconsiderations-when-hiring-manufacturers-reps (last visited May 9, 2019) (describing manufacturer's representatives as a kind of "outsource[d] ... sales force").
In Maryland, as in Pennsylvania, product liability is governed by common law.
See
Maryland State Bar Association,
Maryland Product Liability Law
§ 1.1 (2d ed. 2003). Contrary to the majority's characterization, the court's decision in
Erie
did not turn on a Maryland statute, but rather consulted a potentially analogous statutory provision alongside other sources including dictionary definitions and out-of-state persuasive authority to infer the common law meaning of "seller."
Maryland differs from Pennsylvania in declining to hold liable those who transfer possession through a transaction other than a sale, such as lessors and bailors.
See Maryland Product Liability Law
§ 4.8. For that reason, the
Erie
court defined "sellers" as transferors of title and did not discuss transfer of another kind of right to possess the product.
See also
Allstate N.J. Ins. Co. v. Amazon.com, Inc.
, No. 17-2738,
In defining "one who otherwise distributes a product," the provision further specifies, "[c]ommercial nonsale product distributors include, but are not limited to, lessors, bailors, and those who provide products to others as a means of promoting either the use or consumption of such products or some other commercial activity." Restatement (Third) of Torts: Prod. Liab. § 20. No such nonsale distributor is at issue in this case because the relevant transaction was a sale.
"Exclusive" sales agents may represent a variety of products; they are exclusive agents for a particular product if they obtain exclusive rights from a manufacturer to sell the product for a period of time in a designated region.
See, e.g.
,
Brumbaugh
,
See also
Walnut St. Assocs., Inc. v. Brokerage Concepts, Inc.
,
By contrast, the Pennsylvania Supreme Court explained it would not adopt sections of a restatement "unmoored from existing common law" and whose adoption would "produce such a policy shift that it amounts in actuality or public perception to a derogation of legislative authority."
Tincher
,
While the provisions rejected in
Tincher
departed significantly from the Second Restatement and from state law developed in its framework, as observers note, other "provisions of the
Restatement Third
simply do as promised; they restate the current law." Vicki MacDougall,
The Impact of the Restatement (Third), Torts: Products Liability (1998) on Product Liability Law
, 6 Consumer Fin. L. Q. R. 105, 106 (2008). Provisions more modest than those rejected therefore may in some instances fulfill the intended purpose of Restatement guidance in Pennsylvania law: not "supplanting" Pennsylvania's "traditional approach" but "rather ... clarifying the contours of the tort."
Bilt-Rite
,
In
Hoffman
, the court did not discuss whether the sales agent at issue had an exclusive franchise to sell within a particular territory or a nonexclusive franchise.
See
As
Musser
makes clear, the relevant question is whether alternate legally responsible members of the distribution chain exist, not whether the other members are solvent and able to pay.
See
The majority argues third-party sellers are in a poor position to monitor product dangerousness, because they communicate with customers through Amazon Marketplace's platform and receive access to customer ratings of their products which are also made public. But it is not clear what obstacle the Marketplace platform's collation and formatting would present to sellers monitoring customer feedback.
I concur in the majority's thoughtful analysis of the CDA's application to plaintiffs' claims.
Reference
- Full Case Name
- Heather R. OBERDORF; Michael A. Oberdorf, Her Husband, Appellants v. AMAZON.COM INC., a Washington Corporation
- Cited By
- 10 cases
- Status
- Published