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Court of Appeals Finds That Online Marketplaces Like Amazon Are Liable for Defective Products Sold On Their Websites

Liability4

A recent decision out of the Third Circuit Court of Appeals finding that online marketplace retailers like Amazon.com can be liable for defective products sold by other companies on their website will have huge repercussions for consumers seeking to hold companies responsible for any harm incurred as a result of these products. Not only does this open the door for these online marketplace companies to be sued, but it also imposes strict liability for defective products, introducing significant change when it comes to liability in the supply chain. In doing so, the court reversed the district court’s opinion.

The Case & Deciding That Amazon Is A “Seller” In The Supply Chain

The case involved the purchase of a dog leash sold by a company on Amazon’s website. According to the plaintiff, the leash ended up injuring (blinding) them when it failed to work correctly. While the district court found that Amazon was not a “seller“ under the law, and therefore could not be held liable, the appeals court vacated the decision and found that Amazon was a seller and did not simply provide a website for products sold by other companies/vendors. In doing so, the court looked at a number of factors such as:

  • Amazon being the only part of the supply chain that was actually available to the customer in part because when it enters into sales contracts with these third-party vendors, it blocks customer access to the vendors. In other words, Amazon’s vendor agreements enable companies selling products to completely conceal themselves from customers;
  • Imposing strict liability on Amazon would arguably incentivize the company to ensure that unsafe products are removed from its website;
  • Amazon was in the best position to pull problematic products off of its website due to the regular customer feedback that it receives; and
  • Amazon already accounts for liability costs associated with any product-related injuries and harm via the indemnification provisions in its vendor agreements.

The Decision’s Broad Effect

Although the case came out of Pennsylvania, its holding is likely to be broad because Pennsylvania, like many other states, adheres to the Second Restatement of Torts (Note that Florida adheres to the Third Restatement of Torts, which is similar, however, expands coverage in order to compensate for developments in product law between 1965 and 1997). As a result, the decision has implications for all online marketplaces, as a number of third-party vendor platforms operate under Amazon’s model and currently have similar vendor agreements in place.

Contact Our Florida Defective Products Attorneys with Any Questions

Not only do manufacturers have a duty to ensure that the products they sell are safe for consumers, but now, those companies that provide the platform to sell these products also have to ensure that what they sell is safe. Contact our Jacksonville product defect attorneys at Douglas & Carter, Attorneys at Law today with any questions you have about the decision and/or defective product liability.

Resources:

natlawreview.com/article/supply-chain-decision-online-marketplaces-risk-due-to-federal-court-ruling-oberdorf

floridabar.org/the-florida-bar-journal/the-restatement-third-of-torts-products-liability-the-tension-between-product-design-and-product-warnings/

https://www.douglasandcarter.com/a-simple-fix-to-a-number-of-products-could-prevent-many-children-from-being-maimed-and-killed-every-year/

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