Upcoming 2nd Circuit En Banc Appeal Scares E-Commerce Giants

            Almost 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 banc review.Oberdorf involves perhaps the most important company currently in America, owned by the world’s richest man, and involves a majority and dissent that fundamentally disagree on what Amazon’s role was in the sale of the dog leash. This would satisfy both instances that federal rules consider the two reasons to hear en banc appeals: to achieve uniformity in decisions and when cases involve something of particular importance.

            The en banc review will focus heavily on whether not Amazon was a “seller” in the sale of a product from a third-party seller. Amazon often stores its Marketplace products, and ships it to customers, but Amazon had no part in manufacturing the dog leash that blinded the plaintiff. The majority and dissent vehemently disagreed whether Amazon was a seller of the dog leash for the purposes of the Communications Decency Act. The 2nd Circuit chose to, in the dissent’s view, depart from precedent to find that Amazon’s conduct in the Marketplace makes them a seller.

            If Amazon is a seller, it cannot use the CDA’s “safe harbor” provision to protect themselves from a suit against Furry Gang. The safe harbor provision “intended to allow interactive computer services companies ‘to perform some editing on user-generated content without thereby becoming liable for all defamatory or otherwise unlawful messages that they didn’t edit or delete’” according to the 2nd Circuit. In the dissent’s view of the case, that’s exactly what Amazon is doing: they are not selling but rather hosting user (Furry Gang) content on Amazon Marketplace and should not be held liable for the actions of Furry Gang. The majority presents Amazon’s role as extending far beyond the mere “editorial” platform of the product, as it has a far more active role in the sale of items such as Furry Gang’s dog leash.

            An interpretation of Amazon as a seller has large-scale implications for the e-commerce industry at large. An amicus brief recently filed by the Computer Communications Industry Association and Technet raised significant fears about the potential liability for the e-commerce industry at large, with growth being the primary concern, as a ruling here could open the floodgates for other courts to buy the same argument about Amazon and other e-commerce giants that provide similar services as Amazon’s marketplace.

            Despite the concern for a flood of new claims against e-commerce giants, there are significant reasons that a ruling against Amazon feels like the right thing to do. Here, the blinded plaintiff would have tried to sue Furry Gang, but Furry Gang has completely disappeared off the face of the map, not selling on Amazon since 2016 and therefore avoiding any blame or lawsuit for what ended up being a terrible injury.

            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