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Amazon is the world's second largest retailer. But it didn't get there by selling its own products. The online giant is more of a marketplace, connecting customers and sellers. So, when a customer buys a defective product from a third party through Amazon, who's liable? According to a recent ruling out of the Third Circuit in Philadelphia, Amazon is.
"Amazon had no vetting process in place to ensure, for example, that third-party vendors were amenable to legal process," reasoned the judges. As a result, Amazon now stands as the only member of the marketing chain available to the injured plaintiff for redress.
Concealing Themselves From Customers
That availability for redress factored heavily into the Third Circuit's analysis. And the court wasn't swayed with Amazon's take-it-up-with-the-seller argument:
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.
This was the first time a federal appeals court applied defective product liability to Amazon, and the facts of this particular case may have made an impression as well. The plaintiff, Heather Oberdorf, was blinded in her left eye after a retractable leash she purchased through Amazon snapped, striking her in the face. And neither Oberdorf nor Amazon has been able to locate a representative of The Furry Gang, who sold the collar. The company hasn't had an active account on Amazon.com for over three years.
Influence and Incentives
The Third Circuit also reasoned that placing liability at Amazon's feet might be an incentive to provide safer products for sale. "Although Amazon does not have direct influence over the design and manufacture of third-party products, Amazon exerts substantial control over third-party vendors," via the ability to remove items, suspend accounts, or terminate seller agreements, according to the court." Therefore, Amazon is fully capable, in its sole discretion, of removing unsafe products from its website. Imposing strict liability upon Amazon would be an incentive to do so."
Given the circuit split on the liability issue, and the millions of dollars in litigation that could arise, Amazon is certain to appeal the decision. Next stop, Supreme Court?