A tragic accident and a faulty rhinestone dog collar are at the center of a court drama that could have far-reaching effects on how products are sold online.
In 2015, Heather Oberdorf took her dog for a walk outside her Pennsylvania home, attaching a retractable leash to a collar she bought from Amazon seller The Furry Gang. The collar broke when her dog lunged, and the leash snapped back, permanently blinding her in one eye, according to the complaint she filed in 2016.
In the first significant decision of its kind, a Pennsylvania appeals court ruled last week that Amazon can be held liable for selling the defective product the same way a brick-and-mortar store would be, despite the company's claim it is only serving as a platform to connect buyers to third party companies like The Furry Gang.
The decision is a significant departure from the outcomes of other recent court battles. Within the last three months, two other federal courts have ruled the opposite: That, despite taking a cut of sales from third-party sales, Amazon can't be held responsible for damage caused by the products sold in its third-party "marketplace."
State and federal courts have rejected lawsuits against Amazon over everything from deadly supplements to exploding hover-boards for the same reason. The decision in the dog-leash case could change that.
"(T)his case has potential to open the courthouse and allow these cases to finally get before a jury and Amazon's business practices to be out in the open," said Brian Balser, the attorney for the family of 18-year-old Logan Stiner, who died after ingesting a fatal amount of pure caffeine a friend had bought from a marketplace seller. In February, a federal appeals court in Ohio ruled that Amazon couldn't be held liable for his death.
If you've ever shopped on Amazon.com or Walmart.com, there's a good chance you've bought something from their "marketplaces." More than half of the products purchased on Amazon are sold by independent stores through the internet giant's website.
Many customers shopping on Amazon don't realize when they're buying so-called "marketplace" products. Amazon's third-party listings have a small "sold by" tag, and third-party listings on Walmart have a label that says "sold and shipped by." Both sites often list them under "other sellers" on a product page.
In last Wednesday's decision, Judge Jane Richards Roth wrote that, by serving as the only way customers and sellers could contact each other, Amazon's platform "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."
It can be incredibly difficult to find out who owns stores on Amazon. Last year, a New York Times investigation found 141 Amazon sellers tied to an LLC using the same address in San Francisco. One of the stores listed its return address as the Palo Alto home of a family with no ties to the companies and could not understand why they kept getting Amazon returns delivered to their house.
Neither Amazon nor Oberdorf was able to find anyone connected with The Furry Gang, the Amazon store that sold the leash. An Amazon spokesperson declined to comment about the case.
Amazon's Teflon coating in marketplace sales cases has been a thorn in the side of many groups seeking more corporate responsibility.
"We're trying to get Amazon to work like a bartender," who can be held responsible for over-serving people who later drive drunk, said Scott Steinford, CEO of Trust Transparency Center, a market research and consulting firm for the dietary supplement industry, which has conducted several investigations into products sold on Amazon.
A few weeks ago, a judge in Alameda County Superior Court ruled that As You Sow, an activist group that pushes for corporate social responsibility, couldn't sue Amazon over skin whitening creams containing high levels of mercury being sold on the platform without the warnings about cancer risk required by California law. One cream sold through Amazon contained 38,000 times the level of mercury allowed by the FDA, according to As You Sow's complaint.
The judge in that case agreed with Amazon that the federal Communications Decency Act, designed to protect online platforms from defamation claims based on internet comments and blog posts, meant Amazon was not responsible for warning labels. Last week's decision in Pennsylvania agreed with that understanding of the law but argued the company can still be held liable for damages caused by defective products.
While the Pennsylvania ruling is based on state laws, many other states, including California, use the same basic legal theory when deciding who counts as a seller, meaning the decision could have ramifications throughout the country.
"We need to decide, is this a store? I think the answer has to be yes. Amazon is our new store," said Danielle Fugere, president and general counsel of As You Sow. "We need laws that require a company like Amazon to undergo due diligence like a brick-and-mortar store would."
These questions will only become more important as more retailers, including Target, open their websites to third-party sellers.
"They take the position that it's the customer's responsibility to do due diligence on products in the marketplace. But if there's a problem with a product, it only comes out when it's used," Steinford said. "It may take a large number of bad reviews for it to be clear that a product is unsafe."
Amazon must now decide whether to appeal the Pennsylvania case. The court ruled 2-1 in favor of Oberdorf.
"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," Judge Roth wrote in the decision. "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."
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