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Image: Amazon

In January 2015, Heather Oberdorf took her dog Sadie for a walk. Mid-walk, Sadie lunged prompting the retractable leash that Oberdorf had purchased on Amazon for $20 a month prior to snap, hit her in the face, break her glasses, and ultimately cause her to permanently lose vision in one of her eyes. Seeking recourse, Oberdorf attempted to contact the seller of the leash, a company called Furry Gang, but the company had disappeared, seemingly leaving Oberdorf without recourse in connection with the life-altering incident. So, Oberdorf decided to take on Amazon.

In June 2015, Oberdorf filed suit against the retail behemoth in a federal court in Pennsylvania, citing claims of strict products liability, negligence, and misrepresentation. Judge Matthew Brann of the U.S. District Court for the Middle District of Pennsylvania sided with Amazon, and dismissed the case finding that Amazon was not the seller of the leash, and thus, was not liable for Oberdorf’s injuries.

Oberdorf appealed and won. In July 2019 decision, a 3-judge panel for the U.S. Court of Appeals for the Third Circuit held that despite Amazon’s argument that it was the “seller” of the product and similarly, was not responsible for “sourcing or shipping” the leash (a third-party vendor, Furry Gang, did that), the $1 trillion online retailer is liable for the damage by the dog leash. The court decided that Amazon “plays a large role in the actual sales process” and thus, may be held liable when the products are defective, a decision that is expected to impose a greater – and potentially model-altering – level of responsibility on Amazon for the goods offered up on its third-party marketplace.

But now, barely two months later, Amazon has put an abrupt halt to Oberdorf’s win. In response to a plea from the retailer that the case be reviewed en banc, i.e., in front of the full panel of judges for the Third Circuit, not the routine 3-judge panel, the court granted Amazon’s petition for a rehearing.

The case is significant and one to watch, as the Third Circuit’s July decision marked the first time that a federal court of appeals has found that Amazon is the “seller” of its marketplace products; two other federal appeals courts have held that Amazon cannot be held liable as a seller of products from third-party vendors, which make up more than 60 percent of its annual sales.

With that in mind, the outcome “could impose on Amazon greater responsibility over the goods posted on its site,” Bloomberg predicted last month, “possibly adding new costs and complexities to a business model designed around efficiency.”

Also of interest will be whether Amazon should be shielded from liability for its failure to provide adequate warnings about the product by Section 230 of the Communications Decency Act of 1996 (“CDA”), a federal law that protects online businesses from lawsuits resulting from content posted by their users. The lower court sided with Amazon on this, and while the 3-judge panel for the Third Circuit held that the CDA protects Amazon to an extent (namely, its failure to warn), it does not shield it from Oberdorf’s claims that it is liable for “selling, inspecting, marketing, distributing, failing to test, or designing” the collar.

*The case is Heather Oberdorf, et al v. Amazon.com Inc., Case No. 18-1041 (3d Cir.).