Third Circuit Court of Appeals Vacates Amazon Strict Liability Ruling and Grants En Banc Rehearing
Civil Litigation Update, a publication of the Pennsylvania Bar Association
By: Erin K. Aronson, Esq.
The U.S. Third Circuit Court of Appeals granted a petition for rehearing en banc in Oberdorf v. Amazon.com Inc., 936 F.3d 182 (Mem.) (3d Cir. 2019) (Opinion by Smith, J.), which vacated a prior opinion that gained national interest. In its initial ruling, a panel of the Third Circuit found Amazon.com Inc. (Amazon) strictly liable in relation to an injury incurred by a product sold on its website that was created by a third-party vendor. Oberdorf v. Amazon.com Inc., 930 F.3d 136 (3d Cir. 2019) (Opinion by Roth, J.).
In the now-vacated opinion, the Third Circuit initially reasoned that Amazon, the well-known online purveyor of all varieties of products, acted as a “seller” under Pennsylvania product liability law and could therefore be subject to strict liability. In the Third Circuit’s original Oberdorf opinion, it found Amazon was a seller subject to strict liability by examining the following factors: a) the party is the member of the marketing chain available for redress; b) strict liability would incentivize safety; c) the party can better prevent the circulation of defective products than the consumer; and whether; d) the party can distribute the damages related to defective products by charging for it in their business. 930 F.3d 145-148.
The court found that these factors weighed in favor of strict liability, thereby potentially exposing Amazon to product liability claims whenever third-party vendors on Amazon’s site sell defective products. Relying on Pennsylvania Supreme Court precedent, the court held that strict liability is applied broadly in Pennsylvania, including to those who market products. The court held that despite the thirdparty vendor’s role being to design, manufacture, and package the product, Amazon retained oversight throughout the marketing and sale process. “Amazon’s customers are particularly vulnerable in situations” where its third-party vendors cannot be located to be held liable, which is what happened in Oberdorf.
The dissent, written by Judge Scirica, determined Amazon should not be deemed a seller subject to strict liability because it was more akin to an auctioneer than a typical product distributor. The Third Circuit’s choice to grant Amazon’s rehearing en banc renders the future liability of online purveyors such as Amazon uncertain in Pennsylvania, and possibly nationwide, as other circuit courts of appeal already cited Oberdorf prior to the grant of rehearing.