8-28 U.S. Appeals Court: Amazon Can Be Held Liable for Defective Products of Third-Party Vendors

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Posted: August 28, 2019

Over the summer, consumers were handed a major victory against Amazon, one of the world’s largest retailers. In the decision, a federal appeals court ruled that consumers can sue Amazon after purchasing defective products from third-party sellers on the company’s website. 

Heather Oberdorf filed the original suit in federal court against Amazon in 2016 after she purchased a dog leash from a vendor on the company’s site. The suit alleges that the retractable leash was defective and retracted uncontrollably, hitting her in the face and blinding her in one eye. Oberdorf had purchased the leash on Amazon.com from a company called Furry Gang which no longer operates on the site and has been inactive since 2016. 

A Reuters report on the case quotes Circuit Judge Jane Richards Roth who, writing the 2-1 majority opinion of the court, said that Amazon’s business operations “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.”

The ruling contradicts previous decisions from other courts, including two other federal courts of appeal, that have tended to indicate that Amazon cannot be held liable for defective products sold by third-party vendors. This most recent decision, by the Philadelphia based 3rd U.S. Circuit Court of Appeals, both overturned a lower court ruling and set the 3rd Circuit apart from the other U.S. courts of appeal that have tackled the question.

One of the reasons for the 3rd Circuit’s decision is that product liability is typically governed at the state law level, not at the federal level. Because the 3rd Circuit is located in Philadelphia, Pennsylvania law factored into the court’s decision. 

The Reuters report on the case says that about half the items Amazon sells are from third-party vendors, and these sales accounted for approximately $11 billion in revenue during the first quarter of 2019.