The federal district court is the first to follow the U.S. Court of Appeals for the Third Circuit’s decision in Oberdorf v. Amazon.com Inc., which held that the e-commerce giant could be liable under Pennsylvania law for injuries caused by items sold through the Amazon marketplace. The Third Circuit was the first federal appeals court to find Amazon subject to liability as the seller of an item offered by a third party.
New Jersey’s definition of a “seller” is similar to Pennsylvania’s and looks to some of the same factors, the court here said.
The decision “is a logical application of Oberdorf and an excellent example of the development of the law in applying longstanding legal principles to new situations,” plaintiffs’ attorney Timothy Blood of Blood, Hurst & O’Reardon told Bloomberg Law in an email. Blood has litigated against Amazon but doesn’t represent the plaintiff here.
Courts “are recognizing what nearly every consumer already understands—Amazon controls the marketplace and should be treated like any other retailer,” he said.
Nicole Papataros’s failure-to-warn claims on behalf of her son can’t proceed against Amazon because it’s protected by the Communications Decency Act, the court said. But her other claims against Amazon can proceed, it said.
Oberdorf requires that result, the U.S. District Court for the District of New Jersey, which is within the Third Circuit, said. But it didn’t take account of the Third Circuit’s grant of rehearing en banc Aug. 23, vacating the three-judge panel’s decision. Amazon argues it should be immune from all claims.
Papataros alleges she purchased a Dreamwalker self-balancing scooter for her son from Coolreall Technology LLC in September 2015, through the Amazon website. Less than a month later, he was injured while using it as intended, she says.
The New Jersey Product Liability Act imposes liability on both manufacturers and sellers for defects in manufacturing, design, and warnings, according to the court. The term “product seller” is defined broadly, it said. But there’s an exception for “brokers,” and Amazon argued it was one.
New Jersey courts look to the defendant’s control over the product, Judge Kevin McNulty said. Here, in a “Fulfillment by Amazon” relationship with Coolreall, Amazon took physical possession of the hoverboard and shipped it, according to the court. It also allowed customer communication only through its website, not directly with the seller. And it had “control over the listing itself—in particular, it retained the right to change, suspend, prohibit or remove listings,” the court said.
Other policy factors, including Amazon’s ability to spread the cost of defects, weigh in favor of finding that it’s a seller. Amazon’s very business model “impedes compensation of an injured purchaser,” shielding third-party vendors’ location and contact information, the court said in a footnote. “Tort policies weigh against a structure that would leave consumers without recourse,” it said. Even Amazon couldn’t find Coolreall, it said.
As more decisions follow Oberdorf, Amazon will take steps to improve the safety of products sold on its site, Blood said. The U.S. tort system “is working as designed,” he said.
An attorney for e-commerce trade groups that supported Amazon’s request for a rehearing in Oberdorf didn’t respond to a request for comment on Papataros.
The Law Offices of Rosemarie Arnold represents Papataros. Sills Cummis & Gross PC represents Amazon.
The case is Papataros v. Amazon.com, Inc., D.N.J., No. 2:17-cv-09836, 8/26/19.