Business & Practice

Amazon Pushes to Undo New Jersey Hoverboard Liability Ruling

Aug. 27, 2019, 5:45 PM

Amazon.com Inc. wants a federal court in New Jersey to rescind or put on hold a ruling saying it can be held liable in that state for the sale of an allegedly defective hoverboard on its marketplace.

The Aug. 26 ruling should be undone or reconsidered because it relies on a Third Circuit panel decision that was just vacated so that the full appeals court may consider Amazon’s liability in another product liability case, the company said in a letter to the U.S. District Court for the District of New Jersey.

The U.S. Court of Appeals for the Third Circuit panel had been the first appeals court to hold that Amazon could be a “seller” under state law—in that instance, Pennsylvania’s—for a third party’s product. How the full court rules in Oberdorf v. Amazon.com, Inc. will not only help determine whether Amazon should be responsible for injuries caused by products sold through its website, but could also have a big impact on whether sweeping liability protections enjoyed by online companies and content providers will continue.

Two other federal appeals courts, the Fourth and Sixth circuits, have said Amazon isn’t a “seller” under Maryland or Tennessee law, though the latter court said the company may still be liable for an email it wrote to customers related to the safety of a product. The Eleventh Circuit also recently reinstated some claims in another hoverboard case under Georgia law, though it didn’t reach the sales issue.

The Third Circuit panel ruling also put it in line with the Fourth Circuit in finding that the Communications Decency Act leaves Amazon exposed to at least some product liability claims.

The potential weakening of the online communications law has drawn strong opposition from e-commerce and social media trade groups, including those representing Facebook, Google, eBay, Airbnb, and others. The trade groups asked the full Third Circuit to reconsider the Oberdorf case. The panel’s view of the CDA, “if left standing, would threaten serious harms not only for Amazon, but for myriad other internet companies, small businesses, consumers, and the U.S.economy,” the groups said.

“Faced with costly litigation and potential liability, service providers like Amazon would be pressed to simply stop allowing third-parties to offer products through their sites or otherwise reduce services,” said the Internet Association, the Computer & Communications Industry Association, and TechNet.

“Additionally, the threat of liability that the panel’s novel decision would impose could force internet service providers and websites to block user-generated content to reduce risk, leading to a less open and collaborative internet,” the groups said.

They argued the CDA aspect of the Oberdorf ruling conflicts with a prior Third Circuit decision and other courts’ interpretations of the immunity law.

The Third Circuit order vacating the panel’s decision, which came in a suit over an allegedly defective dog collar, came down Aug. 23. That was one business day before the District of New Jersey, which is within the Third Circuit, allowed the hoverboard claims to proceed.

The district court followed the reasoning of the panel’s decision in Oberdorf on the state-law issue and said it was bound by it on the CDA question. Given its reliance on a now-vacated opinion, it shouldn’t proceed with the case until the full court rules in Oberdorf, Amazon said in its letter filed late Aug. 26.

The District of New Jersey isn’t the only court to recently cite the Third Circuit panel ruling. The Ohio Supreme Court, also looking to Oberdorf, reversed course last week and agreed to review a decision exonerating Amazon in the death of a teenager who used a caffeine product.

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, letter 8/26/19.

To contact the reporter on this story: Martina Barash in Washington at mbarash@bloomberglaw.com

To contact the editors responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com; Steven Patrick at spatrick@bloomberglaw.com

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