Heather Oberdorf v. Amazon.com Inc ( 2019 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 18-1041
____________
HEATHER R. OBERDORF;
MICHAEL A. OBERDORF, her husband,
Appellants
v.
AMAZON.COM INC., a Washington Corporation
On Appeal from the United States District Court
for the Middle District of Pennsylvania
(D.C. Civil No. 4-16-cv-01127)
District Judge: Honorable Matthew W. Brann
Argued October 3, 2018
Before: SHWARTZ, SCIRICA and ROTH, Circuit Judges
(Opinion filed: July 3, 2019)
David F. Wilk (Argued)
Lepley, Engelman & Yaw
140 East Third St.
Williamsport, PA 17701
Counsel for Appellants
Eric D. Miller* (Argued)
William B. Murphy
Laura Hill
Perkins Coie
1201 Third Avenue
Suite 4900
Seattle, WA 98101
Timothy J. McMahon
Marshall, Dennehey, Warner, Coleman & Goggin
100 Corporate Center Drive
Suite 201
Camp Hill, PA 17011
Counsel for Appellee
________________
OPINION OF THE COURT
________________
*
Mr. Miller withdrew his appearance on February 28, 2019.
2
ROTH, Circuit Judge:
On January 12, 2015, Heather Oberdorf returned home
from work, put a retractable leash on her dog, and took the
dog for a walk. Unexpectedly, the dog lunged, causing the D-
ring on the collar to break and the leash to recoil back and hit
Oberdorf’s face and eyeglasses. As a result, Oberdorf is
permanently blind in her left eye.
Oberdorf bought the collar on Amazon.com. As a
result of the accident, she sued Amazon.com, including
claims for strict products liability and negligence. The
District Court found that, under Pennsylvania law, Amazon
was not liable for Oberdorf’s injuries. In its opinion, the
District Court emphasized that a third-party vendor—rather
than Amazon itself—listed the collar on Amazon’s online
marketplace and shipped the collar directly to Oberdorf.
Those facts were the basis for the District Court’s two main
rulings.
First, the District Court found that Amazon is not
subject to strict products liability claims because Amazon is
not a “seller” under Pennsylvania law. Second, the District
Court found that Oberdorf’s claims are barred by the
Communications Decency Act (CDA) because she seeks to
hold Amazon liable for its role as the online publisher of
third-party content.
I
Both issues in this case pertain to Amazon’s role in
effectuating the sale of products offered by third-party
vendors. Therefore, we begin by describing the anatomy of a
3
sale on Amazon.com.1
Amazon Marketplace
Amazon is the world’s most valuable retail company.2
Its website is an online marketplace where Amazon retails its
own products as well as those of more than one million third-
party vendors.3 These third-party vendors decide which
products to sell, the means of shipping, and product pricing.
For its part, Amazon lists the products on the Amazon
Marketplace, collects order information from consumers, and
processes payments. In exchange for these services, Amazon
collects fees from each third-party vendor.
In order to use Amazon’s services, a third-party vendor
must assent to Amazon’s Services Business Solutions
Agreement. This Agreement governs every step of the sales
process.
Once a third-party vendor has assented to the
Agreement, the vendor chooses which product or products it
1
Throughout this opinion, we use the more complete
company name, “Amazon.com,” to refer to Amazon’s
website, but use the shorter name, “Amazon” to refer to the
company itself.
2
David Streitfeld, Amazon Is Now Second to Cross $1
Trillion Line, N.Y. TIMES, Sept. 5, 2018, at B1.
3
To remain consistent throughout this opinion, and to avoid
using the term “seller,” which has legal significance under
Pennsylvania strict products liability law, we refer to the third
parties who offer products on Amazon.com as “third-party
vendors” or “vendors.”
4
would like to sell using Amazon’s website. This choice is,
with some notable exceptions, left to the discretion of the
vendor. Among the exceptions are products that Amazon
determines are illegal, sexually explicit, defamatory, or
obscene.
When the third-party vendor has chosen a product that
it wants to offer on Amazon’s website, the vendor provides
Amazon with a description of the product, including its brand,
model, dimensions, and weight. Pursuant to the Agreement,
the vendor must also provide Amazon with digital images of
the product, as well as other information such as shipping and
handling options, product availability, in-stock status, and any
other information reasonably requested by Amazon.
Based on this information, Amazon formats the
product’s listing on its website. This function, too, is
provided for in the Agreement, by which Amazon retains the
right in its sole discretion to determine the content,
appearance, design, functionality, and all other aspects of the
Services, including by redesigning, modifying, removing, or
restricting access to any of them. In fact, the Agreement
grants Amazon a royalty-free, non-exclusive, worldwide,
perpetual, irrevocable right and license to commercially or
non-commercially exploit in any manner, the information
provided by third-party vendors.
The third-party vendor can then choose which, if any,
of Amazon’s other services it will use in conjunction with
listing its product on Amazon’s website. For example,
Amazon offers “Amazon Clicks,” an advertising service in
which Amazon highlights and promotes the vendor’s product
to customers. Amazon also offers a “Fulfillment by Amazon”
5
service, in which it takes physical possession of third-party
vendors’ products and ships those products to consumers.
Otherwise, the vendor itself is responsible for shipping
products directly to consumers.
The listed price for the product is chosen by the third-
party vendor, subject to one exception: Vendors may not
charge more on Amazon than they charge in other sales
channels. Nor, according to the Agreement, may third-party
vendors offer inferior customer service or provide lower
quality information about products than in other sales
channels. To the extent that third-party vendors need to
communicate with customers regarding their orders on
Amazon, they must do so through the Amazon platform.
With these preliminaries completed, Amazon lists the
product online and sales begin. As customers make
purchases on Amazon’s website, Amazon collects payment
and delivers order information to the third-party vendor. At
checkout, the customer can choose any shipping method
offered by the third-party vendor, and any promises made by
the vendor with respect to shipping date must be met.
Amazon ensures compliance with this obligation by requiring
the vendor to send Amazon shipping information for each
order. In addition, vendors have a powerful interest in
providing quality products and ensuring timely delivery, as
Amazon allows shoppers to publicly rate the vendors and
their products.
In exchange for its role in the transaction, Amazon
collects two types of fees: one is a commission, typically
between seven and fifteen percent of the overall sales price;
the other is either a per-item or monthly fee, depending on the
6
third-party vendor’s preference. At least once every two
weeks, Amazon remits all sales proceeds, minus fees, to the
vendor. Pursuant to the Agreement, Amazon is classified as
the third-party vendor’s “agent for purposes of processing
payments, refunds, and adjustments . . . receiving and holding
Sales Proceeds on your behalf, remitting Sales Proceeds to
Your Bank Account, charging your Credit Card, and paying
Amazon and its Affiliates amounts you owe . . ..”4
Throughout each step of the sales process, Amazon
may at any time cease providing any or all of the Services at
its sole discretion and without notice, including suspending,
prohibiting, or removing any listing. Amazon also retains
other important privileges. For example, Amazon can require
vendors to stop or cancel orders of any product. If Amazon
determines that a vendor’s actions or performance may result
in risks to Amazon or third parties, it may in its sole
discretion withhold any payments to the vendor.
Furthermore, Amazon requires that its vendors release it and
agree to indemnify, defend, and hold it harmless against any
claim, loss, damage, settlement, cost, expense, or other
liability.
The Dog Collar
On December 2, 2014, Heather Oberdorf logged onto
Amazon’s website. She typed search information for dog
collars into Amazon’s search terms box. She decided to
purchase the dog collar at issue, which was sold by a third-
party vendor, “The Furry Gang.” The Furry Gang shipped
the dog collar directly from Nevada to Oberdorf, who put the
4
JA195.
7
collar on her dog, Sadie. Then, on January 12, 2015, while
Oberdorf was walking Sadie, the D-ring on the collar broke
and the retractable leash recoiled into Oberdorf’s eyeglasses,
injuring her and permanently blinding her in her left eye.
Neither Amazon nor Oberderf has been able to locate a
representative of The Furry Gang, which has not had an
active account on Amazon.com since May 2016.
Procedural History
Oberdorf filed a complaint in the United States District
Court for the Middle District of Pennsylvania, bringing
claims for strict product liability, negligence, breach of
warranty, misrepresentation, and loss of consortium.5
Oberdorf propounds two separate theories of strict product
liability: (1) failure to provide adequate warnings regarding
the use of the dog collar, and (2) defective design of the dog
collar. She also asserts a variety of negligence theories,
namely that Amazon was negligent in (1) distributing,
inspecting, marketing, selling, and testing of the dog collar in
an unreasonable manner; (2) allowing the dog collar to enter
the stream of commerce in a dangerous condition; (3) failing
to conduct a proper hazard analysis; (4) failing to follow the
guidelines of the “safety hierarchy”; and (5) failing to provide
the product with features, elements, precautions, or warnings
that would have made it safer.
The District Court granted Amazon’s motion for
5
The breach of warranty and misrepresentation claims and
Michael Oberdorf’s loss of consortium claim are not relevant
to the present appeal.
8
summary judgment, finding that (1) Amazon cannot be sued
under Pennsylvania’s strict products liability law because it
does not constitute a “seller” within the meaning of
Pennsylvania strict liability law, and (2) Oberdorf’s claims
are barred by the CDA because she seeks to hold Amazon
liable for its role as the online publisher of a third party’s
content.
II
The District Court had jurisdiction pursuant to 28
U.S.C. § 1332. We have jurisdiction pursuant to 28 U.S.C. §
1291. Because our review of a district court’s grant of
summary judgment is plenary, we affirm only where “there is
no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.”6 In determining
whether summary judgment is appropriate, we view all facts
and make all reasonable inferences in favor of the non-
moving party, in this case, the Oberdorfs.7
6
Fed. R. Civ. P. 56(a); see Mylan Inc. v. SmithKline Beecham
Corp., 723 F.3d 413, 418 (3d Cir. 2013). “An issue is
genuine only if there is a sufficient evidentiary basis on which
a reasonable jury could find for the non-moving party, and a
factual dispute is material only if it might affect the outcome
of the suit under governing law.” Kaucher v. County of
Bucks, 455 F.3d 418, 423 (3d Cir. 2006) (citing Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).
7
Hugh v. Butler Cty. Family YMCA, 418 F.3d 265, 266–67
(3d Cir. 2005).
9
III
We begin our analysis by addressing Amazon’s
contention that it is not subject to Oberdorf’s strict products
liability claims.
Because our subject matter jurisdiction stems from the
parties’ diverse citizenship, we apply Pennsylvania law in
deciding whether the District Court properly dismissed
Oberdorf’s strict products liability claim.8 The Pennsylvania
Supreme Court has made clear that the Second Restatement
of Torts § 402A applies to Pennsylvania strict products
liability claims.9 Section 402A specifically limits strict
products liability to “sellers” of products.10 Amazon relies on
this limitation as its defense, claiming that it is not a “seller”
because it merely provides an online marketplace for products
sold by third-party vendors. We disagree.11
8
Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938).
9
Webb v. Zern, 220 A.2d 853, 854 (Pa. 1966).
10
Restatement (Second) of Torts § 402A (Am. Law. Inst.
1965) (an actor can only be subject to strict liability for
selling a defective product if he is a “seller . . . engaged in the
business of selling such a product”).
11
Our decision, guided by Pennsylvania law, is limited to the
question of whether Amazon is a “seller” based on its role in
effectuating sales of physical products offered by third-party
vendors. We express no view, for example, on whether other
companies providing online marketplaces are considered
“sellers.”
10
A
Amazon relies heavily on the Pennsylvania Supreme
Court’s decision in Musser v. Vilsmeier Auction Co, Inc.12 to
support its contention that it is not a “seller.” Although
Musser is a significant case to which we look for guidance, it
does not command the result that Amazon seeks.
The plaintiff in Musser was injured by a tractor that his
father had bought at an auction house. Following his injury,
he sought to hold the auction house strictly liable as a “seller”
of the allegedly defective tractor. The Pennsylvania Supreme
Court held that the auction house could not be considered a
“seller,” and thus that the plaintiff must prove that the auction
house acted unreasonably (i.e., bring a negligence claim) in
order to hold it liable.13 In making this ruling, the court relied
on the policy rationale articulated in comment f of § 402A of
the Second Restatement of Torts:
The basis of the rule is the ancient
one of the special responsibility
for the safety of the public
undertaken by one who enters into
the business of supplying human
beings with products which may
endanger the safety of their
persons and property, and the
forced reliance upon that
undertaking on the part of those
who purchase such goods. This
12
562 A.2d 279 (Pa. 1989).
13
Id. at 282-83.
11
basis is lacking in the case of the
ordinary individual who makes
the isolated sale, and he is not
liable to a third person or even to
his buyer in the absence of his
negligence.14
The court noted that, when the above policy rationale
“will not be served, persons whose implication in supplying
products is tangential to that undertaking will not be subjected
to strict liability for the harms caused by defects in the
products.”15 Therefore, because “[t]he auction company
merely provided a market as the agent of the seller,” the court
concluded that applying strict liability doctrine to the auction
house would not further the doctrine’s underlying policy
justification.16
In its opinion, the Pennsylvania Supreme Court made
clear that courts later tasked with determining whether an
actor is a “seller” should consider whether the following four
factors apply:
(1) Whether the actor is the “only member of the
marketing chain available to the injured plaintiff
for redress”;
(2) Whether “imposition of strict liability upon the
[actor] serves as an incentive to safety”;
14
Id. at 281 (quoting Restatement (Second) of Torts § 402A
cmt. f).
15
Id.
16
Id. at 282.
12
(3) Whether the actor is “in a better position than the
consumer to prevent the circulation of defective
products”; and
(4) Whether “[t]he [actor] can distribute the cost of
compensating for injuries resulting from defects by
charging for it in his business, i.e., by adjustment of
the rental terms.”17
We consider below each of the four factors articulated
in Musser.
1
The first factor is whether Amazon “may be the only
member of the marketing chain available to the injured
plaintiff for redress.”18 In Musser, the court found that this
factor failed to support a finding that the auction house was a
“seller” because in an auction there is a vendor, for whom the
auctioneer is the agent and who may be amenable to suit
under § 402A for negligence or breach of warranty.19 In other
words, the plaintiff in Musser could sue the other parties in
the sales distribution chain.
17
Id. (citations omitted). Note that the four-factor test
articulated in Musser was applied earlier in the context of
determining whether a lessor should be considered a “seller”
for purposes of § 402A. See Nath v. Nat’l Equip. Leasing
Corp., 439 A.2d 633, 635-36 (Pa. 1981); Francioni v.
Gibsonia Truck Corp., 372 A.2d 736, 739 (Pa. 1977).
However, Musser represents the court’s first use of the test
outside of that context.
18
Musser, 562 A.2d at 282.
19
Id.
13
Amazon contends that, just as every item offered at an
auction house can be traced to a seller who may be amenable
to suit, every item on Amazon’s website can be traced to a
third-party vendor. However, Amazon fails to account for the
fact that under the Agreement, third-party vendors can
communicate with the customer only through Amazon. This
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. There are
numerous cases in which neither Amazon nor the party
injured by a defective product, sold by Amazon.com, were
able to locate the product’s third-party vendor or
manufacturer.20
In this case, Amazon’s Vice President of Marketing
Business admitted that Amazon generally takes no
precautions to ensure that third-party vendors are in good
standing under the laws of the country in which their business
is registered. In addition, Amazon had no vetting process in
place to ensure, for example, that third-party vendors were
amenable to legal process. After Oberdorf was injured by the
20
See, e.g., Allstate N.J. Ins. Co. v. Amazon.com, Inc., 17-cv-
2738, 2018 WL 3546197, at *2 (D.N.J. July 24, 2018)
(“Neither Plaintiff nor [Amazon] is aware who manufactured
the laptop battery . . ..”); Fox v. Amazon.com, 16-cv-3013,
2018 WL 2431628, at *6 (M.D. Tenn. May 30, 2018) (“[T]he
manufacturer of the hoverboard at issue is unknown.”) appeal
filed No. 18-5661, 2018 WL 2431628 (6th Cir. June 25,
2018); Stiner v. Amazon, 15-cv-185837, 2017 WL 9751163,
at *7 (Ohio. Com. Pl. Sept. 20, 2017) (Dkt. No. 120-1) (“[The
manufacturer] is a Chinese company and not subject to
process and [the third-party vendor] is insolvent.”).
14
defective collar, neither she nor Amazon was able to locate
The Furry Gang. As a result, Amazon now stands as the only
member of the marketing chain available to the injured
plaintiff for redress.
The first factor weighs in favor of imposing strict
liability on Amazon.21
2
The second factor we consider is whether “imposition
of strict liability upon the [actor would] serve[] as an
incentive to safety.”22 In Musser, the Pennsylvania Supreme
Court “fail[ed] to see how the imposition of strict liability [on
the auction house] would be more than a futile gesture in
promoting the manufacture and distribution of safer
products,” chiefly because the auction house was “not in the
business of designing and/or manufacturing any particular
21
The dissent concludes that the first factor weighs in favor
of Amazon because “[t]o assign liability for no reason other
than the ability to pay damages is inconsistent with our
jurisprudence.” Cafazzo, 668 A.2d at 526. This contention
overlooks the extensive record evidence that Amazon fails to
vet third-party vendors for amenability to legal process. The
first factor weighs in favor of strict liability not because The
Furry Gang cannot be located and/or may be insolvent, but
rather because Amazon enables third-party vendors such as
The Furry Gang to structure and/or conceal themselves from
liability altogether. As a result, Amazon remains “the only
member of the marketing chain available to the injured
plaintiff for redress.” Musser, 562 A.2d at 281.
22
Musser, 562 A.2d at 282.
15
product or products.”23 Amazon asserts that it does not have
a relationship with the designers or manufacturers of products
offered by third-party vendors. Therefore, it contends that
imposing strict liability would not be an incentive for safer
products. Again, we disagree with Amazon.
Although Amazon does not have direct influence over
the design and manufacture of third-party products, Amazon
exerts substantial control over third-party vendors. Third-
party vendors have signed on to Amazon’s Agreement, which
grants Amazon “the right in [its] sole discretion to . . .
suspend[], prohibit[], or remov[e] any [product] listing,”24
“withhold any payments” to third-party vendors,25 “impose
transaction limits,”26 and “terminate or suspend . . . any
Service [to a third-party-vendor] for any reason at any
time.”27 Therefore, Amazon is fully capable, in its sole
discretion, of removing unsafe products from its website.
Imposing strict liability upon Amazon would be an incentive
to do so.
The second factor favors imposing strict liability on
Amazon.28
23
Id.
24
JA168.
25
JA150.
26
Id.
27
Id.
28
The dissent contends that holding Amazon strictly liable for
defective products will require them to “enter a
fundamentally new business model” because “the company
does not undertake to curate its selection of products, nor
generally to police them for dangerousness.” Dissent at 21-
16
3
The third factor we consider is whether Amazon is “in
a better position than the consumer to prevent the circulation
of defective products.”29
In Musser, the court indicated that the auctioneer was
not in a better position than the consumer to prevent the
circulation of defective products because it lacked an
“ongoing relationship with the manufacturer from which
some financial advantage inures to [its] benefit . . ..”30
Similarly, in Nath v. National Equipment Leasing Corp.,31 the
Pennsylvania Supreme Court held that, because financing
agencies perform only a “tangential” role in the sales process,
“their relationship with a particular manufacturer does not, in
the normal course, possess the continuity of transactions that
would provide a basis for indirect influence over the
condition and the safety of the product.”32 Here, while
Amazon may at times lack continuous relationships with a
third-party vendor, the potential for continuing sales
encourages an on-going relationship between Amazon and the
third-party vendors.
22. We do not believe that Pennsylvania law shields a
company from strict liability simply because it adheres to a
business model that fails to prioritize consumer safety. The
dissent’s reasoning would give an incentive to companies to
design business models, like that of Amazon, that do nothing
to protect consumers from defective products.
29
Musser, 562 A.2d at 282.
30
Id.
31
439 A.2d 633 (Pa. 1981).
32
Id. at 636.
17
Moreover, Amazon is uniquely positioned to receive
reports of defective products, which in turn can lead to such
products being removed from circulation. Amazon’s website,
which Amazon in its sole discretion has the right to manage,
serves as the public-facing forum for products listed by third-
party vendors. In its contract with third-party vendors,
Amazon already retains the ability to collect customer
feedback: “We may use mechanisms that rate, or allow
shoppers to rate, Your Products and your performance as a
seller and Amazon may make these ratings and feedback
publicly available.”33 Third-party vendors, on the other hand,
are ill-equipped to fulfill this function, because Amazon
specifically curtails the channels that third-party vendors may
use to communicate with customers: “[Y]ou may only use
tools and methods that we designate to communicate with
Amazon site users regarding Your Transactions . . ..”34
The third factor also weighs in favor of imposing strict
liability on Amazon.35
33
JA163.
34
JA154.
35
Musser, 562 A.2d at 282. The dissent contends that
Amazon is no better-positioned than the consumer to
encourage the safety of products sold in the Amazon
Marketplace. However, the dissent openly acknowledges at
least one aspect of Amazon’s relationship with third-party
sellers that demonstrates Amazon’s powerful position relative
to the consumer: Amazon “reserves the right to eject sellers.”
Dissent at 21. Imposing strict liability on Amazon will ensure
that the company uses this relative position of power to eject
sellers who have been determined to be selling defective
goods.
18
4
The fourth factor we consider is whether Amazon can
distribute the cost of compensating for injuries resulting from
defects.
In Musser, the court “acknowledge[d] that it would be
possible for the auctioneer to pass on the costs of imposing
strict liability upon him; possibly as [the injured plaintiff]
suggests, by indemnity agreements between the auctioneer
and the seller.”36 However, although the court found that
extending the meaning of “seller” to include the auctioneer
would provide another remedy for injured customers, the
court demurred, stating that this would “only marginally”
promote the “purpose of the policy considerations”
underlying § 402A.37
In this case, however, Amazon has already provided
for indemnification by virtue of a provision in the Agreement:
You release us and agree to
indemnify, defend, and hold
harmless us, our Affiliates, and
our and their respective officers,
directors, employees,
representatives, and agents against
any claim, loss, damage,
settlement, cost, expense, or other
liability (including, without
36
Musser, 562 A.2d at 283.
37
Id.
19
limitation, attorneys’ fees) . . ..38
Moreover, Amazon can adjust the commission-based
fees that it charges to third-party vendors based on the risk
that the third-party vendor presents.
Amazon’s customers are particularly vulnerable in
situations like the present case. Neither the Oberdorfs nor
Amazon has been able to locate the third-party vendor, The
Furry Gang. Conversely, had there been an incentive for
Amazon to keep track of its third-party vendors, it might have
done so.
The fourth factor also weighs in favor of imposing
strict liability on Amazon. Thus, although the four-factor test
yielded a different result when applied by the Musser court to
an auction house, all four factors in this case weigh in favor
of imposing strict liability on Amazon.39
38
JA267.
39
The dissent contends that the Pennsylvania Supreme
Court’s decision in Cafazzo upended the Commonwealth’s
well-established four-factor analysis, thereby rendering the
Francioni factors secondary to a threshold question of
whether a particular defendant is a supplier/seller of the
product. Cafazzo v. Cent. Med. Health. Servs., Inc., 668 A.2d
521, 525 (Pa. 1995). However, even if we were to assume
that Cafazzo created a threshold issue of whether Amazon is a
seller, we believe, as detailed below, that under Pennsylvania
law, Amazon is in fact a seller, and thus we must proceed to
the Francioni factors.
20
B
We do not rely exclusively upon the four-factor test to
reach our conclusion that Amazon is subject to strict products
liability claims for sales involving third-party vendors. Our
reasoning is consistent with that in other Pennsylvania cases.
Notably, in Hoffman v. Loos & Dilworth, Inc.,40 the
Pennsylvania Superior Court decided that a sales agent was a
“seller” under § 402A, and thus subject to strict product
liability under Pennsylvania law.41 Although Hoffman
predates Musser, its holding remains valid, as neither Musser
nor any subsequent decision by the Pennsylvania Supreme
Court has called Hoffman’s holding into question.42
Moreover, Hoffman addresses Amazon’s main argument:
Amazon claims that it cannot be considered a “seller” because
it does not take title to or possession of the products sold by
third-party vendors. The court held in Hoffman that under
Pennsylvania law a participant in the sales process can be
held strictly liable for injuries resulting from defective
products, even if the participant does not take title or
possession of those products.43
40
452 A.2d 1349 (Pa. Super. 1982).
41
Id. at 1354-55.
42
See Wisniewski v. Johns–Manville Corp., 759 F.2d 271,
273–74 (3d Cir. 1985). (“Although lower state court decisions
are not controlling on an issue on which the highest court of
the state has not spoken, federal courts must attribute
significant weight to these decisions in the absence of any
indication that the highest state court would rule otherwise.”).
43
452 A.2d at 1354-55.
21
Hoffman involved bulk sales of linseed oil. The
manufacturer’s sales agent, E.W. Kaufmann Co., would
transmit orders for linseed oil from the packager to the
distributor. That was Kaufmann’s only role in the sales
process. As part of the summary judgment briefing in
Hoffman, Kaufmann submitted an affidavit from its principal
executive, stating that it did not take title, possession, or
ownership of any of the relevant linseed oil during the
distribution or sales process.44 Nonetheless, the court made
clear that strict liability in Pennsylvania is properly extended
“to anyone ‘who enters into the business of supplying human
beings with products which may endanger the safety of their
persons and property.’”45 Because Kaufmann’s tasks
amounted to being “in the business of selling or marketing
merchandise,” rather than performing a “tangential” role, it
could be held strictly liable for injuries resulting from defects
in that merchandise.46
In reaching this conclusion, the court discussed two
prior Pennsylvania Supreme Court cases, both of which also
inform our judgment that Amazon is subject to strict liability.
The first of these is Francioni v. Gibsonia Truck Corp.,47 in
44
See id. at 1352 n.2 (citing an affidavit stating that, for all
transactions involving the relevant packager, “title passed
directly from [the manufacturer] to [the packager],” and that
“[a]ny oil which [the packager] obtained from [the
manufacturer] at the time in question was never owned by . . .
E.W. KAUFMANN COMPANY.”).
45
Id. at 1353 (citing Restatement (Second) of Torts § 402A,
cmt. f).
46
Id. at 1354.
47
372 A.2d 736 (Pa. 1977).
22
which the Pennsylvania Supreme Court decided that the term
“seller,” as used in § 402A, does not limit strict products
liability to the context of sales; that is to say, the term “seller”
can also extend to lessors and bailors. The court held that
strict products liability should be applied broadly to those
who market products, “whether by sale, lease or bailment, for
use and consumption by the public.”48
Four years later, in Nath v. National Equipment
Leasing Corp.,49 the Pennsylvania Supreme Court declined to
extend the application of strict product liability to financial
lessors because the financial lessor’s “participation in the
chain of events was tangential,” in such a way that it “was not
able to, nor would it have been in a position to, effect or
oversee the safety of the product.”50 The core of the court’s
logic was that “[a] finance lessor is not in the business of
selling or marketing merchandise,” but rather it “is in the
business of circulating funds.”51
In this case, Amazon’s role extends beyond that of the
Hoffman sales agent, who in exchange for a commission
merely accepted orders and arranged for product shipments.
Amazon not only accepts orders and arranges for product
shipments, but it also exerts substantial market control over
product sales by restricting product pricing, customer service,
and communications with customers.52 Amazon’s
involvement, in other words, resembles but also exceeds that
48
Id. at 738.
49
439 A.2d 633 (Pa. 1981).
50
Id. at 636.
51
Id.
52
JA111, JA114, JA154, JA166.
23
of the sales agent labeled a “seller” in Hoffman.
At oral argument, Amazon contended that it should not
be likened to a sales agent because it lists products and
collects payment on behalf of various third-party vendors,
whereas a sales agent typically represents a single seller or
manufacturer. This is a distinction without a difference.
Pennsylvania state courts have repeatedly found that large
retailers who offer a range of different products are “sellers”
within the meaning of § 402A.53 Amazon is not exempted
from strict products liability simply because its website offers
a variety of products.54
53
See, e.g., Barton v. Lowe’s Home Centers, Inc. 124 A.3d
349, 352 (Pa. Super. Ct. 2015) (permitting claim against
Lowes premised on it being a “seller” to proceed past
demurrer stage); Burch v. Sears, Roebuck and Co., 467 A.2d
615, 621, 623 (Pa. Super. Ct. 1983) (holding that Sears is a
“seller,” and reaffirming that, “under our products liability
law, all suppliers of a defective product in the chain of
distribution, whether retailers, partmakers, assemblers,
owners, sellers, lessors, or any other relevant category, are
potentially liable to the ultimate user injured by the defect.”);
see also Restatement (Second) of Torts § 402A, cmt. f (“The
rule stated in this Section applies to . . . any manufacturer of
such a product, to any wholesale or retail dealer or distributor,
and to the operator of a restaurant. It is not necessary that the
seller be engaged solely in the business of selling such
products. Thus the rule applies to the owner of a motion
picture theatre who sells popcorn or ice cream, either for
consumption on the premises or in packages to be taken
home.”).
54
The dissent characterizes Hoffman as a “narrow exception”
24
C
Amazon’s remaining arguments similarly fail to
demonstrate that it is not subject to strict product liability in
Pennsylvania.
For example, Amazon asks that we look to dictionary
definitions of the word “seller” for support. However,
comment f to § 402A makes clear that the term “seller” is not
to the general rule that a “‘seller’ in Pennsylvania is almost
always an actor who transfers ownership from itself to the
customer.” Even assuming arguendo that Hoffman represents
an “exception,” Amazon falls within said exception, which
Pennsylvania courts have never labeled as “narrow.” The
dissent claims that the Hoffman exception applies only to
“exclusive sales representatives or exclusive agents,” with
“exclusive agents” often considered sellers because the agent
(1) “trafficks intimately in [the products],” Bumbaugh, 152
A.D.2d at 72, and (2) is “bound by its exclusive sales
representative contract to promote the sale of [the] products.”
Bittler, 560 N.E.2d at 982. The dissent concludes that
because Amazon does not have any “exclusive” franchise in
the sale of third-party products, it “clearly does not fit this
description.” There is one problem with the dissent’s
description of the so-called Hoffman exception: Nowhere in
Hoffman does it state that the sales agent, E.W. Kaufmann
Company, was an “exclusive” agent for the manufacturer. To
the contrary, E.W. Kaufmann’s ostensibly non-exclusive role
as sales agent was nearly identical to that of Amazon: It
received orders for the product on behalf of a third-party
manufacturer and transmitted the orders to be fulfilled, never
taking any right to possession or title.
25
limited by its dictionary definition, as it “applies to any
manufacturer of such a product, to any wholesale or retail
dealer or distributor, and to the operator of a restaurant.”55
Amazon contends that we should construe “seller” as a person
who transfers a thing that she owns to another in exchange for
something of value, usually money. This concept runs
squarely against Pennsylvania case law that does not require
an actor to possess or hold title to an item in order to be
considered a “seller” for purposes of § 402A.56
Amazon also relies heavily on non-controlling case
law from jurisdictions other than Pennsylvania. However, in
deciding whether Amazon is a “seller” within the meaning of
§ 402A, we must predict what the Pennsylvania Supreme
Court would decide under Pennsylvania law interpreting the
Second Restatement of Torts.57 It is of little consequence
whether Amazon is a “seller” for purposes of other states’
statutes, as each of those statutory schemes is based on
distinct language and policy considerations.58
55
Restatement (Second) of Torts § 402A, cmt. f.
56
See e.g., Hoffman, 452 A.2d at 1349.
57
Berrier v. Simplicity Mfg., Inc., 563 F.3d 38, 45–46 (3d Cir.
2009) (“In the absence of a controlling decision by the
Pennsylvania Supreme Court, a federal court applying that
state’s substantive law must predict how Pennsylvania’s
highest court would decide this case.”).
58
The dissent also cites approvingly to out-of-jurisdiction
case law determining that Amazon was not subject to strict
liability as a “seller.” In particular, the dissent highlights
cases from the Fourth Circuit, Sixth Circuit, Southern District
of New York, and Northern District of Illinois, none of which
should shape our analysis here. See Erie Ins. Co. v.
26
Amazon.com, No. 18-1198, 2019 WL 2195146 (4th Cir. May
22, 2019); Fox v. Amazon, No. 18-5661, 2019 WL 2417391
(6th Cir. June 10, 2019); Eberhart v. Amazon, Inc., 325 F.
Supp. 3d 393 (S.D.N.Y. 2018); Garber v. Amazon.com, Inc.,
No. 17 C 673, 2019 WL 1437877 (N.D. Ill. Mar. 31, 2019).
The Fourth Circuit case made clear that its holding turned in
large part on a provision of the Maryland Uniform
Commercial Code, which, of course, has no effect on
Pennsylvania law. See Erie Ins. Co., 2019 WL 2195146, at
*4 (citing § 2-103(1)(d) of the Maryland Code of Commercial
Law as a basis for its holding because it defines a “sale” as
“the passing of title from the seller to the buyer for a price”).
Moreover, as Judge Motz noted in her concurrence in that
case, as a federal court sitting in diversity, “[g]iven the
policy-intensive nature of this inquiry, the lack of on-point
Maryland precedent, and Amazon’s novel business model,”
one could not “confidently predict that Maryland courts
would treat Amazon as a seller under state law.” Id. at *7.
The Sixth Circuit case was explicitly based on a Tennessee
statute that applied a different test than that of § 402A of the
Second Restatement, namely, whether an “individual [was]
regularly engaged in exercising sufficient control over a
product in connection with its sale.” Fox, 2019 WL 2417391,
at *7. Under Pennsylvania law, on the other hand, we apply
the Francioni factors, none of which parallel the apparently
single-factor Tennessee test for “sufficient control.” Id. In
the New York case, the federal district court noted that under
New York law, a distributor cannot be held strictly liable for
product defects unless it “at some point, own[ed] the
defective product.” Eberhart, 325 F. Supp. 3d at 398. And in
the Illinois case, the district court noted that prior state cases
appeared to require an “exclusivity” arrangement where an
27
Therefore, having concluded that Amazon should be
considered a “seller” under § 402A of the Second
Restatement of Torts, we hold that under Pennsylvania law,
Amazon is strictly liable for consumer injuries caused by
defective goods purchased on Amazon.com.
IV
The second issue in this appeal is whether Oberdorf’s
claims, both for negligence and for strict liability, including
failure to provide adequate warnings regarding the use of the
dog collar, are barred by § 230 of the CDA.59 Unlike the first
issue, this is a question of federal law. We conclude that the
CDA bars some, but not all, of Oberdorf’s claims.
The CDA states, in relevant part, that “[n]o provider or
user of an interactive computer service shall be treated as the
publisher or speaker of any information provided by another
alleged seller was not involved in transferring title. Garber,
2019 WL 1437877, at *7 (“The [plaintiffs] have not presented
any evidence that Amazon purported to be the exclusive seller
of Shenzhen hoverboards.”). As noted above, in
Pennsylvania, a party involved in the sales process need not
own the defective product or have an exclusivity arrangement
with the manufacturer to be strictly liable for product defects.
See, e.g., Hoffman, 452 A.2d 1349. Therefore, we do not
believe these non-precedential, out-of-circuit cases should
guide our reasoning. Our task is strictly limited to
determining what the Pennsylvania Supreme Court would do
pursuant to Pennsylvania law.
59
See 47 U.S.C. § 230.
28
information content provider.”60 This section, sometimes
referred to as the CDA “safe harbor provision,”61 “precludes
courts from entertaining claims that would place a computer
service provider in a publisher’s role, and therefore bars
lawsuits seeking to hold a service provider liable for its
exercise of a publisher’s traditional editorial functions—such
as deciding whether to publish, withdraw, postpone, or alter
content.”62 The CDA is intended to allow interactive
computer services companies “to perform some editing on
user-generated content without thereby becoming liable for
all defamatory or otherwise unlawful messages that they
didn’t edit or delete.”63
The CDA safe harbor provision was passed by
Congress in the wake of a controversial New York state court
decision allowing defamation claims to proceed against a
website host.64
The crux of Amazon’s argument is that Oberdorf’s
negligence and strict liability claims are barred because she
seeks to treat Amazon as the publisher or speaker of material
provided by The Furry Gang, an information content
60
47 U.S.C. § 230(c)(1).
61
See, e.g., Zango, Inc. v. Kaspersky Lab, Inc., 568 F.3d
1169, 1170 (9th Cir. 2009).
62
Green v. America Online, 318 F.3d 465, 471 (3d Cir. 2003)
(citations omitted).
63
Fair Housing Council of San Fernando Valley v.
Roommates.com, LLC, 521 F.3d 1157, 1163 (9th Cir. 2008)
(en banc).
64
See Stratton Oakmont, Inc. v. Prodigy Servs. Co., No.
31063/94, 1995 WL 323710 (N.Y. Sup. Ct. May 24, 1995).
29
provider.65 Amazon contends Oberdorf’s claims are
essentially that Amazon should be held liable for letting The
Furry Gang post the offer for the dog collar and for failing to
police that offer once it was posted. Oberdorf, on the other
hand, asserts that her claims do not pertain to Amazon’s role
in publishing third-party information but rather to its direct
role in the actual sale and distribution of the defective
product. That is true to a point but Oberdorf also contends
that Amazon should have revised the content provided to
include warnings to ensure the safe use of the dog collar. The
question that we must answer is “Would such an addition to
the content be part of the editorial function of the Amazon
website?”
Courts throughout the country have interpreted the
CDA safe harbor provision broadly.66 Turning first to our
Court, in Green v. America Online,67 the plaintiff alleged that
AOL had failed to properly police its chat rooms to prevent a
third party from posting defamatory content that caused the
plaintiff emotional distress.68 We held that the CDA safe
harbor provision barred the plaintiff’s claims because he was
“attempt[ing] to hold AOL liable for decisions relating to the
monitoring, screening, and deletion of content from its
65
See 47 U.S.C. § 230(c)(1). “The term ‘information content
provider’ means any person or entity that is responsible, in
whole or in part, for the creation or development of
information provided through the Internet or any other
interactive computer service.” Id. § 230(f)(3).
66
See Jane Doe No. 1 v. Backpage.com, LLC, 817 F.3d 12, 19
(1st Cir. 2016) (collecting federal appellate cases).
67
318 F.3d 465 (3d Cir. 2003).
68
Id. at 469.
30
network—actions quintessentially related to a publisher’s
role.”69
Other federal appellate courts have addressed related
questions. For example, the First Circuit barred sex
trafficking claims against a classified advertisement website
because the allegations centered on the website’s role in
failing to regulate third-party content that led to the plaintiffs’
injuries.70 The Fifth Circuit barred negligence claims alleging
that an online social network took insufficient precautions to
prevent a fifteen-year-old teenager from lying about her age,
thereby leading to her being contacted and sexually
assaulted.71 The Seventh Circuit barred housing
discrimination claims against an online message board for
permitting discriminatory posts.72
These cases demonstrate that claims are precluded
whenever “the duty that the plaintiff alleges the defendant
violated derives from the defendant’s status or conduct as a
‘publisher or speaker.’”73 Nonetheless, courts have refused to
extend the scope of the CDA safe harbor provision “to
immunize a party’s conduct outside the realm of the Internet
just because it relates to the publishing of information on the
69
Id. at 471.
70
Jane Doe No. 1 v. Backpage.com, LLC, 817 F.3d 12, 22
(1st Cir. 2016).
71
Doe v. MySpace, Inc., 528 F.3d 413, 420 (5th Cir. 2008).
72
Chicago Lawyers’ Comm. for Civil Rights Under Law, Inc.
v. Craigslist, Inc., 519 F.3d 666, 672 (7th Cir. 2008), as
amended (May 2, 2008).
73
Barnes v. Yahoo!, Inc., 570 F.3d 1096, 1102 (9th Cir.
2009), as amended (Sept. 28, 2009).
31
Internet.”74 In Barnes v. Yahoo!, Inc.,75 for example, the
Ninth Circuit barred the plaintiff’s negligence claims against
Yahoo for failing to remove posts by her ex-boyfriend
containing nude photographs of her. However, the court held
that the CDA safe harbor provision did not immunize Yahoo
against the plaintiff’s related promissory estoppel claim,
which was based on Yahoo’s promise to remove the injurious
content rather than on any editorial function.76
While we recognize that Amazon exercises online
editorial functions, we do not agree that all of Oberdorf’s
claims seek to treat Amazon as the publisher or speaker of
information provided by another information content
provider. As previously discussed, Amazon is a “seller” of
products on its website, even though the products are sourced
and shipped by third-party vendors such as The Furry Gang.77
Amazon’s involvement in transactions extends beyond a mere
editorial function; it plays a large role in the actual sales
process. This includes receiving customer shipping
information, processing customer payments, relaying funds
and information to third-party vendors, and collecting the fees
it charges for providing these services.
Therefore, to the extent that Oberdorf’s negligence and
strict liability claims rely on Amazon’s role as an actor in the
sales process, they are not barred by the CDA. However, to
the extent that Oberdorf is alleging that Amazon failed to
74
Fed. Trade Comm’n v. Accusearch Inc., 570 F.3d 1187,
1206 (10th Cir. 2009) (Tymkovich, J., concurring).
75
570 F.3d 1096 (9th Cir. 2009).
76
Id. at 1107–09.
77
See supra Part III.
32
provide or to edit adequate warnings regarding the use of the
dog collar, we conclude that that activity falls within the
publisher’s editorial function. That is, Amazon failed to add
necessary information to content of the website. For that
reason, these failure to warn claims are barred by the CDA.
Because the District Court did not parse Oberdorf’s
claims in order to distinguish between “failure to warn”
claims and claims premised on other actions or failures in the
sales or distribution processes, we will vacate its holding that
Oberdorf’s claims are barred by the CDA. To the extent that
Oberdorf’s claims rely on allegations relating to selling,
inspecting, marketing, distributing, failing to test, or
designing, they pertain to Amazon’s direct role in the sales
and distribution processes and are therefore not barred by the
CDA safe harbor provision.78 Those claims will be remanded
to the District Court.
V
For the above reasons, we hold that (1) Amazon is a
“seller” for purposes of § 402A of the Second Restatement of
Torts and thus subject to the Pennsylvania strict products
liability law, and (2) Oberdorf’s claims against Amazon are
not barred by § 230 of the CDA except as they rely upon a
78
The Fourth Circuit has similarly held that the CDA does
not insulate Amazon against claims based on its participation
in the sale of a defective product. See Erie Ins. Co., 2019 WL
2195146, at *3 (“While the Communications Decency Act
protects interactive computer service providers from
liability as a publisher of speech, it does not protect them
from liability as the seller of a defective product.”).
33
“failure to warn” theory of liability. We will therefore affirm
the dismissal under the CDA of the failure to warn claims.
We will vacate the remainder of the judgment of the District
Court and remand this matter for further proceedings
consistent with this opinion.
34
Oberdorf v. Amazon, Inc., No. 18-1041
SCIRICA, Circuit Judge, concurring in part and dissenting in
part.
This case implicates an important yet relatively
uncharted area of law. No Pennsylvania court has yet examined
the product liability of an online marketplace like Amazon’s
for sales made by third parties through its platform. Our task,
as a federal court applying state law, is to predict how the
Pennsylvania Supreme Court would decide the case. Berrier v.
Simplicity Mfg., Inc., 563 F.3d 38, 45 (3d Cir. 2009). We must
take special care “to apply state law and not . . . to participate
in an effort to change it.” McKenna v. Ortho Pharm. Corp.,
622 F.2d 657, 663 (3d Cir. 1980) (internal citation omitted). In
my view, well-settled Pennsylvania products liability law
precludes treating Amazon as a “seller” strictly liable for any
injuries caused by the defective Furry Gang collar.
The plaintiffs weigh in detail policy reasons for
allowing them to sue Amazon. Plaintiffs’ theory would
substantially widen what has previously been a narrow
exception to the typical rule for identifying products liability
defendants sufficiently within the chain of distribution. A
“seller” in Pennsylvania is almost always an actor who
transfers ownership from itself to the customer, something
Amazon does not do for Marketplace sellers like The Furry
Gang.1 For similar reasons, every court to consider the question
thus far has found Amazon Marketplace not a “seller” for
1
For purposes of this opinion, “ownership” includes, in
addition to legal title, other rights to possess such as lease and
bailment.
products liability or other purposes; several of those courts
have done so under products liability regimes similar to
Pennsylvania’s.2 For these reasons, I respectfully dissent from
2
For determination under Restatement-derived common
law definition of “seller,” see Erie Ins. Co. v. Amazon.com,
Inc., 925 F.3d 135, 141–42 (4th Cir. May 22, 2019) (under
Maryland common law of products liability, Amazon was not
a seller of a third-party seller’s product because it never held
title to the product); Garber v. Amazon.com, Inc., --- F. Supp.
3d ---, 2019 WL 1437877, at *8 (N.D. Ill. Mar. 31, 2019)
(under Illinois common law, Amazon Marketplace was not
within the “chain of distribution” of a third-party seller’s
product, nor did it “play an integral role in the marketing
enterprise” such that policy considerations would justify
extending liability outside the chain of distribution) (internal
citations omitted); Eberhart v. Amazon.com, Inc., 325 F. Supp.
3d 393, 398 (S.D.N.Y. 2018) (under New York common law,
Amazon Marketplace was not a seller because it was not within
the product’s “chain of distribution”). For determination under
state common law doctrine and under state statutes whose
definitions of “seller” are inconclusive, requiring consideration
of common law principles, see Fox v. Amazon.com, Inc., ---
F.3d ---, 2019 WL 2417391, at *7 (6th Cir. June 10, 2019)
(interpreting ambiguously defined Tennessee statutory term
“seller” to include “any individual regularly engaged in
exercising sufficient control over a product in connection with
its sale, lease, or bailment, for livelihood or gain” but holding
Amazon Marketplace did not meet this definition); Carpenter
v. Amazon.com, Inc., No. 17-3221, 2019 WL 1259158, at *5
(N.D. Cal. Mar. 19, 2019) (under California law, Amazon
Marketplace was not subject to strict liability because it was
2
the majority’s disposition of the claims not barred by the
Communications Decency Act (CDA).
I.
Amazon is a multinational technology company.
Among other ventures, it hosts online sales. Products are
offered for sale at Amazon.com in three primary ways. First,
not “integral to the business enterprise and a necessary factor
in bringing the product to market”); Allstate N.J. Ins. Co. v.
Amazon.com, Inc., No. 17-2738, 2018 WL 3546197, at *6–7
(D.N.J. July 24, 2018) (Amazon Marketplace was not a seller
under New Jersey statutory definition encompassing “any
person who, in the course of business conducted for that
purpose: sells . . . or otherwise is involved in placing a product
in the line of commerce”) (internal citation omitted); Stiner v.
Amazon.com, Inc., 120 N.E.3d 885, 891 (Ohio Ct. App. 2019)
(Amazon Marketplace was not a seller under Ohio statutory
definition encompassing “[a] person that, in the course of a
business conducted for the purpose, sells . . . or otherwise
participates in the placing of a product in the stream of
commerce”) (internal citation omitted); see also Milo & Gabby
LLC v. Amazon.com, Inc., 693 F. App’x 879, 885 (Fed. Cir.
2017) (Amazon Marketplace was not a “seller” under the
Copyright Act, 17 U.S.C. § 106); McDonald v. LG Elecs. USA,
Inc., 219 F. Supp. 3d 533, 541–42 (D. Md. 2016) (dismissing
a Maryland-law negligence claim against Amazon); Inman v.
Technicolor USA, Inc., No. 11-666, 2011 WL 5829024, at *6
(W.D. Pa. Nov. 18, 2011) (holding, under Pennsylvania
products liability law, eBay was not a “seller” because eBay
was not “anything more than an online forum where sellers . .
. may peddle their wares to buyers”).
3
Amazon sources, sells, and ships some products as seller of its
own goods. Second, third-party sellers sell products through
Amazon Marketplace “fulfilled by Amazon,” purchasing
Amazon’s services in storing and shipping their products.
Third, at issue here, third-party sellers sell products through
Amazon Marketplace without additional “fulfillment”
services. These sellers, like The Furry Gang, supply and ship
products directly to consumers without ever placing the items
in Amazon’s possession.
Amazon Marketplace has grown enormously in recent
years. Over a million businesses of all sizes sell products on
Amazon Marketplace, according to Amazon’s own figures,
and “small and medium-sized businesses selling in Amazon’s
stores now account for 58 percent of [Amazon’s] sales.”
Amazon, 2019 Amazon SMB Impact Report 1, 3,
https://d39w7f4ix9f5s9.cloudfront.net/61/3b/1f0c2cd24f37b
d0e3794c284cd2f/2019-amazon-smb-impact-report.pdf (last
accessed June 17, 2019). These businesses and their products
are diverse: a recent profile of highly successful Amazon
Marketplace sellers included businesses offering beauty
products, indoor gardening kits, and an educational toy
teaching coding. Kiri Masters, 4 Companies Founded By
Millennials That Are Making Millions on Amazon, Forbes
(Aug. 9, 2018), http://www.forbes.com/sites/kirimasters/
2018/08/09/4-companies-founded-by-millennials-who-are-
selling-millions-on-amazon. Amazon Marketplace and other
online platforms give consumers the ability to buy from small
and large businesses whose products they may never have
encountered in an ordinary physical store.
Amazon envisions its Marketplace as an open one. It
reserves the right to remove sellers’ listings or terminate
4
Marketplace services for any reason and requires sellers to
represent they are in good legal standing, but it does not apply
a general vetting process to all sellers to identify those who do
not in fact meet that standard. Amazon also does not narrow
the Marketplace’s offerings by limiting the number of sellers
who may offer each type of product: any number of sellers may
register. In displaying products to customers, Amazon
distinguishes products sold through the Marketplace from
those sold directly by Amazon, identifying the seller
responsible for the item in a “sold by” line placed prominently
next to the price and shipping information. App. 211. The
seller’s name also appears on the order confirmation page,
before the customer clicks “place your order” to finalize the
purchase. Id. Amazon’s conditions of use for customers affirm
the distinction, explaining, in Amazon Marketplace purchases
from third-party sellers, “you are purchasing directly from
those third parties, not from Amazon. We are not responsible
for examining or evaluating, and we do not warrant, the
offerings of any of these businesses or individuals.” Appellee’s
Br. 4 (citing Amazon, Conditions of Use,
http://www.amazon.com/gp/help/customer/display.
html/ref=footer %20cou?ie=UTF8&nodeId=508088 (last
updated May 21, 2018)).
A customer on Amazon Marketplace buys a product
that has been chosen, sourced, and priced by the third-party
seller. The seller contractually commits to “ensure that [it is]
the seller of each of [its] Products” listed for sale. App. 164. In
exchange for Amazon’s services including listing the product
and managing payments, the seller is charged a monthly fee, as
well as a referral fee of a percentage of each sale made. The
relationship reflected in the agreement between Amazon and
the seller is one of “independent contractors.” Id. at 270. The
5
agreement specifically disclaims other potential relationships:
it does not mean to create relationships of “partnership, joint
venture, agency, franchise, sales representative, or
employment,” nor does it create an “exclusive relationship”
constraining either Amazon or the third-party seller from other
sales relationships. Id.
For each new listing a seller creates, the seller identifies
the product it plans to sell, designates a price, and writes a
product description. Amazon requires the description include
certain minimum information about the product, and requires
the seller to offer a price as favorable as the one it offers in any
other sales channels. Amazon also automatically formats the
information provided into a product listing page matching
others on the Marketplace, and it sometimes modifies listings
to streamline user experience: for example, by grouping
together the pages of multiple sellers who offer the identical
product sourced in different ways. The seller may choose to
offer, or not to offer, a warranty on its product. Regardless, the
agreement makes the seller “responsible for any
nonconformity or defect in, or any public or private recall of,
any of [its] products.” Id. at 173.
II.
When a product is sold on Amazon Marketplace, the
third-party seller offering the product for sale, as well as the
product’s original manufacturer, may each be sued in product
liability if the product is defective. This case raises the question
whether Amazon, too, can be liable as a “seller” of such a
product, because of the assistance it gives to the third-party
seller that provided the product to the customer. Plaintiffs
answer this question in part by invoking a set of four policy
6
factors laid out in Francioni v. Gibsonia Truck Corp., 372 A.2d
736, 739 (Pa. 1977). For the reasons I discuss in Part III, the
Francioni factors should come second to an analysis under
Pennsylvania law of the defendant’s role in supplying the
product. See Cafazzo v. Cent. Med. Health Servs., 668 A.2d
521, 523 (Pa. 1995). I begin, instead, with the definition of
“seller” under Pennsylvania law.
A.
A seller under Pennsylvania product liability law is one
“engaged in the business of selling . . . a product.” Id. at 523
(quoting Restatement (Second) of Torts § 402A(1)(a) (Am.
Law Inst. 1965)). In nearly all cases, “selling” entails
something Amazon does not do for Marketplace products:
transferring ownership, or a different kind of legal right to
possession, from the seller to the customer. Thus, in
Pennsylvania, sellers include traditional wholesalers and
retailers, as well as those who supply a product through a
transaction other than a sale. See, e.g., Chelton v. Keystone
Oilfield Supply Co., 777 F. Supp. 1252, 1256 (W.D. Pa. 1991)
(wholesaler); Burch v. Sears, Roebuck & Co., 467 A.2d 615,
618 (Pa. Super. Ct. 1983) (retailer); Francioni, 372 A.2d at
739–40 (lessor); Villari v. Terminix Int’l, Inc., 663 F. Supp.
727, 730–31 (E.D. Pa. 1988) (pest control company supplying
insecticide as part of service). Though varied, each of these
cases holds liable a “seller” who transferred the right to possess
the product from itself to the customer.
Transfer of a right to possession is so typical to
“sellers” that exceptions are rare. There is one primary
exception in Pennsylvania caselaw: the “manufacturer’s
representative.” See Hoffman v. Loos & Dilworth, Inc., 452
7
A.2d 1349, 1351 (Pa. Super. Ct. 1982). Hoffman reversed a
grant of summary judgment for the defendant and held a
“manufacturer’s representative” could be strictly liable. Id. at
1354–55. A manufacturer’s representative, also termed “sales
agent” or “manufacturer’s agent,” is a salesperson who helps a
manufacturer expand sales by representing a product, usually
in a particular region for a period of time, promoting the
product to retailers or directly to customers.3 After evaluating
this uniquely involved retail role, the Superior Court of
Pennsylvania concluded it was much more than “tangential,”
and the sales agent could be held liable as a seller. Id. at 1354.
But in no other scenario has a Pennsylvania court
imposed “seller” liability on a defendant whose role in the sale
did not include transferring ownership or possession of the
product. For example, the Pennsylvania Supreme Court
considered and rejected “seller” liability for an auctioneer who
“never owned, operated or controlled the equipment which was
to be auctioned.” Musser v. Vilsmeier Auction Co., 562 A.2d
279, 279 (Pa. 1989). As the court explained, in auctioning off
a product owned and controlled by the third-party seller, “[t]he
3
See A Dictionary of Business and Management 377
(Jonathan Law ed., 6th ed. 2016) (defining “manufacturer’s
agent” as “[a] commission agent who usually has a franchise
to sell a particular manufacturer’s products in a particular
country or region for a given period”); Charles Cohon, Top
Considerations When Hiring Manufacturers’ Reps,
Manufacturers’ Agents National Association,
http://www.manaonline.org/manufacturers/topconsiderations-
when-hiring-manufacturers-reps (last visited May 9, 2019)
(describing manufacturer’s representatives as a kind of
“outsource[d] . . . sales force”).
8
auction company merely provided a market as the agent of the
seller. . . . Selection of the products was accomplished by the
bidders, on their own initiative and without warranties by the
auction company.” Id. at 282. The auction company’s
significant role in assisting the sale was nonetheless
“tangential” to the core of the transaction, the exchange
between the buyer and third-party seller. Id. Similarly
“tangential” was the role of the financer of a sale, who,
although technically temporary owner and lessor of the
supplied product, participated only by “offering the use of
money.” Nath v. Nat’l Equip. Leasing Corp., 439 A.2d 633,
636 (Pa. 1981) (quoting Francioni, 372 A.2d at 740 n.3).
Pennsylvania courts would not hold liable as sellers such
tangential actors as shopping malls renting space to retailers,
credit card companies that enable sales transactions, or
newspapers or websites hosting classified ads. See generally 3
Summ. Pa. Jur. 2d Torts § 41:61 (2d ed. 1998).
Amazon Marketplace, like the auctioneer in Musser,
takes an important part in assisting sales, but is “tangential” to
the actual exchange between customer and third-party seller.
562 A.2d at 282. Like an auctioneer, Amazon Marketplace
provides the “means of marketing” to a third-party seller who
accomplished the “fact of marketing” when it “chose the
products and exposed them for sale.” Id. (citing Francioni, 372
A.2d at 738). Amazon Marketplace’s services to any individual
seller for an individual product are not “undertaken
specifically,” but rather, as with the auctioneer, provided on
essentially similar terms to a large catalogue of sellers. Id.; see
id. at 282 n.3. And like an auctioneer, Amazon Marketplace
never owns, operates, or controls the product when it assists in
a sale. See id. at 279.
9
Amazon Marketplace’s similarities to the auctioneer
emphasize it has little in common with Hoffman’s
manufacturer’s representative, the only kind of “seller” held
liable despite not having made a transfer of ownership or
possession rights. Hoffman, 452 A.2d at 1354. Amazon
Marketplace does not offer the co-strategizing relationship
promised by manufacturers’ representatives. Amazon
Marketplace is not an outsourced sales force working with
individual manufacturers to boost sales: it offers a marketing
platform, and it is up to the third-party seller to make best use
of the platform to maximize sales.
Under Pennsylvania law, then, Amazon was not the
seller of The Furry Gang’s product and therefore is not liable
for any product defect. Because established Pennsylvania law
precludes holding Amazon strictly liable here, I respectfully
dissent.
B.
While Pennsylvania law alone dictates this outcome, it
is reinforced by “analogous decisions” and “other reliable
data.” McKenna, 622 F.2d at 663. Pennsylvania courts have yet
to consider whether Amazon is strictly liable for defective
products sold through its Marketplace. So just like a
Pennsylvania court would, I consider relevant decisions from
other jurisdictions. These sources, including two federal
appellate decisions so far, confirm what Pennsylvania law
already makes clear. Amazon’s role in assisting a product’s
sale does not make it that product’s “seller.”
The Sixth Circuit found Amazon Marketplace was not
a “seller” after consulting a variety of sources to clarify the
10
term’s expansive but ambiguous meaning within the Tennessee
Products Liability Act. Fox v. Amazon.com, Inc., --- F.3d ---,
2019 WL 2417391, at *5–7 (6th Cir. June 10, 2019). The
Tennessee statute defines “seller” as “any individual or entity
engaged in the business of selling a product,” including a
“retailer,” “wholesaler,” “distributor,” “lessor,” or “bailor.”
Tenn. Code Ann. § 29-28-102(7) (West 2012). Considering
and rejecting a more “limited construction” proposed by
Amazon, Fox, 2019 WL 2417391, at *5, the court interpreted
this definition to include not only those who transfer title, but
“any individual regularly engaged in exercising sufficient
control over a product in connection with its sale, lease, or
bailment, for livelihood or gain,” id. at *7. The court
nonetheless found Amazon Marketplace did not fall within
even this more expansive definition. The court held Amazon
did not exercise sufficient control to be the product’s “seller”
because Amazon “did not choose to offer the [product] for sale,
did not set the price of the [product], and did not make any
representations about the safety or specifications of the
[product] on its marketplace.” Id. at *7. It noted that, as in this
case, Amazon did not fulfill the product and therefore never
possessed it or shipped it to the customer. Id.
Even where Amazon Marketplace did fulfill the product
at issue, the Fourth Circuit held Amazon was not the product’s
“seller” under Maryland common law. Erie Ins. Co. v.
Amazon.com, Inc., 925 F.3d 135, 144 (4th Cir. May 22, 2019).4
4
In Maryland, as in Pennsylvania, product liability is
governed by common law. See Maryland State Bar
Association, Maryland Product Liability Law § 1.1 (2d ed.
2003). Contrary to the majority’s characterization, the court’s
11
In that case, unlike this one, Amazon “fulfilled” the product by
storing it prior to sale then shipping it to the customer. The
court held Amazon Marketplace was not a seller because,
despite its role in “fulfilling” the sale, it never performed the
basic act of sale: it did not “transfer title to purchasers of [the
product] for a price.” Id. at 141. The court explained, relying
in part on Pennsylvania precedent, those who “own . . . the
products during the chain of distribution are sellers,” while
those who “render services to facilitate that distribution or
sale[] are not sellers.” Id. (citing Musser, 562 A.2d at 283).
Amazon, because it only rendered services and did not transfer
ownership, was not a seller. Id. at 144.5 Here, Amazon played
an even more limited role: it neither stored nor shipped the
product.
Other federal courts have reached the same outcome.
Courts have declined to treat Amazon Marketplace as a “sales
agent,” as plaintiffs ask us to do. In dismissing a products
liability lawsuit against Amazon essentially identical to this
decision in Erie did not turn on a Maryland statute, but rather
consulted a potentially analogous statutory provision alongside
other sources including dictionary definitions and out-of-state
persuasive authority to infer the common law meaning of
“seller.” 925 F.3d at 141.
5
Maryland differs from Pennsylvania in declining to hold
liable those who transfer possession through a transaction other
than a sale, such as lessors and bailors. See Maryland Product
Liability Law § 4.8. For that reason, the Erie court defined
“sellers” as transferors of title and did not discuss transfer of
another kind of right to possess the product. 925 F.3d at 141.
Because no such non-sale transaction is at issue in this case,
however, Maryland and Pennsylvania law are analogous, and
Erie’s analysis is informative.
12
one, the District Court for the Southern District of New York
considered a New York case that, like Pennsylvania’s Hoffman
decision, held a sales agent liable as a “seller.” Eberhart v.
Amazon.com, Inc., 325 F. Supp. 3d 393, 398–99 (S.D.N.Y.
2018) (citing Brumbaugh v. CEJJ, Inc., 547 N.Y.S.2d 699,
700–01 (App. Div. 3d Dep’t 1989)); see Hoffman, 452 A.2d at
1354. The court found Brumbaugh exceptional and of no help
in establishing liability against Amazon. Eberhart, 325 F.
Supp. 3d at 398–99. It reasoned, among New York cases
holding defendants liable as sellers, “the vast majority of
opinions” involve a defendant who did “at some point, own the
defective product.” Id. at 398. And while Brumbaugh’s sales
agent, given its exclusive role in connecting the manufacturer
with local distributors, was “a mandatory link in [the]
distributive chain,” id. at 399 (quoting Brumbaugh, 547
N.Y.S.2d at 701), the court found Amazon Marketplace’s role
in merely “facilitating purchases” did not rise to this level. Id.
The Northern District of Illinois adopted similar
reasoning in rejecting Amazon’s liability. Garber v.
Amazon.com, Inc., --- F. Supp. 3d ---, 2019 WL 1437877, at *7
(N.D. Ill. Mar. 31, 2019). The court identified and analyzed the
few Illinois cases in which parties who never owned the
product were nonetheless held liable. It found Amazon
Marketplace resembled neither a manufacturer’s
representative, nor a broker who made direct agreements with
customers to sell the product and held exclusive rights to do so.
Id. at *7–9 (discussing Hammond v. N. Am. Asbestos Corp.,
454 N.E.2d 210, 216 (Ill. 1983), and Bittler v. White & Co.,
560 N.E.2d 979, 981 (Ill. App. Ct. 1990)). Amazon was not
liable for third-party sales because “[the third-party seller], not
Amazon, owned the [product], sourced it and listed it for sale
on Amazon’s marketplace, and sold and shipped it directly to
13
the [customers].” Id. at *7. Moreover, unlike the more involved
defendants held to be sellers, Amazon’s “‘major role’ was
providing a venue and marketplace for third-party sellers . . .
to connect with buyers.” Id. at 8.6 This consensus among courts
analyzing common law analogous to Pennsylvania’s confirms
that Amazon’s limited role in Marketplace sales does not make
it a “seller” liable for defective products.
The Third Restatement of Torts’ § 20, defining “seller,”
captures state law trends in Pennsylvania, common also to New
York, Illinois, and other states, as federal courts considering
product liability suits against Amazon Marketplace have noted.
See Restatement (Third) of Torts: Prod. Liab. § 20 (Am. Law
Inst. 1998); see also, e.g., Eberhart, 325 F. Supp. 3d at 398 &
n.4 (finding its conclusion against product liability for Amazon
Marketplace “reinforced” by § 20, though New York had not
adopted the provision). Although the Supreme Court of
Pennsylvania has not yet had occasion to consider § 20, the
provision’s incremental clarification of existing law, fully
consistent with Pennsylvania case law, is the kind of guidance
the Pennsylvania Supreme Court would likely find
informative.
6
See also Allstate N.J. Ins. Co. v. Amazon.com, Inc., No.
17-2738, 2018 WL 3546197, at *5–12 (D.N.J. July 24, 2018)
(Amazon Marketplace did not resemble a broker who
exercised control over a product by taking title to it; it instead
resembled a broker who never exercised control and was thus
not a “seller”); Stiner v. Amazon.com Inc., 120 N.E.3d 885, 892
(Ohio Ct. App. 2019) (distinguishing Amazon Marketplace
from the consignee who took possession of an item before
putting it up for auction; Amazon Marketplace more closely
resembled the auctioneer and was thus not a “seller”).
14
In explaining the parameters of seller liability, § 20
reinforces and builds on the Second Restatement’s analogous
definition. Under the Second Restatement, a seller is one who
is “engaged in the business of selling products for use or
consumption.” Restatement (Second) of Torts § 402A cmt. f.
This definition distinguishes the non-liable occasional seller
from the liable regular seller, but it offers no help in
determining what kind of involvement in a sale might be
considered selling. The Third Restatement analyzes
intervening case law to specify that a seller is one who
“transfers ownership . . . either for use or consumption,” or,
alternately, one who “otherwise distributes a product” by
providing that product “in a commercial transaction other than
a sale.” Restatement (Third) of Torts: Prod. Liab. § 20.7
Amazon Marketplace does not transfer ownership of third-
party products, so it is not a seller. In its commentary, the Third
Restatement also addresses the situation of businesses
participating in a sale who do not themselves do the work of
transferring title. These actors are “product distribution
facilitators,” meaning those “[p]ersons assisting or providing
services to product distributors, while indirectly facilitating the
commercial distribution of products.” Id. cmt. g. In general,
product distribution facilitators are not liable as sellers. Id.
7
In defining “one who otherwise distributes a product,”
the provision further specifies, “[c]ommercial nonsale product
distributors include, but are not limited to, lessors, bailors, and
those who provide products to others as a means of promoting
either the use or consumption of such products or some other
commercial activity.” Restatement (Third) of Torts: Prod.
Liab. § 20. No such nonsale distributor is at issue in this case
because the relevant transaction was a sale.
15
reporter’s note g (citing Musser, 562 A.2d at 283). Amazon
Marketplace fits the description of a product distribution
facilitator, so it would not qualify as a seller.
The Third Restatement includes the Hoffman exception
to the general rule for product distribution facilitators:
exclusive sales representatives or exclusive agents are often
considered sellers because the agent “trafficks intimately in
[the products],” Brumbaugh, 547 N.Y.S.2d at 701, and is
“bound by its exclusive sales representative contract . . . to
promote the sale of [the] products,” Bittler, 560 N.E.2d at 982.
See Restatement (Third) of Torts: Prod. Liab. § 20 reporter’s
note g; see also Hoffman, 452 A.2d at 1354. Moreover, where
the agent’s franchise to sell the product is exclusive, meaning
the agent is entitled to coordinate all sales of the product for a
period of time in a particular region, then the agent is “a
mandatory link in [the] distributive chain,” cementing the
rationale for its liability. Brumbaugh, 547 N.Y.S.2d at 701.8 As
noted, see supra pp. 8–9, Amazon Marketplace clearly does
not fit this description.
The Pennsylvania Supreme Court explained in Tincher
v. Omego Flex, Inc. that it would “adopt[] . . . sections of a
restatement . . . if the cause of action and its contours are
consistent with the nature of the tort and Pennsylvania’s
traditional common law formulation.” 104 A.3d 328, 354 (Pa.
8
“Exclusive” sales agents may represent a variety of
products; they are exclusive agents for a particular product if
they obtain exclusive rights from a manufacturer to sell the
product for a period of time in a designated region. See, e.g.,
Brumbaugh, 547 N.Y.S.2d at 701.
16
2014) (internal quotation mark omitted).9 Pennsylvania’s
9
See also Walnut St. Assocs., Inc. v. Brokerage Concepts,
Inc., 20 A.3d 468, 479 (Pa. 2011) (adopting the Second
Restatement of Torts § 772 because “the formulation is
consistent with the very nature of the tort, and with
Pennsylvania law”); Bilt-Rite Contractors, Inc. v.
Architectural Studio, 866 A.2d 270, 285 (Pa. 2005) (adopting
the Second Restatement of Torts § 552, because the provision
“is consistent with Pennsylvania’s traditional common law
formulation of the tort”); Webb v. Zern, 220 A.2d 853, 854 (Pa.
1966) (adopting the Second Restatement of Torts § 402A).
By contrast, the Pennsylvania Supreme Court explained
it would not adopt sections of a restatement “unmoored from
existing common law” and whose adoption would “produce
such a policy shift that it amounts in actuality or public
perception to a derogation of legislative authority.” Tincher,
104 A.3d at 354. On these grounds, the Pennsylvania Supreme
Court declined to adopt certain provisions of the Third
Restatement of Torts that did not meet this standard because
those provisions made a major revision to the traditional strict
liability standard. Specifically, the provisions in question
instituted a new requirement for design defect cases, requiring
plaintiffs show the existence of a reasonable alternative safer
design, rather than treating alternative design as one non-
determinative factor among others. Id. at 346, 393–94
(discussing the Third Restatement of Torts: Products Liability
§ 2(b) and related provisions, §§ 1 through 7, implementing the
alternative design element). The court found these provisions
an “inaccurate” representation of existing Pennsylvania law
17
approach is to evaluate “sections of a restatement” rather than
adopting or rejecting the entire document. Id. at 339. In
excluding most sales facilitators from products liability but
making an exception for sales agents, Pennsylvania case law
matches § 20 of the Third Restatement, meeting Tincher’s
standard. Under Pennsylvania law, as in § 20, an actor who
assists a sale, but does not directly transfer ownership or
possession, is in nearly all cases not a “seller” of the product.
Compare 3 Summ. Pa. Jur. 2d Torts § 41:60–61, with
Restatement (Third) of Torts: Prod. Liab. § 20 reporter’s note
g. Under Pennsylvania law, as in § 20, one kind of sales
facilitator may nonetheless be a “seller”: a sales agent, who
personally represents the manufacturer in advocating for the
product’s sale, and may have an exclusive right to facilitate the
product’s sale for a period of time within a geographic area.
Hoffman, 452 A.2d at 1354–55; Restatement (Third) of Torts:
and believed them in potential conflict with important “general
principles” of Pennsylvania products liability. Id. at 399, 397.
While the provisions rejected in Tincher departed
significantly from the Second Restatement and from state law
developed in its framework, as observers note, other
“provisions of the Restatement Third simply do as promised;
they restate the current law.” Vicki MacDougall, The Impact
of the Restatement (Third), Torts: Products Liability (1998) on
Product Liability Law, 6 Consumer Fin. L. Q. R. 105, 106
(2008). Provisions more modest than those rejected therefore
may in some instances fulfill the intended purpose of
Restatement guidance in Pennsylvania law: not “supplanting”
Pennsylvania’s “traditional approach” but “rather . . .
clarifying the contours of the tort.” Bilt-Rite, 866 A.2d at 287.
18
Prod. Liab. § 20 reporter’s note g. Because § 20 is “consistent
with the nature of the tort and Pennsylvania’s traditional
common law formulation,” it is likely the provision would
inform the Pennsylvania Supreme Court’s analysis of the
question at issue in this case. Tincher, 104 A.3d at 354.
In Pennsylvania, as in states across the country
including New York and Illinois, a business assisting a sale is
not a “seller” for products liability purposes unless it takes on
the particularly involved retail relationship of sales
agent/manufacturer’s representative.10 The Third
Restatement’s § 20 tracks this pattern. Like every federal court
to consider this issue so far, I would find Amazon Marketplace
not a seller.
III.
To deem Amazon a “seller” of Marketplace products,
plaintiffs rely in large part on a four-factor policy test first
articulated in Francioni v. Gibsonia Truck Corp., 372 A.2d
736, 739 (Pa. 1977). More recently, though, the Pennsylvania
Supreme Court has clarified the Francioni test’s purpose and
limited applicability, making it evident the test has no role in
10
In Hoffman, the court did not discuss whether the sales
agent at issue had an exclusive franchise to sell within a
particular territory or a nonexclusive franchise. See 452 A.2d
at 1351. Hoffman, then, is consistent with cases requiring
exclusivity to hold sales agents liable but does not create such
a requirement itself. Regardless, for the reasons discussed
above, see supra pp. 8–9, Amazon does not resemble a sales
agent with either an exclusive or a nonexclusive franchise to
market products.
19
answering the question at issue here. See Cafazzo v. Cent. Med.
Health Servs., 668 A.2d 521, 525 (Pa. 1995).
A.
As the Pennsylvania Supreme Court has explained, the
Francioni test guides “whether a particular supplier of
products, whose status as a supplier is already determined, is
to be held liable for damages caused by defects in the products
supplied.” Id. at 525. Cafazzo makes clear the Francioni test
should not be used to determine whether, in the first place, a
particular defendant is a supplier of the product: that question
is a “precondition necessary for application of this analysis.”
Id. That question must be answered by considering “what is
being done” by the defendant, and whether the activity
constitutes supplying products. Id. at 524.
No one disputed that the Francioni defendant, who was
a lessor of hauling equipment, had supplied the equipment that
caused the plaintiff’s injury. 372 A.2d at 737. The issue,
instead, was whether supplying equipment via a lease made the
defendant a “seller,” even though the transaction was not
technically a sale. Id. The Pennsylvania Supreme Court
identified four policy factors which, in other jurisdictions, had
served to justify including lessors as “sellers” for products
liability purposes:
(1) In some instances the lessor, like the seller,
may be the only member of the marketing chain
available to the injured plaintiff for redress; (2)
As in the case of the seller, imposition of strict
liability upon the lessor serves as an incentive to
safety; (3) The lessor will be in a better position
20
than the consumer to prevent the circulation of
defective products; and (4) The lessor can
distribute the cost of compensating for injuries
resulting from defects by charging for it in his
business, [i].e., by adjustment of the rental terms.
Id. at 739.
Because the equipment leasing company was in the
business of supplying products via lease, and because of the
four identified policy factors, the court held the equipment
leasing company should be considered a “seller.” Id. at 739–
40. Similarly, though reaching the opposite outcome, the
Pennsylvania Supreme Court applied the Francioni test to a
pharmacy defendant, holding, although the pharmacy had
supplied drugs to patients, policy factors would counsel against
imposing strict product liability on the pharmacy. Coyle v.
Richardson-Merrell, Inc., 584 A.2d 1383, 1387 (Pa. 1991).
The Pennsylvania Supreme Court has also cited the
Francioni test as additional support for its holding, after
determining that a potential defendant was not a “supplier.”
See Musser, 562 A.2d at 281; Nath, 439 A.2d at 634. In each
case, the court analyzed the activities of the defendant, and
found them too “tangential” to the actual sale of the product to
support seller liability. Musser, 562 A.2d at 282; Nath, 439
A.2d at 636. The court then applied the Francioni factors and
found, in each case, policy considerations did not support seller
liability, either. Musser, 562 A.2d at 282–83; Nath, 439 A.2d
at 635–36.
Cafazzo clarifies the relationship between the two
holdings present in each of these cases, establishing that policy
21
factors alone cannot create seller liability. In Cafazzo, the court
held a hospital and physician were not suppliers of a medical
device they provided to a patient, accompanied by a surcharge
for the device, because “the relationship of hospital and/or
doctor to patients is not dictated by the distribution of such
products, even if there is some surcharge on the price of the
product.” 668 A.2d at 524.
As Cafazzo makes evident, once a court has determined
a defendant is too “tangential” to be considered a supplier of
the product at issue, applying the Francioni policy factors is
unnecessary. Id. at 523–24. Courts may nonetheless discuss
them in order to demonstrate that, “even assuming that [the
defendants] could reasonably be termed sellers . . . the policy
reasons for strict liability are not present.” Id. at 525. For the
reasons already discussed, Amazon Marketplace is too
tangential to third-party sales of products to be considered a
supplier or seller of those products under Pennsylvania law.
The Francioni policy factors therefore cannot establish seller
liability.
B.
Even if Amazon Marketplace could be considered a
supplier, application of the Francioni factors would not result
in liability. Indeed, the policy outcomes produced by liability
for Amazon Marketplace closely resemble those produced by
liability for an auctioneer, as in Musser. See 562 A.2d at 282–
83. Thus, for reasons very similar to those identified in Musser,
the Francioni policy factors do not support strict product
liability for Amazon Marketplace.
The first factor, availability of other members of the
distribution chain, weighs in Amazon’s favor, just as in
22
Musser. The Musser court found the first factor did not support
liability for the auctioneer because, “in an auction there is a
seller, who is served by the auctioneer.” Id. at 282 (footnote
omitted). Whereas in Francioni, the defendant lessor leased the
product directly to the customer and the court identified no
other member of the marketing chain, see 372 A.2d at 739, all
Amazon Marketplace products are sold by third-party sellers
who are available to be sued. That seller may be defunct,
insolvent, or impossible to locate by the time of suit, just as the
seller of an auctioned product may be. But as the Pennsylvania
Supreme Court noted in applying this factor, “[t]o assign
liability for no reason other than the ability to pay damages is
inconsistent with our jurisprudence.” Cafazzo, 668 A.2d at
526.11
The second two factors, the potential incentive to safety
and the defendant’s relative ability to prevent circulation of the
products, weigh in favor of Amazon, as they did in Musser. In
Musser, the court considered the auctioneer’s current business
model, finding the auctioneer was “not in the business of
designing and/or manufacturing any particular product,” nor
did the auctioneer attempt to create the kind of “ongoing
relationship” with any of its large catalogue of sellers “which
might equip the auctioneer to influence the manufacturing
process.” 562 A.2d at 282. The auctioneer was not the kind of
seller who makes it “his business to know the product he sells.”
Id. at 283. Similarly, Amazon Marketplace is “not in the
11
As Musser makes clear, the relevant question is whether
alternate legally responsible members of the distribution chain
exist, not whether the other members are solvent and able to
pay. See 562 A.2d at 282.
23
business” of choosing, monitoring, or influencing third-party
sellers’ products or their manufacturing processes. Id.12 Rather,
the current model of Amazon Marketplace is an open one. All
sellers meeting Amazon’s terms may offer their products, and
the same general terms apply to all. Although Amazon reserves
the right to eject sellers, the company does not undertake to
curate its selection of products, nor generally to police them for
dangerousness. As it operates now, Amazon Marketplace does
not exercise, relative to the consumer, any greater “influence
in the manufacture of safer products.” Id. Though it is possible
to envision, as plaintiffs do, a new model for Amazon
Marketplace in which the company researches products for
potential defects and polices sellers to ensure they do not offer
them, such a model would be fundamentally different from the
Amazon Marketplace that exists now. Indeed, nearly any sales
facilitator, including an auctioneer, could transform itself by
creating a system to research sellers, and excluding those
deemed unfit, instead of serving all comers meeting its terms.
This kind of transformation, though, would have costs as well
as benefits, for small entrepreneurs who might be excluded as
too risky, and for consumers whose access to all goods would
likely be reduced with greater scrutiny of sellers. Under
Musser, Pennsylvania products liability law does not demand
a sales facilitator enter a fundamentally new business model
simply because it could.
12
The majority argues third-party sellers are in a poor
position to monitor product dangerousness, because they
communicate with customers through Amazon Marketplace’s
platform and receive access to customer ratings of their
products which are also made public. But it is not clear what
obstacle the Marketplace platform’s collation and formatting
would present to sellers monitoring customer feedback.
24
Just as in Musser, the final factor, Amazon’s ability to
pass on the costs of product liability suits by charging all sellers
more, is the only one weighing in favor of imposing liability.
But because a variety of market participants could take on this
insurer role if they chose, even if only peripherally involved in
the sale, the fourth factor is not determinative. As the Musser
court explained, where the other three policy factors are not
present, imposing strict liability “would be related to the
purpose of the policy considerations underlying the [Second
Restatement of Torts § 402A] only marginally.” Id.
Because Amazon Marketplace is not a “supplier” of
third-party products, our inquiry must end there under Cafazzo.
668 A.2d at 525. Even were we to apply the Francioni policy
test, though, its four policy factors also counsel against
liability.
IV.
For these reasons, I respectfully dissent from the
majority opinion as to plaintiffs’ products liability claims not
barred by § 230 of the CDA and would affirm the District
Court’s dismissal of those claims.13
13
I concur in the majority’s thoughtful analysis of the
CDA’s application to plaintiffs’ claims.
25