Highlighting need to protect product quality in online marketplace channel
Update: Upon petition by Amazon, the U.S. Court of Appeals for the Third Circuit has vacated its ruling in Oberdorf v. Amazon.com Inc. and listed the case for rehearing en banc (to be heard by the entire Third Circuit panel of judges). The Court has not yet set the new hearing date. Vorys eControl will continue to update the Marketplace Solutions Blog as the case progresses.
The Third Circuit’s recent ruling, which determined that Amazon.com is subject to a strict products liability standard in Pennsylvania, has obvious significance for Amazon, but also highlights issues facing brand owners whose products are being sold by third-party resellers on marketplaces like Amazon.
The plaintiff, Heather Oberdorf, purchased a retractable dog leash from a third-party Amazon seller and was injured when the product malfunctioned. Oberdorf sued Amazon and, on appeal, the Court held that Amazon would be subjected to Pennsylvania’s strict products liability law notwithstanding the fact that the product at issue was purchased from a third-party seller.
Lost in much of the buzz around the case have been the Court’s findings around various realities of the Amazon ecosystem. Several of these findings highlight the need for brand owners to exercise strong quality controls over marketplace sales of their products – and likewise expose the error in thinking that marketplaces will do it for them.
For example, the Court recognized that the Amazon marketplace “enables third-party vendors to conceal themselves from the customer,” which often results in customers having “no direct recourse to the third-party vendor.” Indeed, the Court observed that there have been “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.” Moreover, based on testimony from Amazon’s Vice President of Marketing Business, the Court found 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.”
Indeed, neither Oberdorf nor Amazon itself were able to locate the third-party seller that sold the dog leash at issue.
Given these marketplace realities, brands wanting to ensure that their products are sold only by high-quality resellers and that products in the channel are of the appropriate quality and integrity must step in and take proper steps to control this channel.
The case is Oberdorf v. Amazon.com Inc., No. 18-1041 (3d Cir. July 3, 2019). Read the full opinion here.
If you’re interested in learning more about controlling your own brand on Amazon or other online marketplaces, download our eBook.