At the end of 2019, a federal court panel ruled 2-1 that “under Pennsylvania law, Amazon is strictly liable for consumer injuries caused by defective goods purchased on Amazon.com.” The case’s ruling is nationally significant as it is scheduled for review by a rare full panel hearing early next year in Philadelphia before the Third Circuit Court of Appeals. The case represents the struggle of judges nationwide to apply 20th Century legal principles to the demands of 21st Century digital commerce.

When a consumer, blinded in one eye by a product purchased from a third-party vendor on Amazon, could not locate the seller to attempt to redress her injuries, she sued Amazon, which disclaims liability in these situations by the blanket application of a policy which states that it is only a services provider and not responsible for defective products sold by third parties on its site.

This product liability case is a current example of how modern judges struggle with the application of legal standards and laws from an era that precedes the form of commerce prevalent in today’s internet marketplace. Countless institutions in addition to Amazon, such as social media giants like Facebook and transportation innovators like Uber grasp for their share of the marketplace while reluctant to accept the traditional obligations of retailers, publishers, and employers inherent with their traditional roles.

Although Amazon claims it is only an agent of conduit for third-party sellers, many consumers perceive that Amazon itself is the vendor supplying the product. In the case involving the unfortunate woman who was blinded, when asked at her deposition who sold her the product, she replied “I purchased it on Amazon.”

Before this decision, federal judges had ruled at least a half dozen times that Amazon, in the case of third-party merchants, was not part of the commercial chain and carried no responsibility for defective products. These cases involving hoverboards with exploding batteries, a headlamp that caused a house fire, a French press coffee maker that shattered, and a laptop battery that caught fire. It is important to note that these decisions have not dealt with actual liability, but only with the issue of whether Amazon is in the chain of potential liability.

The primary issue on appeal was whether Amazon was a seller for purposes of strict products liability under §402A of the Second Restatement of Torts as applied under Pennsylvania law. The court examined four factors established under Pennsylvania law and found that Amazon may be the only member of the marketing chain available to consumers for the redress of consumer harm.

Amazon’s agreement with third-party vendors mandates that these vendors may communicate with customers only through Amazon, enabling vendors to conceal themselves from customers who have been injured by defective products, unavailable for direct recourse. In the case of the blinded woman, neither she nor Amazon was able to locate the third-party vendor to address the product’s defects.

The legal term “Strict liability” means that any seller in the chain of commerce — manufacturer, wholesaler, distributor, or retailer — may be held liable for a defective product. Amazon has argued that affirmation of the panel’s decision by the Third Circuit victory “would constitute an unprecedented expansion of products-liability law.”

The Third Circuit majority opinion by Jane R. Roth and Patty Shwartz contained the following telling statement: “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.”