Liability Is Just One Click Away!

In Oberdorf v. Amazon.com, the plaintiff filed suit against Amazon alleging the product she purchased from a third-party vendor was defective. Although the U.S. District Court for the Middle District of Pennsylvania held Amazon was not a “product seller” within the meaning of Section 402A, the U.S. Court of Appeals for the Third Circuit disagreed, finding that Amazon qualified as a product seller, thus expanding the scope of strict products liability to include online sales platforms.

Section 402A of the Restatement (Second) of Torts provides that a user or consumer injured by a defective product may seek redress from the product seller under a theory of strict liability. Nevertheless, Pennsylvania courts have held that not every entity with a role in putting a product into the hands of consumers is a “product seller” within the meaning of Section 402A. Entities like brokers, auctioneers, and second-hand markets have been exempted from the definition of “product seller.”

The development of e-commerce has led Pennsylvania courts to consider whether online sales platforms are akin to brick and mortar retailers or more like the intermediaries that fall outside the scope of strict liability. In Oberdorf v. Amazon.com, 930 F.3d 136 (3d Cir. 2019), the plaintiff filed suit against Amazon alleging the product she purchased from a third-party vendor was defective. Although the U.S. District Court for the Middle District of Pennsylvania held Amazon was not a “product seller” within the meaning of Section 402A, the U.S. Court of Appeals for the Third Circuit disagreed, finding that Amazon qualified as a product seller, thus expanding the scope of strict products liability to include online sales platforms. Other courts have reached the same conclusion and expanded strict products liability to include e-commerce sites.

The decisions in cases like Oberdorf are not surprising, since the factors courts consider to determine whether or not an entity is a product seller weigh heavily in favor of imposing strict liability. Under Pennsylvania’s current test, courts evaluate four factors to determine whether an entity qualifies as a product seller: whether the actor is the only member of the marketing chain available to the injured plaintiff for redress; whether imposing strict liability on the actor serves as an incentive to safety; whether the actor is in a better position than the consumer to prevent the circulation of defective products; and whether the actor can distribute the cost of compensating for injuries resulting from defects by building it into the price charged to the consumer. See Musser v. Vilsmeier Auction, 562 A.2d 279 (Pa. 1989); Francioni v. Gibsonia Truck, 372 A.2d 736 (Pa. 1977).

None of these factors weigh against imposing strict liability, nor do any consider the ability of the consumer to make an informed purchase or protect against the risk of injury. Rather, application of these factors inevitably leads to the imposition of strict liability. The first factor (availability of a remedy) is too often watered-down to whether the “seller” is the only entity the plaintiff can easily pursue, not whether the plaintiff’s remedy against the manufacturer has been fully destroyed. As to the second factor, it is difficult to imagine a scenario where imposing strict liability on the seller would not serve as an incentive to safety, but this factor ignores important considerations like facilitating commerce and making products available to consumers. Similarly, regarding the third and fourth factors, there is likely no circumstance where the consumer can more effectively prevent the circulation of defective products or where the seller cannot better distribute the cost of compensating for injuries. These factors become a “plaintiff always wins” test that does not fairly weigh competing policy interests or account for the relationship between the consumer and the online platforms that help facilitate e-commerce. The current test also fails to consider the consumer as a knowledgeable individual who can act responsibly and account for any risks associated with a particular product. This is especially true with regard to online platforms that give consumers easy access to instructions and customer reviews (including photographs and videos of the product) on a once unfathomable scale. The factors courts currently consider do not account for the availability of information and the ease with which potential consumers can educate themselves about the products they purchase online.

It is clear that a more even-handed, relevant framework that better accounts for the nature of e-commerce is needed to determine whether these entities should fall within the scope of strict liability. This framework must consider the features and functions of online marketplaces and the ways in which consumers interact with those platforms, while also allowing a court to meaningfully consider whether an online platform’s role in facilitating a transaction is sufficient to impose strict liability.

The new test should consider:

• whether the online marketplace facilitates a transaction between consumer and product seller that would not otherwise be readily available to the consumer, and thus provides the consumer with a benefit.
• whether the online marketplace obtained physical possession, took title of the product, or otherwise had control over the product at any time.
• whether the online marketplace identifies the manufacturer or upstream seller in a way that a reasonable consumer would understand someone other than the online platform manufactured the product.
• whether the consumer has the opportunity, through readily available insurance products or the purchase of additional warranties, to address the risk of injury and insure against that risk.

This new framework not only provides for a more balanced analysis, it recognizes the realities of e-commerce. This new test recognizes the consumer’s role in the transaction, including whether the online marketplace facilitates a transaction that could not take place through traditional commercial channels or otherwise advances the interests of the consumer. It also recognizes that online marketplaces can actually advance safety by providing product information, updates, and even customer reviews at the click of a button, leading to better informed consumers. It jettisons one-sided factors like risk spreading and removing allegedly defective products from the marketplace. This new test equally considers the role of consumer and seller in determining whether strict liability should attach.

This new framework aligns with the Pennsylvania Supreme Court’s holding in Tincher v. Omega Flex, 104 A.3d 328 (Pa. 2014). A decade ago, our Supreme Court sought to modernize Pennsylvania products liability law. Abandoning a one-sided test that was developed decades before many of today’s online marketplaces were even launched aligns with that goal.

The Tincher court also directed that “consumer expectations” is a proper test for evaluating whether or not a product is defective. In much the same way, the new framework proposed in this article considers the expectations and experiences of the consumer in weighing whether or not the consumer would reasonably expect a remedy against an e-commerce site that facilitates a transaction with an upstream seller. Where the law of product defect is framed in terms of consumer expectations, it follows that the consumer’s expectations should be a relevant consideration in setting the scope of any remedy. Adopting a new framework that accounts for the consumer’s expectations, considers the realities of e-commerce and fairly balances the competing policy interests of advancing the consumer’s access to products and protecting against the risk of injury further modernizes Pennsylvania law and eliminates the one-sided analysis now in place that nearly always favors expanding the scope of strict liability.

Stephen J. Finley is a director in Gibbons P.C.’s products liability group. Finley dedicates his practice to the defense of cases involving wrongful death, catastrophic personal injury and major property loss. He defends companies involved in complex litigation, including multidistrict litigation, mass tort litigation and serial lawsuits. In addition to his products liability practice, Finley handles the prosecution and defense of commercial matters, including breach of contract disputes and business tort claims. Email him at sfinley@gibbonslaw.com.

Cecilia Y. Carreras is an associate with the firm, where she handles the defense of products liability injury cases, as well medical malpractice cases. She is well versed in all aspects of civil litigation, from pre-suit investigation through disposition of cases through dismissal, settlement, and trial. Email her at ccarreras@gibbonslaw.com.

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Reprinted with permission from the February 5, 2024 issue of The Legal Intelligencer. © 2024 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved. For information, contact 877-257-3382 or reprints@alm.com or visit www.almreprints.com.