The Third Circuit Joins The Ninth In Excluding E-Commerce Platforms From Section 230's Protection

from the selling-out-the-Internet dept

Remember when there was a terrible decision in the 5Pointz VARA case and I wrote 3000 words to explain just how terrible it was? Well, buckle-up, because here's another awful decision, this time in the Section 230 realm. In fact, this one may even be worse, because it was a decision at the federal appellate level, and thus we are more likely to feel the impact of its terribleness. What follows is an explanation of how it so badly missed the mark.

Not long ago we warned that the Ninth Circuit's decision in HomeAway v. City of Santa Monica, if allowed to stand, threatened Internet commerce. This new decision from the Third Circuit in Oberdorf v. Amazon heightens that alarm. As with the Ninth Circuit, it reflects undue focus on the commercial transaction it facilitated instead of on the underlying expression the transaction was connected to. Worse, it did so in a way that gave short shrift to the policy interests behind why Section 230 exists in the first place.

As is typical in cases with terrible Section 230 rulings, the underlying facts in this case are terrible too. One of the plaintiffs had bought a retractable dog leash via Amazon. The leash was defective, and when it broke it recoiled in a way that blinded her in one eye. She and her husband then sued Amazon over the injury. The district court dismissed their claims, partially for Section 230 reasons, and also because it could not find a way to deem Amazon a "seller" for purposes of the Pennsylvania consumer protection law the plaintiffs were trying to base their claim upon. But the Third Circuit, looking at the decision afresh, substantially rejected the district court's analysis and largely reversed its holding. It's this decision that joins the Ninth Circuit HomeAway decision in now seriously threatening Internet commerce.

It is worth noting that this was a 2-1 decision, with a majority opinion providing the controlling analysis and a dissent. Much of the majority decision involves pages and pages of discussion about what counts as a "seller" under that Pennsylvania law. While on the surface this discussion may seem at first seem tangential to our larger Section 230 concerns, in this case it ends up being fairly relevant. For one thing, it's part of the decision, and it shouldn't be. Section 230 includes a pre-emption provision because state and local laws are often messy and, worse, contradictory. An Internet platform's protection from liability should not be contingent on how any given state a platform's services may reach has opted to write its local law. So the mere fact that the decision starts out by reviewing how Pennsylvania's state law might affect the liability of an Internet platform like Amazon is the first sign that the decision is trouble.

Also, the "seller" analysis is itself revealing about how the court got the analysis denying Amazon Section 230 protection so very wrong. Not only does it read like a pre-ordained result – the court seems to really want Amazon to lose this case and stretches its reasoning to make sure this consumer protection law can reach them (in ways the dissent takes significant issue with) – but what's most telling is that the ways that the court decides that Amazon flunks the four-factor test it used to use to decide whether Amazon was a "seller" show why Section 230 should have applied and foreclosed this entire "are they a seller" analytical exercise in the first place.

Things start off poorly. The first factor is whether Amazon “may be the only member of the marketing chain available to the injured plaintiff for redress.” The majority complains:

[…]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. [p. 14]

It is a legitimate policy problem that it can be challenging, if not sometimes impossible, to find the person who used the Internet to cause harm and then hold them responsible. But that difficulty doesn't mean that Section 230 is to blame, nor does it follow that Section 230 should be curtailed, which would only end up inviting all the other significant harms that Section 230 exists to prevent. Courts have been clear on this point for over twenty years: Section 230 applies even if the party behind the content at issue cannot be found.

Furthermore, even if there were some reason why that rule should be different here, the majority presented no meaningful justification for why, even though Section 230 would insulate a platform in cases where, say, a user might have said something defamatory, it would not similarly protect the platform if the user's expression instead had offered the sale of a defective good. In all these situations the problem with the expression originated with the user, not the platform, yet the majority treats these situations as if they were somehow different, when they are not. Section 230 should therefore still apply.

Meanwhile, the dissent points out that the majority's decision would effectively punish marketplace platforms for not having vetted all of their users. To which the majority unconvincingly dismisses this reality by declaring, without support, that if the Internet user cannot be found the platform must absorb the liability.

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.” [p. 15].

In other words, like the Wisconsin Court of Appeals in Armslist had tried to do (before the Wisconsin Supreme Court corrected it), the Third Circuit is seeking to allow for the punishment of a platform for being a platform that people could use in bad ways. But it is because we knew that people would use the Internet in bad ways that Congress passed Section 230 in the first place. It's the very reason why we insulated platforms from liability. It is not a reason to now take away that protection.

Section 230 was also passed so that platforms would not be crippled with the burden of having to vet all their users or all the expression their users used their services to facilitate. The dissent is right that the majority decision creates that obligation, and thus threatens to chill future online commercial activity, not just by Amazon, but by anyone, including any smaller platforms and anyone who might want to compete with Amazon.

Worse, the majority holds against Amazon that Amazon had tried to police the commercial user expression appearing on its platform anyway, even though it didn't have to. It deems the volitional acts Amazon performed as evidence of sufficient "control" over the contents appearing on its platform to justify holding Amazon liable for anything wrong with that user speech.

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,” “withhold any payments” to third-party vendors, “impose transaction limits,” and “terminate or suspend . . . any Service [to a third-party-vendor] for any reason at any time.” 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. [p. 16]

First, given the sheer volume of content that Amazon intermediates, it is not at all certain that it is correct to say that "Amazon is fully capable of removing unsafe products from its website." It requires a giant, unsupported logical leap to read the language in Amazon's vendor agreement reserving its rights solely with respect to its vendor-users as any sort of declaration that it has the practical ability necessary to do the sort of moderation the majority declares it now must do.

The dissent recognizes this problem. As the majority cites in footnote 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.”

But then the majority dismisses this concern in the same footnote:

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.

Not only does this language return us to the discussion as to why Section 230 includes a pre-emption provision in order to protect it reliably from the vagaries of state law, but it also fails to account for the market pressures that will demand marketplace platforms act in ways that best protect consumers. The majority seems to take the view that "but for" its ruling no one would be looking out for consumers, but it provided no basis to believe that this assumption is true.

Worse, the decision ends up making it all that much harder, if not impossible, for platforms to look out for consumers as the Third Circuit would want them to. By taking issue with all the things Amazon says it may do to police their platform in the language of its vendor agreement, it's made it impossible for Amazon, or any other marketplace vendor, to actually pursue any of them since the attempt just risks liability for itself. Yet these things are exactly the sorts of moderation activities that Section 230 expressly protects in order to encourage platforms to do. Section 230 sets up a situation where platforms can feel able to take what steps they can to police the user content they facilitate because it removes the risk of liability if they do. But here is the Third Circuit now chilling that moderation activity by instead using it as a basis for imposing liability.

The reasoning for the third and fourth factors isn't much better. The third factor involves considering whether Amazon is “in a better position than the consumer to prevent the circulation of defective products.” [p. 17]. In an earlier Pennsylvania case an auction house had been found not to have been liable for a defective product it sold as a "seller," for several reasons, including that it didn't have sufficient ability to prevent the distribution of defective problems. With little more than supposition, however, the majority decided that Amazon, somehow, did.

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.” 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 . . ..” [p. 18]

The majority never explains why third-party vendors can't also read the public reviews, or why the Amazon-provided communications mechanisms might not be adequate. And the dissent questions the entire conclusion that Amazon is somehow better situated to take defective items out of circulation.

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.” 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. [fn 35]

It is hardly revelatory that platforms have the power to terminate users. It's no secret that they can. Pretty much all platforms can, but per the majority's reasoning, none of them should ever be able to avail themselves of Section 230 protection as a result, if they do. Also, using the threat of liability to mandate censorship of any kind – even censorship that might be valid or beneficial – is also what Section 230 was intended to prevent, since the censorship that results from liability pressures so often isn't valid or beneficial. Yet here is the majority doing just that, using the threat of liability to cause vendor expression to be removed, even though it will inevitably cause the same unwarranted censorship, for fear of liability, that Section 230 was designed to forestall for all types of user expression.

Then the fourth factor considers who can best pay to redress the harm. The majority effectively finds that Amazon has the deepest and most locatable pockets, so therefore it decides that it should pay. If this be the rule, other large platforms have deep pockets as well, but not so smaller ones generally, yet eroding Section 230 protection for the big players erodes it for them as well. And even large pockets are not infinitely deep. The majority dismisses this concern by reasoning that Amazon can simply raise its prices:

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. [p. 20]

Of course, those price increases will ultimately be passed onto consumers. Also, if the solution to platform liability is that platforms should just charge more for their services, it bodes poorly for all the free services Internet users have been able to benefit from to date and threatens to lock out those users who won't be able to afford to continue.

Ultimately, if there is a bright spot in this decision it is that the majority still found that Section 230 knocked out a few of the plaintiffs' claims, claims where the court was able to identify how they involved expressive activity by the platform.

to the extent that Oberdorf is alleging that Amazon failed to 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. [p. 32-33]

But in failing to recognize the expressive activity involved with "Amazon’s role as an actor in the sales process" the Third Circuit has doubled-down on the false dichotomy the Ninth Circuit's earlier HomeAway decision had created by deeming the brokering of the financial transaction connected with the facilitation of expression as something somehow separate from that expression. This bifurcation threatens to put all commercial activity beyond the reach of Section 230 and create an exception to its protection that simply is not in the statute, for good reason.

Filed Under: 3rd circuit, cda 230, e-commerce, intermediary liability, section 230, transactions
Companies: amazon


Reader Comments

Subscribe: RSS

View by: Time | Thread


  • This comment has been flagged by the community. Click here to show it
    identicon
    comnothingmon, 15 Jul 2019 @ 12:18pm

    NO, blanket protection for BUSINESSES is not in Section 230!

    You and Masnick need to stop asserting that it's absolute and total immunity for anything hosted -- while you claim empowering to full arbitrary editorial control for content!

    YOU ARE BOTH WRONG BOTH WAYS.

    "Amazon's role as an actor in the sales process"

    Makes it business activity. The "dichotomy" is real and that businesses are not private persons, Amazon is not just hosting, and cannot have it all ways at once to get around the massive body of corporate law.

    Section 230 is for The Public to be able to Publish our created material easily, simply a mechanical "platform", NOT for any persons let alone mega-corporations to control persons and dodge all law.

    This bifurcation threatens to put all commercial activity beyond the reach of Section 230 and create an exception to its protection that simply is not in the statute, for good reason.

    Doesn't "put": that's The Law right now. (Just as 230 didn't cover Backpage.)

    How many more appeals level decisions will it take before you quit arguing -- as you're paid to by Google among corporate "sponsors" -- and just accept the obvious logic that Section 230 does NOT cover BUSINESS ACTIVITY?

    reply to this | link to this | view in chronology ]

    • identicon
      cpt kangarooski, 15 Jul 2019 @ 1:23pm

      Re: NO, blanket protection for BUSINESSES is not in Section 230!

      You and Masnick need to stop asserting that it's absolute and total immunity for anything hosted -- while you claim empowering to full arbitrary editorial control for content!
      YOU ARE BOTH WRONG BOTH WAYS.

      No, they’re correct and you’re wrong; that’s what 47 USC 230 does.

      Amazon is not just hosting, and cannot have it all ways at once to get around the massive body of corporate law.

      Holy shit, you might be right about this one; the safe harbor probably doesn’t apply to ordinary products liability law. I mean, you’re wrong about everything else, and you arrived at this conclusion erroneously so it is still no points for you, but I have to say, it still terrifying to see such a stupid, stupid, stupid troll get even halfway close to a correct answer.

      Quick, man: spout some made-up crap about common law so that my expectations of you aren’t completely shattered.

      reply to this | link to this | view in chronology ]

      • This comment has been flagged by the community. Click here to show it
        identicon
        Anonymous Coward, 15 Jul 2019 @ 1:32pm

        Re: Re: NO, blanket protection for BUSINESSES is not in Section

        So, that is what 47 USC 230 does? Funny how the courts seem to disagree with you.

        Ever occur to you that maybe you are the one who is ignorant? I guess that would take a level of introspection you are incapable of.

        reply to this | link to this | view in chronology ]

        • icon
          Stephen T. Stone (profile), 15 Jul 2019 @ 1:55pm

          Funny how the courts seem to disagree with you.

          How many courts disagree, and how many courts agree? The first number is likely much smaller than the second.

          reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 15 Jul 2019 @ 5:42pm

          Re: Re: Re:

          How's that Paul Hansmeier defense fund coming along, Herrick?

          reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 15 Jul 2019 @ 7:18pm

          Re: Re: Re: NO, blanket protection for BUSINESSES is not in Sect

          That the best you got Smith? Quite sad and pathetic, even for an impotent old fuckwit like yourself.

          reply to this | link to this | view in chronology ]

  • icon
    BJC (profile), 15 Jul 2019 @ 12:45pm

    You can't touch the money

    I think the Pennsylvania Court's decision, as well as a bunch like it (e.g. AirBnB), are legally sound. I would describe the reasoning as, "they touched the money."

    If you touch the money as it travels from purchaser to the end pocket, it's very easy to say that your act in touching that money is completely separate from your speech rights under the First Amendment and CDA 230.

    To restate: if you take money for a thing, that taking of money can be regulated.

    Armslist? Backpage? Didn't take money for the things they advertised. But Amazon did.

    reply to this | link to this | view in chronology ]

    • icon
      Anonymous Anonymous Coward (profile), 15 Jul 2019 @ 12:56pm

      Re: You can't touch the money

      The problem I see, and it is probably not an appropriate legal argument, is that Amazon did not manufacture the defective product. Also, while Amazon may insist that communication with the original seller be through them, I have also been offered the opportunity to communicate directly with the original seller, who is likely, but not necessarily, also the manufacturer, from either Amazon or the original seller, I don't know which.

      Then, while the manufacturer may not have the financial resources that Amazon does, they are the ones that made the defective product. In addition, in a question of defective products that result in injury, it would seem to me that Amazon might be willing to give up direct contact to the manufacturer. So going after Amazon is merely a deep pocket dive and has nothing to do with actual liability, whether they touched the money or not.

      BTW, your touched the money idea might make credit card companies and/or banks (in the case of a check written for something or a debit card transaction) also liable, and we don't see that happening.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 15 Jul 2019 @ 1:35pm

        Re: Re: You can't touch the money

        The problem I see, and it is probably not an appropriate legal argument, is that >Amazon did not manufacture the defective product.

        The opinion addressed this and in PA and to my knowledge most states, the retailer can face liability, and understandably so. Part of being a retailer is accurately conveying the quality of the goods you're selling, and you can be deceptive or negligent there. The question then becomes more how much work does a retailer have to do to ensure products aren't defective.

        And that's my issue with Amazon here. It seems they're attempting to take the the advantages of being a seller, controlling the customer relationship and the branding and everything, without taking on any of the risks of liability or inventory or anything. And while Amazon doesn't take total control, it does seem like it could in ways similar to a retailer; they control who gets refunds, they could pull you if it competed with their goals and so on.

        Now, a section 230 protected marketplace where the host is really just passing on with some moderation attempts could maybe exist, but I have a hard time seeing Amazon marketplace as serving as such a place.

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 15 Jul 2019 @ 1:49pm

          Re: Re: Re: You can't touch the money

          Now, a section 230 protected marketplace where the host is really just passing on with some moderation attempts could maybe exist, but I have a hard time seeing Amazon marketplace as serving as such a place.

          The service that Amazon marketplace adds, is providing a trusted handler of your credit card information, and forwarding the money, but not the card details to the seller. Would you want to give your credit card details to the sellers in the Amazon Marketplace?

          reply to this | link to this | view in chronology ]

          • identicon
            rasz_pl, 15 Jul 2019 @ 2:03pm

            Re: Re: Re: Re: You can't touch the money

            and recommendation, subsidized shipping, customer service, fulfillment. Pretty much everything any other shop does.

            reply to this | link to this | view in chronology ]

            • identicon
              Anonymous Coward, 15 Jul 2019 @ 2:37pm

              Re: Re: Re: Re: Re: You can't touch the money

              They are selling a logistics service to those who want to use it, but then Amazon has always been primarily a logistics company, that is delivering goods to people. That is what made them a successful online seller.

              reply to this | link to this | view in chronology ]

          • identicon
            Anonymous Coward, 15 Jul 2019 @ 3:30pm

            Re: Re: Re: Re: You can't touch the money

            The service that Amazon marketplace adds

            The difference between Amazon Marketplace and Amazon proper seems to catch people by surprise. It might have helped Amazon's case to design these as two obviously different sites rather than intermingle everything and rely on fine print (the "sold by" text).

            reply to this | link to this | view in chronology ]

      • icon
        BJC (profile), 15 Jul 2019 @ 2:45pm

        Re: Re: You can't touch the money

        Payment systems are already liable for all sorts of things (I've heard stories of Venmo rejecting payments for "Cuban sandwiches" because they were worried it was an embargo violating payment), so it's a legal impossibility, just a practical one.

        Also, there is an obvious difference between "one stop shops" such as Amazon with payment processors, or at least one easily enough definable that a court could draw the line.

        I'm probably going to mention it a couple times during this thread, but I'll mention it here: what I don't intend to argue is whether Amazon should be liable.

        What I want to argue is the point that the government has a lot of leeway to take an axe to what you might think is a perfectly reasonable, society-benefiting business, and there's no rule stopping them. That's "legally sound."

        reply to this | link to this | view in chronology ]

      • icon
        John85851 (profile), 16 Jul 2019 @ 10:24am

        Re: Re: You can't touch the money

        So is Amazon a seller like Wal-Mart or more like a mall?
        If they're like Wal-Mart, can they be held responsible if a Playstation melts down? Or is this the responsibility of Sony, the manufacturer? Sure, Wal-Mart will give you a refund, can can you really sue Wal-Mart if the Playstation burned down your house?

        Or is Amazon like a mall, meaning you can't sue the mall for something you bought at a kiosk just because the kiosk moved to another mall. Is it different if you paid the mall to buy something at the kiosk? Maybe, but like above, shouldn't the manufacturer be the one to sue over a faulty item?

        How many times have physical stores like Sears, K-Mart, and Wal-Mart been sued because of a faulty product? Or is this case another example of someone going after whoever has the deepest pockets because they can't find the sellers or manufacturer?

        reply to this | link to this | view in chronology ]

        • icon
          BJC (profile), 16 Jul 2019 @ 11:17am

          Re: Re: Re: You can't touch the money

          When I go to Sunglass Hut at the mall, I do not make a purchase by giving the real estate firm that owns the mall my money, have them take some off the top for their fee, then point a Sunglass Hut employee in my direction so that Sunglass Hut can give me, a person they had no direct business contact with, my sunglasses.

          reply to this | link to this | view in chronology ]

        • identicon
          cpt kangarooski, 16 Jul 2019 @ 4:56pm

          Re: Re: Re: You can't touch the money

          How many times have physical stores like Sears, K-Mart, and Wal-Mart been sued because of a faulty product?

          About a zillion times. Strict liability for everyone in the chain from manufacturer to retail is pretty standard in the US, and isn’t really being debated. Everyone’s used to it. Amazon’s problem is that they now want to avoid it but haven’t taken any steps to really accomplish that.

          What Amazon needs to do is to get rid of third party resellers and shift that to a site more like eBay where it’s crystal clear that they don’t sell, they only facilitate. (Although I thought I heard that eBay has gone the other way and now sells some things itself)

          It’s a dichotomy: store or facilitator, you can’t be both under a single umbrella.

          reply to this | link to this | view in chronology ]

    • identicon
      cpt kangarooski, 15 Jul 2019 @ 1:05pm

      Re: You can't touch the money

      I’m inclined to agree. I need to read the case still, but my general inclination would be that Amazon is involved in selling a product and under traditional products liability law, everyone in the chain from manufacturer to final retailer has liability.

      If Amazon’s conduct were pure speech — hosting a review of the product or an advertisement or listing where such things can be bought — then 47 USC 230 should protect them to the extent that it isn’t Amazon’s own speech. But participating in the sale is qualitatively different. Are they facilitating a third party? Yes. But they do so like a consignment shop, handling the details and taking a cut.

      Frankly, I’m optimistic; Amazon has a problem with all the third party junk on their site, and this could provide a strong incentive to get them to clean things up so that they’re only selling products they can get behind like any other retailer does.

      (Ironically the one exception would be for books and other media which are defamatory; booksellers traditionally are protected unless they have notice, and section 230 would seem to still protect them in that regard. Of course, a book that is defective because it spontaneously combusts or something would still present a hazard, but that’s fairly rare)

      reply to this | link to this | view in chronology ]

      • identicon
        christenson, 16 Jul 2019 @ 7:04am

        Re: Hazards of books...

        well, grin, books don't ordinarily spontaneously combust, but...
        I broke my foot when I dropped that dictionary on it!
        I herniated a disc lifting up a box of your books!
        The moldy dust from the book infected my house and made me sick!
        I got a paper cut from your book, and my finger got amputated!
        I caught the measles because your book told me it wasn't safe to get vaccinated!
        My child got poisoned by the lead-based ink in your book!
        ** Your book can be used as a weapon and thrown at me!

        reply to this | link to this | view in chronology ]

        • identicon
          cpt kangarooski, 16 Jul 2019 @ 10:37am

          Re: Re: Hazards of books...

          Most of these are not design or manufacturing defects. Mold maybe, depending on how it got there. Lead based ink was a thing. If so much printing hadn’t moved to China I’d say I’d be shocked if you ever encountered it, at least in newer books. Informational harms are going to be a different kettle of fish due to the First Amendment.

          reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 15 Jul 2019 @ 1:44pm

      Re: You can't touch the money

      A quick but relevant question, do you want to use your credit card with hundreds of online sellers, or would you rather go via a single broker like Amazon. How many goods will be available online if only household name corporations are trusted for online shopping?

      reply to this | link to this | view in chronology ]

      • icon
        BJC (profile), 15 Jul 2019 @ 2:33pm

        Re: Re: You can't touch the money

        I don't think the question's relevant.

        I mean, I know what you're getting at. You think the Pennsylvania decision is bad policy and will lead to unintended bad results.

        But neither the Constitution nor CDA 230 prevent a municipality from saying (expressly or impliedly), "we think some action or principle is more important than economic prosperity or any other objective measure, so we're going to take that hit."

        reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 16 Jul 2019 @ 9:45am

        Re: Re: You can't touch the money

        You seem to lump sellers into "household names" and "everyone else", without regard to the ability of sellers to develop reputations in niche markets. (Or, have you ordered anything from Arrow or Zoro lately?)

        reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 15 Jul 2019 @ 1:25pm

    Is this another case where some one thinks a third party is responsible for the actions of the second party?

    reply to this | link to this | view in chronology ]

  • icon
    That Anonymous Coward (profile), 15 Jul 2019 @ 1:40pm

    Do we have the documents where they attempted to sue 'The Furry Gang'?
    Is this just another the platform has deep pockets so they need to pay me?

    Why not sue USPS, they delivered the defective leash.
    Why not sue Customs, for allowing this defective item into the country?

    If I went to Home Depot and bought a grill that then exploded, in my mind I am hard pressed to find a reason to sue Home Depot for another companies failures. If Home Depot had 10 reports of them blowing up & kept them on the shelves... I can see them being liable.

    And while they want to play the popular game of 'on the internet' its different, I want to see how they will now demand that Home Depot test every widget, nut, bolt, washer on their shelves. They get items from multiple sellers & offer a platform to sell the items much like Amazon.

    Amazon should/could demand better contact information from sellers & how they don't manage to have legal terms that protect them is sort of shocking. Buyer Beware was a thing I thought.

    reply to this | link to this | view in chronology ]

    • icon
      Anonymous Anonymous Coward (profile), 15 Jul 2019 @ 2:00pm

      Re:

      It is likely that Amazon does have contact information for the sellers/manufacturers. They have to send the money someplace, or the seller wouldn't have an account at Amazon.

      reply to this | link to this | view in chronology ]

    • icon
      BJC (profile), 15 Jul 2019 @ 2:25pm

      Re:

      Yes, Home Depot is totally liable for selling you an explosive grill. Both under tort law and probably under an implied warranty for fitness for a particular use under the Uniform Commercial Code.

      This has been true for decades.

      reply to this | link to this | view in chronology ]

      • icon
        That Anonymous Coward (profile), 16 Jul 2019 @ 3:58am

        Re: Re:

        It is confusing to me...
        If the grill was made by XYZ Exploding Grills Inc, I can't understand why I have a better case against Home Depot than XYZ, unless HD had been made aware that every 3rd grill explodes & kept selling them.

        In this case a single (as far as we know) leash was alleged to be defective (not seen a report from a forensics expert stating such) leading to an injury. One wonders if they did reach out to 'The Furry Gang' or Amazon to get contact info or just thought kaching & filed.

        If I bought a used grill on Ebay and it explodes I can sue Ebay?
        If I bought something on one of the recent sell your crap to people quick apps & it explodes I can sue the platform?

        reply to this | link to this | view in chronology ]

        • icon
          BJC (profile), 16 Jul 2019 @ 7:39am

          Re: Store Liability

          You don't have a better case, you have the same case. Whatever you collect from Home Depot would be subtracted from any case you might bring against the manufacturer.

          The general case (this is a Restatement, so it's not "the law," but it's a pretty good summary of what the law more or less is in most places) is Restatement 2d of Torts 402A (https://h2o.law.harvard.edu/collages/749). As you can see, the rule is, if it comes off your real or virtual shelf, you're liable for it as if you were the manufacturer unless you go out of your way to separately check its condition.

          So, yeah, Home Depot is liable. The Restatement's been around in more or less this form for a long time.

          Now, let's talk about Amazon. What makes Amazon not a payment processor, and not Ebay, is that it is in the business of selling things. While it didn't sell this particular thing in the traditional way, it didn't make you go over somewhere else and use the "things not directly sold by Amazon.com" site, with different terms and conditions. You went to the same site under the same rules, with the same method you would have used to buy something directly from Amazon's warehouses if you'd just clicked a different product.

          And so it's not really a "marketplace," but it's just one step beyond supermarkets selling their shelf space to manufacturers for whatever the manufacturer is making at the time: they're outsourcing. Outsourcing does not reduce your liability; it just gives you someone else to blame.

          reply to this | link to this | view in chronology ]

          • icon
            That Anonymous Coward (profile), 16 Jul 2019 @ 5:38pm

            Re: Re: Store Liability

            You can understand why this makes my head hurt.

            We have reached the point where the law & progress have created a quagmire by ignoring each other.

            A state consumer protection law, against an online retailer (which might not have enough actual ties to the state).
            Multiply by 51.
            While it wasn't that hard for Amazon to handle the 51 different state tax rates, having to crawl 51 sets of rules & laws (that I am sure Eleisver "owns" & gets well paid for access to) is crippling.

            It shouldn't be impossible to create federal laws covering product fitness and such & spell out the rights & responsibilities for online retailers.
            I might still have issues wrapping my mind around Amazon being responsible but if there was a single law covering the responsibilities & rights everyone would be better off.

            Anything would be much better than having multiple rulings in multiple states appealed in multiple circuits giving split results confusing everyone as each one wants to apply various laws in various ways.

            reply to this | link to this | view in chronology ]

            • icon
              BJC (profile), 17 Jul 2019 @ 7:38am

              Re: Re: Re: Store Liability

              Way back when I did products liability law. In a number of the jurisdictions I had cases in, it didn't matter where the court was, but where the person was injured. For example, if you're a manufacturer in New York and somebody gets hurt by your product in Kentucky, and that person goes all the way to sue you in New York, the courts of New York may very well apply Kentucky law, even if Kentucky law would reach a different outcome than New York law.

              Once again, this is not a new development; it predates the internet by decades. Anyone, big or small, who has done mail order or sells to national retailers has had to deal with this. There are cases from 50 years ago or more about businesses on one side of the country having to do with product liability law on the other side of the country, sometimes in their "home courts."

              What you're doing is arguing against federalism for the internet, basically. That the United States is too big to maintain individual states' police powers over anything that travels in interstate commerce.

              This is, politically, a giant non-starter.

              reply to this | link to this | view in chronology ]

  • identicon
    rasz_pl, 15 Jul 2019 @ 1:56pm

    seriously threatening Internet commerce???

    It blows my mind that someone might think being actually responsible for selling defective dangerous Chinese garbage is a free speech issue.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 15 Jul 2019 @ 3:24pm

    I'm inclined to agree with points mentioned by Anonymous Coward, 15 Jul 2019 @ 1:35pm and cpt kangarooski above.

    I don't see this as a Section 230 issue. Amazon is not being sued for material posted on their website by a third party. (Well they were, but those claims were properly barred by the Court.)

    It appears to me that Amazon's liability in this case stems from their position in the manufacturer-to-consumer chain, just like any brick-and-mortar business would be liable for selling defective goods that cause injury.

    If Amazon's business model was more like a classified ad, where the platform wasn't involved in the sale beyond connecting buyer and seller together, then I would not consider them liable. That isn't the case here. While they don't take an identical position in the chain as a retailer would (buying a product from a manufacturer/wholesaler and then reselling it), their role is similar to that of being the Walmart/Target that a customer walks into to buy stuff, and as such the same liability is in play.

    If the result of this case is that Amazon has to do more due diligence in vetting a vendor before allowing goods to be sold through the website than getting some billing info and a checkbox for "I agree to these terms," that might not be such a bad thing.

    reply to this | link to this | view in chronology ]

    • icon
      Gary (profile), 15 Jul 2019 @ 4:55pm

      Re:

      It appears to me that Amazon's liability in this case stems from their position in the manufacturer-to-consumer chain

      Just like the post office.

      reply to this | link to this | view in chronology ]

    • identicon
      christenson, 16 Jul 2019 @ 7:33am

      Re: Position in the chain of causation

      Gary:
      As it stands, if I sell defective products in a brick and mortar store, I am liable as part of the chain of causation of the horrible events that follow. An auctioneer traditionally is not liable. A newspaper or TV station carrying advertising is also not liable.

      The question is, how involved do I need to be for liability? What is the line with the correct unintended consequences? What is the boundary between being a passive bulletin board and an originator/inciter of bad things?

      Craigslist (want ads) takes a very explicit caveat emptor position...meaning they specifically tell you to protect yourself.

      Amazon Marketplace, and ebay, for its part, is selling trust...trust that when you say "I'll pay $25", there are no collateral consequences, and you have a reasonable expectation that what you paid for will arrive at your doorstep. Incidentally, doing this on a computer using banks was the patent at issue in Alice vs CLS Bank.

      Amazon's position, however, is significantly more involved than either the banks or the post office... in that they make substantial requirements on their sellers as to price and timeliness; they actively interfere with consumers making contact with the manufacturer; and they couple their advertising to their logistics services. They also brand their stuff Amazon Marketplace, which means they are much more involved than simply hosting third-party content and moderating it.

      All of these give Amazon substantial power, which they use to displace costs. So, in this difficult case that will make bad law, where is the correct line??

      I think it goes to the degree of control exercised over the sellers and the interference with direct contact. Craigslist is on one end of the spectrum, backpage (with its actively helping its best advertisers write ads) is in the middle, ebay next, then Wal-mart (and other brick-and mortars) on-line and Amazon.

      reply to this | link to this | view in chronology ]

  • identicon
    Robert Beckman, 16 Jul 2019 @ 9:18am

    Walmart is Amazon, but with liability

    Slightly disagreeing with the logic of the ruling, but in support of the purpose of such a ruling.

    Walmart, like Amazon, doesn’t own all of the product it sells off its shelves. But while Amazon does own some of the product, Walmart owns essentially none of it - Walmart always acts as a consignment store, and the manufacturer owns the product, with Walmart taking a cut of the proceeds for providing a storefront, cash handling, marketing, and sales consulting (help set the price).

    If this has been bought from Walmart, everyone agrees they’d be liable. The only difference is that you can walk into a Walmart point of sale warehouse, while Amazon only let’s employees into their point of sale warehouse.

    The underlying point of the ruling is (or should be), that its inherently unfair that two otherwise identically situation businesses face different liability when one allows the inspection of goods before purchase (Walmart), while another refuses to allow a purchaser to inspect those goods (Amazon), and its the one who restricts purchaser information more that gets immunity.

    Otherwise, all Walmart would need to do is change its point of sale devices into web terminals, so that every sale is completed over the internet and their “store” becomes just a self service warehouse. If anyone saw that happening, where a Walmart store refused to sell you something you picked off an aisle, but would provide you the web portal to “buy it online and take home today! No waiting for Amazon Prime, get it now!” They’d immediately see it as a scam to avoid liability.

    That’s (hopefully) what the two judges saw, and were trying to correct.

    reply to this | link to this | view in chronology ]


Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here



Subscribe to the Techdirt Daily newsletter




Comment Options:

  • Use markdown. Use plain text.
  • Remember name/email/url (set a cookie)

Close

Add A Reply

Have a Techdirt Account? Sign in now. Want one? Register here



Subscribe to the Techdirt Daily newsletter




Comment Options:

  • Use markdown. Use plain text.
  • Remember name/email/url (set a cookie)

Follow Techdirt
Techdirt Gear
Shop Now: I Invented Email
Advertisement
Report this ad  |  Hide Techdirt ads
Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Chat
Advertisement
Report this ad  |  Hide Techdirt ads
Recent Stories
Advertisement
Report this ad  |  Hide Techdirt ads

Close

Email This

This feature is only available to registered users. Register or sign in to use it.