Amazon sign in Sunnyvale, Silicon Valley. Photo: Shutterstock

A ruling by the U.S. Court of Appeals for the Third Circuit last month created a potential split between federal circuits regarding whether the online retail giant Amazon could be held liable for defective products sold by third parties. That split, however, may be short-lived, as the federal appeals court recently agreed to reconsider the case en banc.

On Aug. 23, the appeals court granted Amazon's request to have an expanded panel take a fresh look at Oberdorf v. Amazon. As part of the decision to reconsider the case, the three-judge panel's ruling from last month has been vacated pending further review.

A date has not yet been set for the hearing.

The lawsuit stemmed from an eye injury Heather Oberdorf sustained while walking her dog in early 2015. According to the allegations, she was using a leash she'd purchased a month earlier through Amazon.com from a company called The Furry Gang. After the incident, Oberdorf was unable to locate The Furry Gang or contact the manufacturer directly, and so she sued Amazon.com, alleging products liability, breach of warranty and duty, and negligence.

In early July, the panel on a 2-1 vote reversed a ruling from the U.S. District Court for the Middle District of Pennsylvania, which had predicted that the state Supreme Court would not consider the company to be a "seller" for strict liability purposes.

Amazon had argued that, under the test outlined in a 1989 Pennsylvania Supreme Court decision, it could not be held liable as a "seller," but Senior Judge Jane Richards Roth, who wrote the Third Circuit's majority opinion, determined that because the company was in a position to prevent the circulation of defective products and because imposing liability would incentivize safety that test weighed more in favor of designating the company as a "seller" under 402A of the Second Restatement of Torts.

"Amazon's customers are particularly vulnerable in situations like the present case," Roth said. "Neither the [plaintiffs] 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 ruling bucked a recent trend where both the Fourth and Sixth circuits held that the company could not be liable as a seller under state products liability laws.

In its request to have the initial ruling reconsidered, Amazon contended that the ruling conflicted with other districts and argued the appeal judges had been acting as "judicial pioneers," establishing a precedent with "no practical limit."

"The majority's decision 'substantially widen[s]' the scope of liability for online stores and marketplaces operating in Pennsylvania, including Amazon, eBay, Walmart Marketplace, and smaller businesses like Etsy, Bonanza, and Jet," Amazon said in its petition.

David Wilk of Lepley, Engelman, Yaw & Wilk in Williamsport, Pennsylvania, who represented the plaintiffs, said the decision to review the case en banc was not unexpected, given the significance of the issue. He further noted, after the three-judge panel's ruling came down, a district court in Wisconsin similarly ruled the company could be liable for third-party products.

"I'm more than happy to revisit it," he said. "I think the arguments in our favor have only gotten more compelling."

Perkins Coie attorney Brendan Murphy, who is representing Amazon, declined to comment.