Pennsylvania Federal Court Holds Online Marketplace Has No Duty to Inspect Goods

Although today’s decision involves a medical product, it focuses on an online marketplace rather than a drug or device manufacturer. And by online marketplace we mean the delivery service that has become ubiquitous in almost all of our lives—Amazon.  The decision is significant because it finds Amazon, as a shipper rather than a seller, does not have an independent duty to investigate risks of the products it ships.

The plaintiff in Fike v. Global Pharma. Healthcare, et al., 2024 WL 3460114 (E.D. Pa. July 18, 2024) alleged severe eye injuries following the purchase and use of eye drops allegedly contaminated with a virulent bacteria. Plaintiff included Amazon as a defendant, and Amazon moved to dismiss.

The court began its decision with a nice summary of Third Circuit and Pennsylvania law addressing shotgun pleadings under Rule 8, negligent/reckless misrepresentation, breach of express warranty, the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UPTCPL) and punitive damages. It then addressed the plaintiff’s specific allegations against Amazon. Although the complaint had some of the “hallmarks of a shotgun pleading,” the court found it was not so vague or ambiguous that Amazon did not have notice of the claims against it. So the court declined to dismiss on “shotgun pleading” grounds.

Turning to Amazon’s arguments on the plaintiff’s specific counts, the court first addressed the question of duty in connection with the negligent/reckless misrepresentation claim. Courts in Pennsylvania impose a five-factor test in determining whether to impose a duty: 

(1) the relationship between the parties; (2) the social utility of the actor’s conduct; (3) the nature of the risk imposed and the foreseeability of the harm incurred; (4) the consequences of imposing a duty upon the actor; and (5) the overall public interest in the proposed solution.

Id. at *6. The complaint didn’t allege anything more than that Amazon acted as a middleman between the manufacturer and that the plaintiff and Amazon engaged in an arm’s-length transaction.  Noting that other circuits have held that shippers or distributors do not owe a duty to inspect products they ship, the court found factor one favored Amazon. Factor two—social utility—also favored Amazon based on the importance to the economy of the shipment of goods and the fact that “Amazon’s services provide products to large numbers of people worldwide, including groceries and healthcare products.”  Id. The third factor favored Amazon because there was little foreseeability of the alleged harm. The complaint only alleged “upon information and belief” that Amazon had received reports of symptoms consistent with infections from the eye drops.  The fourth factor also favored Amazon, as “imposing a duty on Amazon could hamper its ability to distribute and ship products, which is an extremely socially useful service.” Id. at *7.  The only factor that weighed in plaintiff’s favor was number five, as the court held that there is a public interest in protecting people from injury and loss.

In concluding that the majority of the factors favored Amazon, the court noted that “Amazon makes many important contributions to the economy, and the burden of imposing this particular duty would be high, decreasing Amazon’s ability to continue with its socially beneficial business.”  Id. Although the court noted that the harm alleged in this case was tragic – the plaintiff had her eye removed – it held that the “solution is not to impose a duty of inspection on Amazon.” Id.

The court also dismissed the claims for punitive damages and breach of express warranty.  Since Amazon didn’t have a duty to inspect the packages it shipped, the Court held there were no facts to support a claim that Amazon acted recklessly “or with the requisite lack of duty.” Id. at *9. The breach of warranty claim failed because representations that the product was “safe and effective” are insufficient to sustain that claim—they were not an explicit guarantee that was part of Amazon’s bargain with plaintiff.

The only claim that survived was the UTPCPL—although it barely avoided dismissal. A claim under the Pennsylvania UTPCPL requires (1) defendant’s unfair practices, (2) an “ascertainable loss” that the defendant’s unfair practices caused, and (3) facts which suggest the plaintiff’s reliance on the defendant was justifiable. The court found the allegations similar to those in Slemmer v. McGlaughlin Spray Foam Insulation, Inc., 995 F.Supp. 2d 452 (E.D. Pa. 2013), where the plaintiff alleged a product was marketed as “safe” and “non-toxic” and that the plaintiff would not have purchased it had certain alleged side effects been disclosed. Here the complaint alleged that Amazon represented the eye drops were safe, and that if plaintiff had been aware of the bacterial contamination she would not have purchased the product.  That allegation about not purchasing the product was enough for the court to find an allegation of “ascertainable loss” under the UPTCL to avoid dismissal.  Although Amazon didn’t prevail entirely on its motion to dismiss, the court’s no-duty holding is a significant win.