The lawsuit was brought by a Pennsylvania woman who suffered permanent blindness in one eye after a retractable dog leash she bought online snapped and hit her four years ago.
In a 2-1 decision released last week, however, the 3rd U.S. Circuit Court of Appeals in Philadelphia reversed most of the lower court's ruling, holding that Amazon can be classified as a seller in part because it doesn't allow customers to communicate directly with third-party vendors.
David Wilk, an attorney who argued the case for Oberdorf, said he believed it was the first time a court had characterized Amazon as a seller under state products liability laws.
"There's an intuitive logic to our position, and it wasn't a hard argument to make," he said. "It was just a matter of whether the court was going to look past what I considered an antiquated precedent."
An Amazon spokeswoman declined to comment Tuesday on the 3rd Circuit's ruling.
Amazon had cited a 1980s Pennsylvania case involving a man who was injured by a tractor his father had bought at an auction. A court had found the auction house couldn't be held liable because it wasn't a seller but had only acted as an agent for the seller.
The appeals court disagreed with that interpretation, writing that, while items sold by Amazon can be traced to a vendor, customers can only communicate with vendors through the retailer's site.
"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," the majority wrote. "There are numerous cases in which neither Amazon nor the party injured by a defective product, sold by Amazon.com, were able to locate the product's third-party vendor or manufacturer."
That is what occurred in Oberdorf's case, according to the ruling, as neither she nor Amazon was able to contact a representative of the vendor, The Furry Gang.
The appeals court also said the Communications Decency Act doesn't shield Amazon from liability because Amazon "plays a large role in the actual sales process" and isn't merely a publisher of information or content provided by third parties. It did, however, rule that the act bars Oberdorf's claims that Amazon had a duty to publish a warning about the dog leash.
In his dissent, Judge Anthony Scirica called the case a "relatively uncharted area of law" and noted that numerous rulings in other states have barred consumers from suing Amazon for liability. He also warned that many small entrepreneurs could be excluded if Amazon were to have to research its products and police its sellers more closely.
Third-party sellers have become a big part of Amazon's success, helping boost the number of products Amazon has available to sell. Amazon said that 58% of the items bought on the site last year were sold by third-party sellers.
Jon Reily, global commerce strategy lead at Publicis Sapient, a digital consulting company, said the ruling was "definitely a harbinger of things to come" for Amazon and could eventually lead to federal legislation.
"This looks to me as something that will have to get to a federal level before it will be a huge thorn in Amazon's side, because the laws haven't caught up to the reality yet," he said.
AP Retail Writer Joseph Pisani in New York contributed to this story.