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E-Commerce Liability Cases Could Open Floodgates For Lawsuits, Panelists Agree

Amazon is entangled in local legal cases that could set off lawsuits for third-party products sold on its platform.

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Nathan Garnett, general counsel at OfferUP, at the ITIF event

May 27, 2021—Emerging legal rulings holding online retailers liable for defective third-party products could cause a ripple effect of lawsuits if more courts across the nation adopt that position, according to a panel of legal experts at an event hosted by the Information Technology & Innovation Foundation on Wednesday.

Product liability law has traditionally held that the “seller” of products are responsible for the defects those products may have. You buy a curling iron from Target, for instance, not directly from Dyson. Target is the seller, and in the case of product defection, Target may be the responsible party.

But Amazon has avoided the legal distinction of seller until recently by arguing that they merely act as the middleman in transactions, and that when items are purchased from its website, business is done directly with the manufacturer, which would be responsible in any legal proceeding. Some have argued that this insulation from liability has made e-commerce companies like Amazon far too powerful.

But two rulings in California and one outstanding case in Texas are challenging that assumption.

Bolger v. Amazon

In one of the California cases challenging the precedent, Angela Bolger bought a laptop computer battery from Amazon.com. The listing for the battery identified the seller as “E-Life,” a company that doesn’t actually exist (Lenoge is the technical company, which wasn’t listed). Several months after the purchase, Bolger was severely burned when the battery she ordered exploded.

In an appeal, Bolger’s lawyers argued that because the package passed through an Amazon-branded warehouse, was prepared for shipment in Amazon-branded packaging, and then sent to Bolger, Amazon is classified as a distributor of the product. Amazon placed itself between Lenoge and Bolger in the chain of distribution, which, according to her lawyers, should make them a responsible party. And the jury agreed.

Loomis v. Amazon

In the second California case, the trials court sided with Amazon when the plaintiff filed suit for sustained injuries stemming from a defective hoverboard, which she purchased from a third-party seller off of Amazon’s website. The Court of Appeal reversed the trial court’s ruling, however, applying the Bolger ruling and confirming that the ruling properly applied strict product liability law to the facts of its case, and was therefore correctly decided.

McMillan v. Amazon 

McMillan v. Amazon.com is currently being heard by the Texas Supreme Court—the first time this legal precedent has crossed state boundaries. Robinson believes that the precedent crossing state lines could be a sign of a shift in legal attitude toward online retailers nationwide.

Taken together — if the Texas court rules similarly to the California cases — a trend may emerge in which other states follow suit and label Amazon a seller, holding them liable in intermediary liability cases.

“I’m not exaggerating when I say this is probably the most important product liability issue that’s arisen in the past 50 years,” said Jeremy Robinson, a partner at law firm Casey Gerry.

Potential problems

While all of the panelists present at the event said they could understand the legal rationale distinguishing Amazon as a seller, some saw brewing legal storms underneath, such as how the law would be applied to other online retailers like eBay and Etsy.

“When you buy a product off Amazon you don’t interact with the third-party seller, you interact with Amazon,” Robinson says, “and all of these things basically make Amazon a retailer. So, Amazon should take the responsibilities of being a retailer, as well as the benefits—and obviously they’re getting a lot of benefits.”

“Where do you draw the line?” Robinson later asked.

Other ecommerce websites like eBay and Etsy have a more direct relationship between sellers and buyers. Amazon may be an easy target because Amazon doesn’t always make it clear who exactly you’re doing business with, but that doesn’t mean that other online marketplaces will remain exempt from the liability protections they have previously enjoyed.

Reporter Tyler Perkins studied rhetoric and English literature, and also economics and mathematics, at the University of Utah. Although he grew up in and never left the West (both Oregon and Utah) until recently, he intends to study law and build a career on the East Coast. In his free time, he enjoys reading excellent literature and playing poor golf.

Section 230

Section 230 Interpretation Debate Heats Up Ahead of Landmark Supreme Court Case

Panelists disagreed over the merits of Section 230’s protections and the extent to which they apply.

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Screenshot of speakers at the Federalist Society webinar

WASHINGTON, January 25, 2023 — With less than a month to go before the Supreme Court hears a case that could dramatically alter internet platform liability protections, speakers at a Federalist Society webinar on Tuesday were sharply divided over the merits and proper interpretation of Section 230 of the Communications Decency Act.

Gonzalez v. Google, which will go before the Supreme Court on Feb. 21, asks if Section 230 protects Google from liability for hosting terrorist content — and promoting that content via algorithmic recommendations.

If the Supreme Court agrees that “Section 230 does not protect targeted algorithmic recommendations, I don’t see a lot of the current social media platforms and the way they operate surviving,” said Ashkhen Kazaryan, a senior fellow at Stand Together.

Joel Thayer, president of the Digital Progress Institute, argued that the bare text of Section 230(c)(1) does not include any mention of the “immunities” often attributed to the statute, echoing an argument made by several Republican members of Congress.

“All the statute says is that we cannot treat interactive computer service providers or users — in this case, Google’s YouTube — as the publisher or speaker of a third-party post, such as a YouTube video,” Thayer said. “That is all. Warped interpretations from courts… have drastically moved away from the text of the statute to find Section 230(c)(1) as providing broad immunity to civil actions.”

Kazaryan disagreed with this claim, noting that the original co-authors of Section 230 — Sen. Ron Wyden, D-OR, and former Rep. Chris Cox, R-CA — have repeatedly said that Section 230 does provide immunity from civil liability under specific circumstances.

Wyden and Cox reiterated this point in a brief filed Thursday in support of Google, explaining that whether a platform is entitled to immunity under Section 230 relies on two prerequisite conditions. First, the platform must not be “responsible, in whole or in part, for the creation or development of” the content in question, as laid out in Section 230(f)(3). Second, the case must be seeking to treat the platform “as the publisher or speaker” of that content, per Section 230(c)(1).

The statute co-authors argued that Google satisfied these conditions and was therefore entitled to immunity, even if their recommendation algorithms made it easier for users to find and consume terrorist content. “Section 230 protects targeted recommendations to the same extent that it protects other forms of content presentation,” they wrote.

Despite the support of Wyden and Cox, Randolph May, president of the Free State Foundation, predicted that the case was “not going to be a clean victory for Google.” And in addition to the upcoming Supreme Court cases, both Congress and President Joe Biden could potentially attempt to reform or repeal Section 230 in the near future, May added.

May advocated for substantial reforms to Section 230 that would narrow online platforms’ immunity. He also proposed that a new rule should rely on a “reasonable duty of care” that would both preserve the interests of online platforms and also recognize the harms that fall under their control.

To establish a good replacement for Section 230, policymakers must determine whether there is “a difference between exercising editorial control over content on the one hand, and engaging in conduct relating to the distribution of content on the other hand… and if so, how you would treat those different differently in terms of establishing liability,” May said.

No matter the Supreme Court’s decision in Gonzalez v. Google, the discussion is already “shifting the Overton window on how we think about social media platforms,” Kazaryan said. “And we already see proposed regulation legislation on state and federal levels that addresses algorithms in many different ways and forms.”

Texas and Florida have already passed laws that would significantly limit social media platforms’ ability to moderate content, although both have been temporarily blocked pending litigation. Tech companies have asked the Supreme Court to take up the cases, arguing that the laws violate their First Amendment rights by forcing them to host certain speech.

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Section 230

Supreme Court Seeks Biden Administration’s Input on Texas and Florida Social Media Laws

The court has not yet agreed to hear the cases, but multiple justices have commented on their importance.

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Photo of Solicitor General Elizabeth Prelogar courtesy of the U.S. Department of Justice

WASHINGTON, January 24, 2023 — The Supreme Court on Monday asked for the Joe Biden administration’s input on a pair of state laws that would prevent social media platforms from moderating content based on viewpoint.

The Republican-backed laws in Texas and Florida both stem from allegations that tech companies are censoring conservative speech. The Texas law would restrict platforms with at least 50 million users from removing or demonetizing content based on “viewpoint.” The Florida law places significant restrictions on platforms’ ability to remove any content posted by members of certain groups, including politicians.

Two trade groups — NetChoice and the Computer & Communications Industry Association — jointly challenged both laws, meeting with mixed results in appeals courts. They, alongside many tech companies, argue that the law would violate platforms’ First Amendment right to decide what speech to host.

Tech companies also warn that the laws would force them to disseminate objectionable and even dangerous content. In an emergency application to block the Texas law from going into effect in May, the trade groups wrote that such content could include “Russia’s propaganda claiming that its invasion of Ukraine is justified, ISIS propaganda claiming that extremism is warranted, neo-Nazi or KKK screeds denying or supporting the Holocaust, and encouraging children to engage in risky or unhealthy behavior like eating disorders,”

The Supreme Court has not yet agreed to hear the cases, but multiple justices have commented on the importance of the issue.

In response to the emergency application in May, Justice Samuel Alito wrote that the case involved “issues of great importance that will plainly merit this Court’s review.” However, he disagreed with the court’s decision to block the law pending review, writing that “whether applicants are likely to succeed under existing law is quite unclear.”

Monday’s request asking Solicitor General Elizabeth Prelogar to weigh in on the cases allows the court to put off the decision for another few months.

“It is crucial that the Supreme Court ultimately resolve this matter: it would be a dangerous precedent to let government insert itself into the decisions private companies make on what material to publish or disseminate online,” CCIA President Matt Schruers said in a statement. “The First Amendment protects both the right to speak and the right not to be compelled to speak, and we should not underestimate the consequences of giving government control over online speech in a democracy.”

The Supreme Court is still scheduled to hear two other major content moderation cases next month, which will decide whether Google and Twitter can be held liable for terrorist content hosted on their respective platforms.

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Expert Opinion

Luke Lintz: The Dark Side of Banning TikTok on College Campuses

Campus TikTok bans could have negative consequences for students.

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The author of this expert opinion is Luke Lintz, co-owner of HighKey Enterprises LLC

In recent months, there have been growing concerns about the security of data shared on the popular social media app TikTok. As a result, a number of colleges and universities have decided to ban the app from their campuses.

While these bans may have been implemented with the intention of protecting students’ data, they could also have a number of negative consequences.

Banning TikTok on college campuses could also have a negative impact on the inter-accessibility of the student body. Many students use the app to connect with others who share their interests or come from similar backgrounds. For example, international students may use the app to connect with other students from their home countries, or students from underrepresented groups may use the app to connect with others who share similar experiences.

By denying them access to TikTok, colleges may be inadvertently limiting their students’ ability to form diverse and supportive communities. This can have a detrimental effect on the student experience, as students may feel isolated and disconnected from their peers. Additionally, it can also have a negative impact on the wider college community, as the ban may make it more difficult for students from different backgrounds to come together and collaborate.

Furthermore, by banning TikTok, colleges may also be missing out on the opportunity to promote diverse events on their campuses. The app is often used by students to share information about events, clubs and other activities that promote diversity and inclusivity. Without this platform, it may be more difficult for students to learn about these initiatives and for organizations to reach a wide audience.

Lastly, it’s important to note that banning TikTok on college campuses could also have a negative impact on the ability of college administrators to communicate with students. Many colleges and universities have started to use TikTok as a way to connect with students and share important information and updates. The popularity of TikTok makes it the perfect app for students to use to reach large, campus-wide audiences.

TikTok also offers a unique way for college administrators to connect with students in a more informal and engaging way. TikTok allows administrators to create videos that are fun, creative and relatable, which can help to build trust and to heighten interaction with students. Without this platform, it may be more difficult for administrators to establish this type of connection with students.

Banning TikTok from college campuses could have a number of negative consequences for students, including limiting their ability to form diverse and supportive communities, missing out on future opportunities and staying informed about what’s happening on campus. College administrators should consider the potential consequences before making a decision about banning TikTok from their campuses.

Luke Lintz is a successful businessman, entrepreneur and social media personality. Today, he is the co-owner of HighKey Enterprises LLC, which aims to revolutionize social media marketing. HighKey Enterprises is a highly rated company that has molded its global reputation by servicing high-profile clients that range from A-listers in the entertainment industry to the most successful one percent across the globe. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views reflected in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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