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Monday, June 17, 2024 | Back issues
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Amazon denies liability for illegally imported products

The online retail giant told a three-judge panel the fault lies with third-party sellers.

WASHINGTON (CN) — Amazon argued before a federal appeals court Friday that it is not responsible for third-party sellers importing illegal products into the United States.

Chief Administrative Law Judge Channing D. Strother granted summary judgment to the U.S. Department of Agriculture in 2021 after finding Amazon liable for aiding and abetting illegal imports in violation of the Animal Health Protection Act and Plant Protection Act. That decision spurred Amazon's appeal to the D.C. Circuit.

The case dates back to 2015, when federal agents in San Francisco seized 13 shipments of beef, pork and poultry products from China addressed to an Amazon warehouse in California. According to the USDA, the shipments carried the risk of spreading foot-and-mouth disease, highly pathogenic avian influenza, classical swine fever and swine vesicular disease. 

To legally ship such products, third-party sellers on Amazon's platform must certify that the products are prepared in conformity with requirements to prevent disease transmission. The seized shipments lacked the required certifications. 

The seller of these products, Yummy House Hong Kong, allegedly also provided false information on its shipping labels, declaring that the items were rubber tubes and personal belongings. The USDA claims Amazon worked with Yummy House after the seizure to ship its remaining inventory to a non-Amazon warehouse in New Jersey. 

Amazon claims it is not liable because it knew of no wrongdoing during the importation process. The AHPA and PPA statutes have language barring the aiding, abetting, causing or inducing of the importation of illegal products. 

"The statutory 'aid, abet, cause, or induce' words that the department purported to apply are secondary liability concepts with long-established meanings," the company's brief filed with the D.C. Circuit states. "They require knowledge of and substantial assistance to third parties' wrongdoing." 

During oral arguments Friday, Chief U.S. Circuit Judge Sri Srinivasan seemed to disagree that Amazon would had to have known of wrongdoing to abet or aid in violation of the AHPA and PPA. The Barack Obama appointee said the only provision in the laws that speaks to aiding and abetting involves assisting in shipping, not knowledge of wrongdoing. 

"Let's say for the sake of argument that we were to agree with you that aid and abet carries with it this concept of knowing and substantially assist," Srinivasan said. "Even if we give you the benefit of that, what that would mean is we would read it into the provision that has to do with carrying, importing, mailing, shipping and supporting because that's where aid and abet appears."

Under the provision, the judge said, it does not matter whether Amazon knew of wrongdoing because it substantially assisted in the importing process.

Amazon's attorney argued that when liability is in question with routine business practices, the court must look to the knowledge of wrongdoing. 

"There is simply no awareness [of wrongdoing]," attorney William Brendan Murphy of Perkins Coie told the three-judge panel on behalf of the online retail giant. "This court and other courts have noted that the knowledge and substantial assistance requirements are particularly important when you're talking about ordinary business activity." 

The USDA argues the company's "Fulfillment By Amazon" program, which allows sellers to ship their inventory to an Amazon warehouse for storing and shipping to the end customer, is a benefit being provided to aid in illegal importation. The agency claims Amazon is aware of the products being sent to its warehouses. 

"Third-party sellers who participate in the Fulfillment By Amazon service are required to register each product they want to include, and Amazon reserves the right to decline to permit particular products to use the service," the USDA's brief states. "Amazon is thus aware of which products third-party sellers will ship to its warehouses for later fulfillment." 

According to the agency, other additional benefits provided by Amazon to sellers include serving as an initial point of contact for returns, handling customer service requests and providing free shipping to customers. 

Murphy countered Amazon did not assist in Yummy House's lack of certificates, which is the violation in question, and said it was the seller's responsibility rather than Amazon's. 

The attorney also argued that Amazon does not help third-party sellers with any part of the process of importing products to the U.S. Instead, it only assists the sellers once their products have reached an Amazon warehouse. The company's contract with third-party sellers specifies they are responsible for importation, not Amazon, according to Murphy.

"What in this record shows that Amazon actually provided some measurable assistance to these third-party sellers in carrying something across the border?" Murphy asked the panel. "The answer is nothing."

U.S. Circuit Judge Judith W. Rogers, a Bill Clinton appointee, said that Amazon, as an American company, should have been monitoring imports closer to protect public health. She said Congress has made it known that concerning contract law, it's on the U.S. company to take on specific responsibilities to prevent foreign companies from importing items that are health hazards. 

"As Congress has understood it and the department has interpreted its power over these years as I understand it, it's that your client is in the best position to know the type of information that is critical to the public health and safety and agriculture in this country," Rogers said to Murphy.

The judge made it clear she believes Amazon is working against the intent of Congress by not asking more questions of third-party sellers before accepting import shipments to its warehouses. 

"I understand why your client might opt to proceed as it does, but why would Congress sanction that type of behavior?" Rogers asked. "In other words, it doesn't care what comes into this country until it actually gets into this country." 

Murphy said that if Congress has a problem with how Amazon conducts business with third-party sellers, it should change the law. 

U.S. Circuit Judge Justin R. Walker, a Donald Trump appointee, rounded out the panel. The judges did not indicate when they would issue a ruling.

Murphy and USDA attorney Bradley Hinshelwood did not respond to requests for comment. 

Categories / Appeals, Business, Government, Health

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