BREAKING NEWS: Huge Court Win for Sellers
Amazon has been communicating directly with state attorney generals and providing information about your sales.
Now, what I have personally seen from the spreadsheets that Amazon provided to state attorney generals, they’re giving all your information, but of course, Amazon left itself and its sales off that data. There were over half a million offers removed from Amazon based upon these price gouging investigations and 6,000 sellers lost their accounts. This is a huge court win for sellers, and this decision is absolutely fantastic when it comes to suspended Amazon seller accounts.
Here’s the legal issue…
Can the State of Kentucky (and hopefully this will apply to all the other states in the union), can the State of Kentucky use its state laws to perform an investigation into Amazon sellers who service the entire country through the national Amazon platform?
The first rule of law the court had to address is something called ‘standing’.
Standing is with the plaintiff, does the person or company bringing the lawsuit have a right to be involved in dispute? Basically, does the person suing, has he or she or it lost anything? The court ruled that the Online Merchants Guild, and more importantly, its members, did have standing to bring the lawsuit. That was a huge victory for the plaintiff in this case for the Amazon seller.
The second issue the court addressed is whether or not the court itself had jurisdiction.
Because first you need someone who has the ability to sue over a wrong. And then the court has to decide whether it has the ability to even become involved. Court jurisdiction basically means power. Does the court have power to decide this dispute and govern the parties? In this case, it was an Amazon seller and the State of Kentucky. The court looked at what’s called ripeness. Was the time to make a decision now? Were there enough facts in dispute and was there harm? The court here decided absolutely 100% yes, because the State of Kentucky was going after sellers and the investigation had criminal-like effects. So the court decided this dispute was within its jurisdiction and it was ripe for a decision.
The second part of jurisdiction is what’s called abstention.
Since this was a federal court, federal courts have to decide whether they should insert themselves into state court law. Since Kentucky’s law was affecting Amazon sellers outside of Kentucky, the court decided not to remove itself, not to exercise abstention. The court decided it was going to handle this case. Now, I mentioned criminal-like investigation. The court addressed that matter and said, yes, when Kentucky was investigating this Amazon seller and other Amazon sellers within Kentucky, and the potential for fines was there, this was criminal-like persecution and the court decided to stay involved.
The entire basis of the case as it sits right now is under US constitutional law, specifically the interstate commerce clause or what lawyers refer to as the dormant commerce clause. I’m trying to stay away from legalese. Basically, the federal government reserves the right to govern interstate commerce. When states are doing business across state lines, that’s interstate commerce. When it comes to the dormant commerce clause, it prohibits states from issuing laws that will have effect outside of state’s borders.
What does that mean? Kentucky’s investigation and Kentucky statute would have effects on sellers in Connecticut, in New York, in California. That made it extra territory, outside the State of Kentucky. This is one of the reasons this federal court decided it was going to keep this case and stay involved.
Court win for sellers: so what did the court specifically rule in this case? It is not a 100% victory. That case is not nearly over, but this is what the court ruled:
- One, that this plaintiff had the right to bring the case to court.
- Number two, the federal court was holding onto it.
- Number three, the federal court issued a TRO, a temporary restraining order that told the State of Kentucky, stop.