Arbitrator’s Ruling for Amazon Was ‘Completely Irrational’: 3rd-Party Seller
An arbitrator’s award in Amazon’s favor “must be vacated on the grounds that the decision is completely irrational” and “manifestly disregards the law,” said former Amazon third-party seller Longyan Junkai in a reply memorandum Monday (docket 1:23-cv-04869) in U.S. District…
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Court for Southern New York in Manhattan in support of its petition to vacate the award, and in opposition to Amazon’s cross-motion to confirm the award. Junkai seeks recovery of $461,000 in sales proceeds that Amazon seized, and an arbitrator ruled it could keep, when Amazon deactivated the seller’s online store for selling counterfeit goods (see 2306270041). The award also should be vacated because it violates “strong public policy” by ruling that Section 2 of Amazon’s contract with third-party sellers has a “liquidated damage clause” that’s valid and enforceable, said the memorandum. The “primary legal issue” is whether Section 2 is within the law when it grants Amazon “the right to confiscate all sales proceeds in the seller account as purported liquidated damages without filing any counterclaim for damages or presenting evidence to substantiate its claimed damages,” it said. This is done after Amazon subtracts its sales commissions and service fees from the confiscated sales proceeds “and ensures all customer refunds have been properly addressed and deducted from the seized sales proceeds,” it said. It’s “a well-defined, explicit, and clearly applicable legal principle that a valid liquidated damage clause must pass the ‘reasonable forecast’ test,” said the memorandum. The parties “argued vigorously about this test in the legal briefs,” and the arbitrator “was briefed multiple times about this test,” it said. The arbitrator “knew of the governing legal principle” but “refused to apply it or ignored it,” it said.