AAA Arbitrator Strikes Section 2 of Amazon's Business Solutions Agreement as an Unenforceable Penalty, Orders Seller Funds Released With 12% Interest

BEVERLY HILLS, Calif., August 6, 2026 - An American Arbitration Association
arbitrator has struck Section 2 of Amazon.com's (NASDAQ: AMZN) Business
Solutions Agreement as an unenforceable penalty and ordered Amazon to release
the full balance of a third-party seller's withheld sales proceeds, together
with mandatory prejudgment interest at 12 percent per annum.

In Dynamic Sneakers, LLC v. Amazon.com, Inc. and Amazon.com Services, LLC,
AAA Case No. 01-25-0003-3748, Arbitrator Theodore (Ted) P. Pearce issued a
Final Award on August 5, 2026 directing Amazon to remit $66,028.12 in withheld
sales proceeds plus $15,651.38 in prejudgment interest under RCW 19.52.010, for
a total of $81,679.50, payable within 30 days. The arbitrator further allocated
70 percent of the AAA administrative fees and arbitrator compensation to
Amazon, requiring reimbursement of an additional $3,785.76 to the seller.

The claimant was represented by Kenneth G. Eade of AMZ Sellers Attorney®.
Amazon was represented by Kristine Modica of Davis Wright Tremaine LLP.

SECTION 2 FAILS BOTH PRONGS OF WASHINGTON'S LIQUIDATED DAMAGES TEST

Amazon defended the withholding on the ground that Section 2 operates as an
enforceable liquidated damages provision. Applying the two-part test from
Watson v. Ingram, 124 Wn.2d 845 (1994), the arbitrator found that Section 2
contains no fixed sum and no formula, does not use the words "liquidated
damages," and provides no reasonable forecast of harm measured at the time of
contract formation. Citing Minnick v. Clearwire U.S. LLC, 174 Wn.2d 443 (2012),
the award notes there is no middle ground: a provision that fails either prong
is an unlawful penalty.

The arbitrator also found the clause unconscionable. Because sellers cannot
negotiate the BSA and cannot proceed through registration without accepting it,
the agreement was analyzed as a contract of adhesion under Burnett v. Pagliacci
Pizza, Inc., 196 Wn.2d 38 (2020). The award states that at the time of contract
formation it was not reasonably foreseeable to the seller that Amazon could
permanently seize all of its proceeds untethered to damages, which were
undefined in the agreement.

Amazon's argument that its investment of more than $900 million annually in
brand protection justified the retention was rejected as measuring Amazon's
global program rather than any harm caused by this seller's transactions. The
arbitrator likewise rejected Amazon's reliance on the 14-day disbursement cycle
in Section S-5, observing that Section 2 imposes no such limit and that the
retention here spanned roughly 90 days of sales.

Under the BSA's own severability clause at Section 18, Section 2 was stricken
while the remainder of the agreement stayed intact.

THE CONDITION PRECEDENT HOLDING

The award separately rejected Amazon's position that a seller's compliance with
the BSA is a condition precedent that extinguishes Amazon's duty to remit funds.
Washington courts require specific language to create a condition precedent -
phrases such as "on condition," "provided that," "subject to," or "contingent
upon." The arbitrator found the BSA's disbursement provisions contain none of
them, and held that seller compliance is a promise rather than a condition. If
that promise is breached, Amazon's remedy is a claim for damages, which the
award notes Amazon neither pleaded independently nor proved.

"Amazon has spent years arguing that a seller's alleged policy violation
switches off its obligation to pay," said Kenneth G. Eade, founding attorney of
AMZ Sellers Attorney®. "This award says plainly that the contract Amazon wrote
does not say that. Amazon drafted the BSA. It knew how to write a condition
precedent, and knew how to write a liquidated damages clause, and it did not write one."

Eade noted that the seller did not prevail on every claim. The arbitrator denied
the Washington Consumer Protection Act claim for lack of the public-interest
element, denied the conversion claim under Washington's independent duty
doctrine, denied unjust enrichment because an express contract governs, and
denied the request for attorney's fees.

"I would rather tell sellers exactly what these awards do and do not deliver,"
Eade said. "The contract claim is where the recovery lives. Prejudgment interest
in Washington is mandatory, and at 12 percent it is doing real work - here it
added nearly a quarter again on top of the principal. Sellers sitting on frozen
funds should understand that the clock is running in their favor."

The firm has now prevailed against Section 2 of the BSA in arbitrations seated
in Washington, Florida, Tennessee, Texas, and New York. Prior documented
outcomes include a $1.8 million ICDR Final Award issued June 12, 2024 by
Arbitrator Deborah A. Coleman and a confidential six-figure Washington Consumer
Protection Act recovery in April 2026.

Arbitration awards are private and are not citeable as binding precedent. Eade
has consistently noted that this limits their formal reach but not their
practical value. "Every one of these awards is another arbitrator, in another
state, potentially reaching a different conclusion about the same clause," he said.

Past results do not guarantee future outcomes. Every matter turns on its own
facts and on the governing version of the Amazon Business Solutions Agreement.
This release is provided for informational purposes and is not legal advice.

MEDIA CONTACT
AMZ Sellers Attorney®
info@amazonsellers.attorney
+1-888-806-2440
https://www.amazonsellers.attorney/

AMZ Sellers Attorney® is the registered mark of Amazon Sellers Attorney, Ltd.,
an attorney-led e-commerce and intellectual property law firm at 9350 Wilshire
Boulevard, Suite 203, Beverly Hills, California, founded in 2017. The firm
represents third-party sellers, brand owners, and KDP authors worldwide in
marketplace enforcement, arbitration, and intellectual property matters across
Amazon, Walmart, eBay, Etsy, TikTok Shop, and KDP/ACX. The practice is led by
Kenneth G. Eade, a California attorney in practice since 1980 , a former seven-figure Amazon FBA seller and published author, alongside
USPTO-registered patent attorney Michael S. Brandt.

This release was published on openPR.