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Lars Gentry, et al. v. eBay, Inc.

99 Cal. App. 4th 816, Super Ct. No. GIC746980 (Cal. Crt. App., June 26, 2002)

California intermediate appellate court affirms the decision of the trial court, and dismisses claims brought by plaintiffs against eBay under both California's Autographed Sports Memorabilia statute and California's Unfair Competition law, as well as for negligence, arising out of plaintiffs' purchase of allegedly non-authentic autographed sports memorabilia offered for sale by third parties on eBay's web site. Plaintiffs sought to hold eBay liable under California's Autographed Sports Memorabilia statute as a result of eBay's alleged failure to supply certificates warranting the authenticity of the goods purchased.  The court held that eBay was not obligated to supply the certificates because it was not a "dealer" of sports memorabilia within the meaning of the statute, as the goods in question were sold by third parties.  The court further held that section 230 of the Communications Decency Act ("CDA") immunized eBay from any liability arising out of its failure to supply these certificates.  The court held that, however couched, plaintiffs' claim sought to hold eBay liable for the allegedly false descriptions of the goods supplied by third parties.  As the CDA creates "federal immunity to any cause of action that would make interactive service providers liable for information originating with a third party use of the service" (excepting intellectual property claims) plaintiffs' Autographed Sports Memorabilia claims had to be dismissed.

The court held that plaintiffs' negligence and Unfair Competition claims were also barred by the CDA as each of these claims was also premised on content supplied by third parties.  These claims attacked eBay for giving the sellers of the goods at issue positive ratings concerning their past sales history, and urging purchasers to rely thereon in making their decision to purchase goods from those sellers.  These positive ratings were, however, simply an accurate reporting of customer feed back supplied by third parties concerning their alleged transactions with the sellers.  As such, eBay could not be held liable for the inaccuracy of such positive ratings because to do so would be to hold eBay liable for content originated by third parties, which is barred by the CDA.

Plaintiffs are individuals who purchased forged autographed sports items offered for sale by various third parties on eBay's web site.  Plaintiffs claimed that "the Marino defendants" forged the signature of sports figures onto sports memorabilia, obtained false certificates of authenticity for these items, and then sold them to third parties.  These third parties, in turn, offered the items for sale on eBay's site with varying inaccurate descriptions describing the goods as authentic

Plaintiffs also claimed that the sellers of these items had improperly received positive ratings from eBay based on their past sales activity, which, in turn, influenced their decision to purchase the goods.  eBay gives those who sell items on its site various ratings based on their prior sales history.  Importantly, however, these ratings are simply reflections of the feedback given to eBay, and posted on its site, by third parties. 

Plaintiffs commenced suit, charging eBay with violations of both California's Autographed Sports Memorabilia statutes, and California's Unfair Competition Law, as well as with negligence.  Finding both that plaintiffs' claims were barred by Section 230 of the CDA, and that the Autographed Sports Memorabilia statute imposed no duty on eBay under the facts of the case at bar, California's Court of Appeals dismissed plaintiffs' action.

California Civil Code Section 1739.7, the Autographed Sports Memorabilia statute, prohibits "dealers" of collectibles from falsely representing an item as a collectible when it is not, in fact, signed by the sports personality in question.  The statute further obligates "dealers" to provide certificates of authenticity for each item they sell.  The statute defines "dealer" as:  "a person who is in the business of selling or offering for sale collectibles in or from this state … Dealer includes an auctioneer who sells collectibles at a public auction …".

Arguing that eBay was an auctioneer, and hence a "dealer," plaintiffs claimed eBay violated Section 1739.7 by failing to supply the certificates of authenticity the statute required.  The Court rejected this argument, holding that eBay had no obligation to supply the certificates because it did not sell the items in question and hence was not a dealer under the statute.  Rather, held the Court, it was the individual defendants who sold the items to the plaintiffs.  Said the Court:

As stated, liability as a dealer under Civil Code Section 1739.7 requires that the dealer be exclusively or nonexclusively 'in the business of selling or offering for sale collectibles in or from this state.'  (Civil Code, §1739.7, subd.(a)(4)).  Here, appellants' specific allegations reveal eBay is not in the business of selling or offering to sell the collectibles at issue; rather, it is the individual defendants who sold the items to plaintiffs, using eBay as a venue.

Curiously, the Court failed to respond directly to plaintiffs' claim that eBay had obligations under the statute by virtue of its status as an auctioneer of the goods in question.  The Court neither determined whether eBay was an auctioneer, or as an auctioneer, whether it had obligations under Section 1739.7.

The Court further held that plaintiffs' Autographed Sports Memorabilia claims was barred by Section 230 of the CDA.  While couched in terms of eBay's alleged failure to supply plaintiffs with a Certificate of Authenticity warranting the authenticity of goods sold on its site, "the substance of [plaintiffs'] allegations reveal they ultimately seek to hold eBay responsible for conduct falling within the reach of section 230, namely, eBay's dissemination of representations made by the individual defendants [concerning the goods in question], or the posting of compilations of information generated by those defendants and other third parties [concerning defendants' past sales history]."

eBay is immunized from such claims by section 230 of the CDA, which "immunizes providers of interactive computer services (service providers) … from causes of action asserted by persons alleging harm caused by the content provided by a third party."  Said the Court:

[F]or purposes of applying section 230 immunity, we consider it was the individual defendants who falsely identified the products as authentically autographed in order to place their items on eBay for sale.  On the basis of appellants' allegations, holding eBay responsible for providing a warranty under Civil Code section 1739.7 when it merely made the individual defendant's false product descriptions available to other users of its web site, or provided the web site on which the individual defendants designated their collectibles as autographed, puts eBay in the shoes of the individual defendants, making it responsible for their publications or statements.  We therefore conclude enforcement of appellants' Civil Code section 1739.7 cause of action is inconsistent with section 230 because it would "stand[] as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress."

The Court similarly rejected plaintiffs' negligence claims.  Plaintiffs alleged that eBay negligently misrepresented the past selling histories of the individual defendants, ascribing to them positive ratings for their transactions.  However, noted the Court, eBay's ratings were merely accurate representations of feedback concerning such transactions generated by third parties.  To hold eBay liable therefore would thus run afoul of the CDA, as it would hold eBay liable as the publisher of content originated by third parties.  Said the Court:

None of these allegations place eBay outside the immunity for service providers.  As eBay points out, the allegations reveal that eBay's Feedback Forum is comprised of negative or positive information provided by third party consumers and dealers.  Likewise, the star symbol and "Power Sellers" designation is simply a representation of the amount of such positive information received by other users of eBay's web site.  Appellants' negligence claim is based on the assertion that the information is false or misleading because it has been manipulated by the individual defendants or other co-conspiring parties.  Based on these allegations, enforcing appellants' negligence claim would place liability on eBay for simply compiling false and/or misleading content created by the individual defendants and other co-conspirators.  We do not see such activities transforming eBay into an information content provider with respect to the representations targeted by appellants as it did not create or develop the underlying misinformation.  We are constrained from enforcing such liability under California law because it would treat eBay as the publisher or speaker of the individual defendants' materials, and thereby conflict with section 230.

The Court also rejected plaintiffs' claim that eBay knew or should have known of the individual defendants' improper activities, and taken steps to stop it.  Said the Court:

This claim seeks to hold eBay responsible for having notice of illegal activities conducted by others on its web site, and for electing not to take action against those third parties, including by withdrawing or somehow altering the content placed by them.  This is the classic kind of claim the Zeran found to be preempted by section 230, as one that seeks to hold eBay liable for its exercise of a publisher's traditional editorial functions.  (Zeran, supra, 120 F.3d at p. 330).  Such claims have been uniformly rejected by the courts that have considered them.

Lastly, the Court held that plaintiffs' Unfair Competition claims were grounded on the same allegations that supported plaintiffs' negligence claims.  As such, those claims, too, were barred by the CDA.

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