Gentry v. Ebay, Inc.

• Decision Date: 26 June 2002
• Docket Number: No. D037661.,D037661.
• Citation: 99 Cal.App.4th 816,121 Cal.Rptr.2d 703
• Court: California Court of Appeals Court of Appeals
• Parties: Lars GENTRY et al., Plaintiffs and Appellants, v. EBAY, INC., Defendant and Respondent.

121 Cal.Rptr.2d 703

99 Cal.App.4th 816

Lars GENTRY et al., Plaintiffs and Appellants, v. EBAY, INC., Defendant and Respondent.

No. D037661.

Court of Appeal, Fourth District, Division 1.

June 26, 2002.

Review Denied October 16, 2002.

Krause & Kalfayan, James C. Krause, Patrick N. Keegan, San Diego, for Plaintiffs and Appellants.

Cooley Godward, Michael G. Rhodes, Christopher R.J. Pace, Andrea S. Hoffman, San Diego, for Defendant and Respondent.

Wilmer Cutler & Pickering, Patrick J. Carome, Susan P. Crawford, Samir Jain, C.Colin Rushing for America Online, Inc. as Amicus Curiae on behalf of Defendant and Respondent.

Bill Lockyer, Attorney General, Richard M. Frank, Chief Assistant Attorney General, Hershel T. Elkins, Assistant Attorney General, Ronald A. Reiter, Judith A. Fiorentini, Seth E. Mermin, Deputy Attorneys General for the Attorney General of California as Amicus Curiae.

O'ROURKE, J.

Lars Gentry, Henry Camp, Mike Hyder, James Conboy, William Pommerening, and Michael Osacky (appellants) appeal a judgment of dismissal entered after the trial court sustained eBay, Inc.'s (eBay) demurrer to appellants' second amended complaint without leave to amend. In that pleading, appellants alleged eBay violated California's Autographed Sports Memorabilia statute (Civ.Code, § 1739.7) by failing to furnish a certificate of authenticity to persons who purchased autographed sports-related collectibles through its web site. Appellants also alleged eBay was negligent and engaged in unfair business practices under the Unfair Competition Law (UCL) (Bus. and Prof.Code, § 17200 et seq.) based on its failure to supply such certificates as well as its acts in distributing false certificates, permitting other false representations to be placed on its web site, and making its own false or misleading representations. In part, the trial court ruled eBay was not a dealer within the meaning of Civil Code section 1739.7 and appellants failed to plead around the statutory immunity provided by section 230 of title 47 of the United States Code (hereinafter section 230), which otherwise protected eBay's conduct. Appellants contend the trial court erred in sustaining eBay's demurrers without leave to amend because (1) they sufficiently alleged eBay is an auctioneer that provides the requisite description of collectibles as being autographed within the meaning of Civil Code section 1739.7; and (2) section 230 does not preempt their causes of action against eBay.

We conclude appellants cannot state a cause of action against eBay under Civil Code section 1739.7 because their allegations reveal eBay did not sell or offer to sell the collectibles at issue. Additionally, we conclude imposition of Civil Code section 1739.7 Hability on eBay in this particular case, as well as liability for negligence and violation of the UCL, is inconsistent with section 230 because appellants' causes of action ultimately hold eBay responsible for misinformation or misrepresentations originating with other defendants or third parties. Because appellants cannot maintain their Civil Code section 1739.7 claim, and section 230 otherwise immunizes eBay from civil liability under these circumstances, we affirm the judgment of dismissal.

FACTUAL AND PROCEDURAL BACKGROUND

eBay promotes itself as the world's largest online marketplace for the sale of goods and services among its registered users.¹ It operates an Internet-based service in which it enables member sellers to offer items for sale to member buyers in what eBay characterizes as either auction-style or fixed price formats. To better enable users to place items for sale on its site, eBay provides descriptions to its users under various product categories and subcategories. For sports items, eBay's web site has a sports product category with the following subcategories: "Sports: Autographs"; "Sports: Memorabilia"; "Sports: Sporting Goods" and "Sports: Trading Cards." eBay's "Sports: Autographs" subcategory is further organized into sub-subcategories to differentiate autographed sports collectibles by particular leagues.

In September 1995, various individuals embarked on a plan to sell faked autographed sports memorabilia to consumers. Specifically, Angelo Marino, Gloria Marino, Gregory Marino, John Marino and Kathleen Marino (the Marino defendants) purchased sporting goods items and photographs from retail stores, forged signatures of professional athletes upon them, and employed Wayne Bray and Donald Frangipani to produce false certificates of authenticity for the items. The Marino defendants then sold most of the forged items to Stanley Fitzgerald and Phil Scheinman, larger dealers who mostly used eBay auctions to eventually sell the forged items to consumers. Stanley Fitzgerald did business as "Stan The Man Memorabilia" and "Stan's Sports Memorabilia." Phil Scheinman did business as "Smokey's Sportscard, Inc."

Appellants are individuals who purchased forged autographed sports items including baseballs, photographs and autographed pieces of paper or "cuts," from Fitzgerald, Scheinman or the Marino defendants through eBay.²

Intending to act on behalf of all purchasers of autographed sports collectibles purchased through eBay from September 1, 1995, to the time of trial, appellants sued the Marino defendants, Bray, Frangipani, Fitzgerald Scheinman and eBay. Their first-amended complaint asserted causes of action against eBay for negligence, violation of the UCL, violation of Civil Code section 1739.7 and for injunctive relief. In that pleading, appellants alleged eBay, having identified itself as an auctioneer in press releases and provided a venue for auctions, "violated California law by either failing to provide a certificate of authenticity expressly warranting the [autographed sports memorabilia] or failing to insure that such a certificate was being provided by any other party to the auction." According to their allegations, during the class period, eBay auctioned thousands of items of sports memorabilia created by the Marino defendants, a substantial number of which were accompanied by fraudulent certificates of authenticity and "expert opinions" produced by Bray and Frangipani. eBay charged placement fees to dealers listing an item for auction, and success fees (percentage fees) when items were sold. Further, appellants alleged, eBay gave customers a false sense of confidence by maintaining a forum that permitted dealers and consumers to give positive or negative feedback to other dealers or consumers, giving endorsements to certain dealers based on the volume of sales and positive feedback ratings, and advising users it may suspend or terminate their account if it finds them to have engaged in fraudulent activity in connection with the web site.

Appellants alleged that as early as 1996, eBay received numerous complaints from consumers and warnings from governmental agencies that a substantial amount of forged sports memorabilia was being auctioned on eBay, but eBay ignored the warnings and allowed the forged sports memorabilia scheme to continue in order to continue to reap millions of dollars in profits for itself.

eBay generally demurred to appellants' UCL, Civil Code section 1739.7 and injunctive relief causes of action. The trial court sustained the demurrers, granting appellants ten days leave to amend in order to plead around the federal statutory immunity of section 230 as to their UCL claim and allege that eBay provided a description of items listed on its web site as being autographed for purposes of their Civil Code section 1739.7 claim. The court sustained without leave to amend eBay's demurrer to appellants' cause of action for injunctive relief on the ground it was not an independently cognizable cause of action.

Appellants' second amended complaint added several new allegations. They alleged: "At all relevant times, eBay was a `dealer' as defined in Civil Code section 1739.7(a)(4) in that, among other things, eBay engages in sales transactions, conducted by means of written exchanges, between eBay and its users. The written exchanges consist of a series of invitations for offers for the purchase of collectibles made by eBay and offers to purchase made by eBay users and culminates in the acceptance by eBay of the highest or most favorable offer made by a participating user. eBay engages in the sale or offer for sale of autographed collectibles in or from this state. eBay provides descriptions of collectibles as being autographed as defined in Civil Code [sic]. It is undisputed that eBay has never furnished a [certificate of authenticity] with a collectible at the time of sale." Appellants further alleged eBay "tightly regulates the transactions it conducts" on its web site, controls the content of its web site by delisting items it deems questionable and filters the web site to prevent items from being sold. They alleged eBay "provided descriptions of the sports items" as being autographed under the above-identified product categories and subcategories, including the subcategory "Sports: Autographs" and that, "[o]ftentimes, eBay provided a standardized description of these sports items with a photo."

In connection with their Civil Code section 1739.7 cause of action, appellants alleged: "During the class period, eBay, in selling or offering to sell to a consumer collectibles in or from this state, provided a description characterizing an item as being autographed. However, eBay has failed to furnish consumers with a [certificate of authenticity] containing the required disclosures and express warranties for collectibles auctioned through its services." Appellants sought to plead around the immunity of section 230 by alleging eBay was itself responsible for creating or developing information on its web site, and that the information was not obscene or otherwise similarly objectionable.

eBay again demurred. With respect to the UCL and negligence causes of action, it...