Theo Chen v. eBay, Inc.
| Decision Date | 24 August 2021 |
| Docket Number | A158417 |
| Parties | THEO CHEN et al., Plaintiffs and Appellants, v. EBAY, INC., Defendant and Respondent. |
| Court | California Court of Appeals Court of Appeals |
NOT TO BE PUBLISHED
Alameda County Super. Ct. No. RG15780778
Plaintiffs and appellants are 10 individuals who sell (or sold) products on eBay. In 2015, they filed a putative class action suit against eBay and PayPal, the entity that provided online payment services. Some four years later, and following extensive discovery, plaintiffs filed a motion for class certification seeking certification of two classes: one comprised of sellers involved in disputes with buyers, the other comprised of sellers adversely affected by eBay's amended performance ratings system. In a comprehensive thoughtful decision that thoroughly analyzed the law and the evidence, the trial court denied certification of both classes. As to the first class, the court found that plaintiffs had failed to show a “uniform practice” that could be subject to class treatment and therefore common issues would not predominate, and as to the second, that the proposed class would not be “manageable or superior.”
Plaintiffs appeal, asserting as to the first class that the trial court abused its discretion, and as to the second that plaintiffs “established liability through common proof.” We reject both arguments, and we affirm, concluding that the trial court properly exercised its broad discretion in denying class certification.
Plaintiffs and appellants are 10 California residents who are current or former sellers on eBay, all of whom registered for accounts there and had active listings of goods, or sold goods, on eBay's website.[1]
Defendant and respondent is eBay, a global e-commerce platform connecting buyers and sellers, alleged by plaintiffs to have well over 100, 000, 000 active users.
Plaintiffs filed their original complaint in August 2015. It was a putative class action that named two defendants, eBay and PayPal, the entity that provided online payment services for individuals and businesses. In November 2015, the case was removed to Federal District Court, and four months later remanded back to superior court. A first amended complaint was filed, and both defendants filed demurrers, rulings on which led to a second amended complaint filed in February 2017, the operative complaint here.
The second amended complaint alleged 23 causes of action, 13 against eBay alone, seven against PayPal alone, and three against both defendants. Both defendants demurred again, the upshot of which was an order of August 17, 2017, sustaining the demurrer without leave to amend to all but three causes of action-the first, for breach of contract against both defendants; the 17th, for violation of the covenant of good faith and fair dealing against eBay; and the 23rd against PayPal.[2] Plaintiffs sought writ review of the August 17 order, which we denied.
The first cause of action focuses on disputes between buyers and sellers, and alleges that in ruling on such disputes eBay “almost always” rules in favor of buyers. Such practice, plaintiffs allege, breaches the terms in eBay's user agreement, which plaintiffs allege requires eBay to consider evidence submitted by the parties to the dispute. The claim asserted in this cause of action came to be referred to below the “money back guarantee” claim, a label we sometimes use here.
The 17th cause of action focuses on how eBay rates the performance of sellers on its site, and alleges that in August 2014, and without warning, eBay updated the criteria used to rate sellers' performance and unfairly applied the ratings system retroactively. The claim asserted in this cause of action came to be referred to below as the “sellers rating system” claim, a label we sometimes use here.
In January 2018, the case was reassigned for all purposes to the Honorable Winifred Smith, a most experienced Superior Court Judge.
On May 3, 2019, plaintiffs filed a motion for class certification seeking certification of classes for both causes of action. The motion was accompanied by numerous declarations-20 to be exact-many of which were from people who were sellers on eBay.
As to the first cause of action, plaintiffs sought to certify a money back guarantee class consisting of “all persons or entities who are domiciled in California who, at any time between January 1, 2010 and December 31, 2018, were sellers listing and selling items using the eBay internet platform.” Plaintiffs asserted that class certification was proper given the alleged “common practice... not to consider the evidence of the eBay sellers” in resolving buyer-seller disputes, essentially to “ensure” that buyers cannot lose dispute resolution cases.
As to the 17th cause of action plaintiffs' sought to certify a sellers rating system class consisting of “all persons or entities who are domiciled in California who were sellers listing and selling items on the eBay internet platform continuously during the time period of August 20, 2013 through August 20, 2014.”
On June 14, eBay filed opposition to the motion, accompanied by declarations of two eBay employees, Kristine Diemoz and Suman Chhabria, the latter of whom was eBay's director of buyer protection. The declarations authenticated almost 200 pages of exhibits.
On July 8, plaintiffs filed their reply, along with objections to the Diemoz and Chhabria declarations.
On July 15, eBay responded to plaintiffs' evidentiary objections. It also filed its own objections to certain testimony in the declarations plaintiffs had filed in support of their motion. The next day plaintiffs submitted a letter objecting to the court giving any consideration to eBay's objections.
Following a July 19 hearing, on July 26, Judge Smith filed her order denying class certification, a comprehensive, seven-page single-spaced analysis. The order began with a description of plaintiffs' claims, followed by an exhaustive citation of class action law interspersed with her analysis of how the issues and evidence before her interacted with that law. Specifically, following discussion of the “standard for class certification, ” Judge Smith described-and analyzed-“ascertainability, ” “numerosity ” “predominance of common questions of law and fact, ” “commonality, ” “manageability and superiority, ” and “typicality, ” pertinent portions of which analysis will be described in detail below. Suffice to say here that as to the money back guarantee claim, Judge Smith found that plaintiffs had failed to show a “uniform practice” that could be subject to class treatment and therefore common issues would not predominate, and as to the sellers rating systems claim, she found that the proposed class would not be “manageable or superior.”
Judge Smith's order also sustained eBay's objections to the hearsay statements in the declarations plaintiffs had submitted and overruled plaintiffs' objections to the Diemoz and Chhabria declarations.
On August 13, plaintiffs filed a motion for reconsideration, eBay filed opposition, and plaintiffs a reply. Following a hearing on September 13, on September 20, Judge Smith filed her six-page order denying it. After first holding that the motion did not identify any new evidentiary facts that could not have been presented in the original motion and did not identify any new law, she went on to specifically confirm the reasons why the seller ratings claim would be unmanageable as a class, as will be quoted below.
On September 20, plaintiffs filed their appeal.
Class actions are statutorily authorized by Code of Civil Procedure section 382: “[W]hen the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court, one or more may sue or defend for the benefit of all.” In order to obtain class status, the class action proponent bears the burden of establishing the propriety of class certification, which requires that the proponent (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435 (Linder).) And (Washington Mutual Bank v. Superior Court (2001) 24 Cal.4th 906, 913-914, citations omitted.)
As to how a ruling on class certification is reviewed, Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1022 (Brinker) confirms the law: ...
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