A Federal Judge agreed in September to dismiss the government’s lawsuit against eBay over the sale of products it alleged violated federal laws, including the CAA, TSCA, and the FIFRA. On Tuesday, the DOJ filed notice that it was appealing the judgment to the Second Circuit.
The DOJ had filed the lawsuit in 2023 in the Eastern District of New York on behalf of the EPA, and the Judge ruled in favor of eBay’s motion to dismiss on September 30, 2024.
The notice of appeal to the Second Circuit was filed on the docket on November 26, 2024, and the appeal record is due by December 10, 2024.
While there’s no information yet about the basis for the government’s appeal, it’s interesting to take another look at the District Court’s ruling dismissing the case – of interest to sellers, and by no means a legal analysis.
The Judge’s September 30, 2024 order on eBay’s Motion to Dismiss addresses several issues. There is an entire section devoted to the definition of “sell.” Both parties agreed that the word “sell” should be understood to convey its ordinary meaning, but eBay argues that selling an item meant transferring title or possession of that item, while the USA said the common dictionary definition of “sell” is “exchang(ing) something for money.”
The Judge cited a 20-year-old case in which Tiffany sued eBay for selling counterfeit goods on its site and lost.
As any longtime eBay seller knows, things were a lot different in 2004 than they are today. eBay has more control over sellers, listings, payments, and policies – including the fact buyers now pay eBay, which then disburses funds to sellers. The Judge addressed that when she wrote:
“The United States attempts to distinguish the district court’s reasoning in Tiffany by pointing out that buyers and sellers no longer contact each other to buy items. Pl. Opp. at 14. eBay’s business model has changed over the years, and today, buyers pay eBay. Compl. ¶ 109. That said, importantly here, eBay still never physically possesses goods.
“As a sister court has highlighted the importance of physically possessing goods sold, and the Second Circuit has affirmed that importance, to “sell” an item one must either possess the physical item or its title. Consequently, Plaintiff’s claim for injunctive relief and civil damages based on eBay’s purported sale of Aftermarket Defeat Devices is dismissed.”
Addressing another claim, the Court said that “since eBay could plausibly be held to distribute goods in commerce, eBay is also a retailer,” and it wrote in its ruling, “eBay’s argument to dismiss Plaintiff’s TSCA claims, on this basis, fails.” Despite eBay being on the losing end for that claim, the court wrote, “…although eBay’s motion to dismiss Plaintiff’s claim for injunctive relief fails under the TSCA, because Section 230 applies, eBay’s motion to dismiss Plaintiff’s claim for injunctive relief is granted.”
Section 230 is usually thought of as relates to user-generated content on Internet sites such as forums and publishing websites, but it has also been used by online marketplaces when defending themselves against liability for third-party sellers’ listings.
The stakes are high for both the government and eBay, with some outlets reporting that eBay could face billions in fines if found guilty – presuming the Second Circuit Court of Appeals decides to entertain the government’s appeal.
Its %100 correct for the DOJ to appeal the INCORRECT verdict finding eBay not guilty.
Its more then obvious that the judge has ZERO understanding on how eBay works and has NEVER bothered to read the TOS, and use eBays own mechanisms … ever.
This ruling is simply about how much control eBay has on its sellers, how the marketplace functions, and what percentage of the transaction(s) as a whole eBay is involved with.
Until eBay changed course a few years back, eBay could have rightly stated the Sgt Shultz defense of not knowing anything. All they did is provide a platform for buyers and sellers to meet, and help facilitate the transactions. In return, eBay kept a percentage of the transaction (as agreed upon by all concerned parties) and that was the end of eBays involvements.
Over time and through successive CEOs, each one brought tighter and tighter control over the process, to the point where (as stated correctly by Shanna and other posters), sellers are basically workers for eBay. Their independence and flexibility to run their business has decreased dramatically, therefore denying eBays lies of “not knowing or being responsible for ANYTHING”.
From the listing procedures where eBay demands specific picture sizes (499 x 499 is no good but 500 x 500 is), the demand for UPC codes (which alot of large sellers themselves do not use), complete or almost complete data on each item, the TOS warning that any aforementioned data becomes eBay property and can and will be used in THEIR catalog gratis, certainly shows that eBay has full knowledge of every item on its site.
eBay also controls ALL payments, all refunds, applies arcane VERO rules (ignoring First Sale Doctrine and Fair Use statues amongst others), making eBay in essence a full partner in the process. It also collects all taxes and controls shipping, making the seller a “gig worker” in their own business.
Much has been said about section 203.
203 was designed to protect ISPs from being sued, and is INCORRECTLY applied here. ISPs have no idea if “1212121212121121212” is a picture of grandma at Christmas, a college term paper or a Spiderman movie. Its %1000 impossible for ISPs to monitor every data packet that moves through “the pipes” – what if the aforementioned data stream is 1/2 of a movie? Should the ISP wait and hold up the data stream and try to stick together various pieces? Impossible!
Therefore, the judgment against eBay should go forward and eBay should be found guilty since they knew exactly (after being warned as well) what was being listed.
INA – I would like to help the DOJ in this case – if need be – please forward this article and any of my contact info to them!
this is awesome.
hope the appeals court rules in favor of the DOJ