71 Cal.App.5th 620
Cal. Ct. App.2021Background
- Plaintiffs (including appellants George and Pitteloud) were long‑time eBay sellers who filed a putative class action challenging numerous eBay and PayPal user‑agreement provisions and policies (original suits beginning 2012–2015; SAC filed May 2017).
- The Second Amended Complaint (SAC) alleged 23 causes of action (16 against eBay), attaching the user agreements and multiple eBay policies; claims included unconscionability, breach of contract and implied covenant, interference, hidden listings, deceptive practices, and aiding buyers who defrauded sellers.
- The trial court sustained demurrers to 20 causes of action without leave to amend, leaving only two claims against eBay (breach of contract and breach of the covenant of good faith and fair dealing). Plaintiffs later voluntarily dismissed their remaining claims against eBay and appealed the prior dismissals.
- Appellants appealed the dismissal as to 11 causes of action (including claims alleging unconscionability of fees/policies, interference, hiding listings, breach of implied covenant, illegal penalties/§16600, and aiding/abetting buyers).
- The Court of Appeal reviewed the demurrer de novo, accepting well‑pleaded allegations and attachments, and affirmed: each challenged cause of action failed to state a claim and dismissal without leave to amend was not an abuse of discretion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Unconscionability of eBay terms (2nd, 9th, 15th, 20th causes) | Terms are adhesive, surprise and oppressive; policies (fees, shipping in FVF, duplicate‑listing takedown, ads) are one‑sided and unconscionable | User agreement and policies were disclosed and serve legitimate commercial purposes; no lack of market alternatives; not shock‑the‑conscience | Demurrer sustained: plaintiffs failed to plead procedural or the requisite high level of substantive unconscionability |
| Interference with contractual relations (7th) | eBay’s dispute resolutions intentionally induced rescission/cancellation of seller–buyer contracts causing loss | eBay’s dispute process is designed to protect both buyers and sellers; allegations are conclusory | Demurrer sustained: intent and factual support inadequate to plead wrongful interference |
| Breach of implied covenant (8th) re: including shipping in final value fees | eBay’s fee change breached duty of good faith despite express term | User agreement expressly allows fee schedule changes; implied covenant cannot contradict express terms | Demurrer sustained: express modification clause bars implied‑covenant claim |
| Hidden listings / breach, interference, UCL (12th–14th) | eBay secretly hid listings making them invisible, causing lost sales and interference with repeat buyers | eBay has contractual right to downgrade visibility; pleading fails to identify specific listings or timing; sales declines are speculative | Demurrer sustained: allegations too vague/speculative; failure to identify specific harmed listings or disrupted economic relationships |
| Illegal penalties/forfeitures and §16600 restraint (16th) | Seller‑performance restrictions impose unlawful penalties/forfeitures and restrain trade/profession | Policies are permitted under the user agreement and do not forfeit money or bar selling elsewhere | Demurrer sustained: provisions are contractually permitted and not unlawful penalties nor restraints on profession |
| Aiding and abetting buyer fraud (19th) | eBay knowingly fosters and substantially assists fraudulent buyers and resolves disputes for them | Allegations lack specificity about tortious acts, specific knowledge, and intent to facilitate wrongdoing | Demurrer sustained: complaint lacks particularized facts showing intent, specific knowledge, or substantial assistance |
Key Cases Cited
- Sanchez v. Valencia Holding Co., LLC, 61 Cal.4th 899 (Cal. 2015) (defines procedural and substantive unconscionability and the sliding‑scale analysis)
- Sonic‑Calabasas A, Inc. v. Moreno, 57 Cal.4th 1109 (Cal. 2013) (unconscionability doctrine context for adhesion contracts)
- Armendariz v. Foundation Health Psychare Servs., Inc., 24 Cal.4th 83 (Cal. 2000) (sliding scale between procedural and substantive unconscionability)
- Pinnacle Museum Tower Assn. v. Pinnacle Market Dev. (US), LLC, 55 Cal.4th 223 (Cal. 2012) (substantive unconscionability requires terms so one‑sided as to shock the conscience)
- Baltazar v. Forever 21, Inc., 62 Cal.4th 1237 (Cal. 2016) (high bar for substantive unconscionability; terms must impair bargaining integrity or public policy)
- Carma Developers (Cal.), Inc. v. Marathon Dev. Cal., Inc., 2 Cal.4th 342 (Cal. 1992) (implied covenant cannot prohibit what contract expressly permits)
- Pacific Gas & Electric Co. v. Bear Stearns & Co., 50 Cal.3d 1118 (Cal. 1990) (elements of tortious interference with contractual relations)
- Morris v. Redwood Empire Bancorp, 128 Cal.App.4th 1305 (Cal. Ct. App. 2005) (oppression includes lack of reasonable market alternatives)
- Roy Allan Slurry Seal, Inc. v. American Asphalt South, Inc., 2 Cal.5th 505 (Cal. 2017) (tortious interference claim fails if economic relationship is too attenuated or speculative)