Gentry v. eBay, Inc.Gentry v. eBay, Inc.
Opinion
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 (
We conclude appellants cannot state a cause of action against eBay under Civil Code
Factual and Procedural Background
eBay promotes itself as the world’s largest on-line marketplace for the sale of goods and services among its registered users.
1
It operates an Internet-based service
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 Sports-card, 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
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
Appellants’ second amended complaint added several new allegations. They alleged: “At all relevant times, eBay was a ‘dealer’ as defined in Civil Code
In connection with their Civil Code
eBay again demurred. With respect to the UCL and negligence causes of action, it argued appellants failed to plead around section 230’s statutory immunity. As to the Civil Code
The trial court granted eBay’s unopposed request for judicial notice and sustained eBay’s demurrers without leave to amend. It ruled appellants could not allege eBay “provides a description of that collectible as being autographed” within the meaning of Civil Code
Discussion
I. Standard of Review
“An appellate court’s ‘ “only task in reviewing a ruling on a demurrer is to determine whether the complaint states a cause of action.” ’ [Citations.] The reviewing court assumes the truth of allegations in the complaint which have been properly pleaded and gives it a reasonable interpretation by reading it as a whole and with all its parts in their context. [Citations.] However, the assumption of truth does not apply to contentions, deductions, or conclusions of law and fact. [Citation.] Furthermore, any allegations that are contrary to the law or to a fact of which judicial notice may be taken will be treated as a nullity. [Citations.]”
(Gulf Ins. Co. v. TIG Ins. Co.
(2001)
We do not review the validity of the trial court’s reasoning, only the propriety of the ruling itself.
(Rodas
v.
Spiegel, supra,
Applying these standards, we review the sufficiency of appellants’ pleadings to ascertain whether they state causes of action for violation of Civil Code
II.
Claim for Alleged Violation of the Autographed Sports Memorabilia Statute (
A. The Statute
Civil Code
The statute defines a dealer as follows: “ ‘Dealer’ means a person who is in the business of selling or offering for sale collectibles in or from this state, exclusively or nonexclusively, or a person who by his or her occupation holds himself or herself out as having knowledge or skill peculiar to collectibles, or to whom that knowledge or skill may be attributed by his or her employment of an agent or other intermediary that by his or her occupation holds himself or herself out as having that knowledge or skill. ‘Dealer’ includes an auctioneer who sells collectibles at a public auction, and also includes persons who are consignors or representatives or agents of auctioneers. ‘Dealer’ includes a person engaged in a mail order, telephone order, or cable television business for the sale of collectibles.” (
B. Business of Selling or Offering to Sell Collectibles
Appellants contend they stated a cause of action against eBay under Civil Code
eBay advances several arguments in support of the proposition appellants cannot, as a matter of law, allege it is a dealer within the meaning of Civil Code
As stated, liability as a dealer under Civil Code
The general allegation that eBay engages in the sale or offer for sale is irreconcilable with other, more specific allegations. These allegations describe the specifiс operations of the individual defendants, expressly stating that the sellers of the forged items were Fitzgerald or Scheinman through their respective business entities. As appellants alleged, the scheme began with the Marino defendants’ conduct in faking autographs of celebrated sports figures on baseballs, photographs and other collectibles and forwarding those items to Fitzgerald or Scheinman, who then placed them for sale on eBay by, in part, designating the appropriate categories contained on the Web site.
4
These factual allegations control. “While inconsistent
theories
of recovery are permitted [citation] a pleader cannot blow hot and
cold as to the
facts
positively stated. [Citations.]”
(Manti v. Gunari
(1970)
C. Section 230 Immunity 5
Notwithstanding our conclusion above, we additionally hold, under the facts presented, placing liability upon eBay for failing to provide a warranty under Civil Code
“(e) Effect on other laws HD ... [ID
“(3) State Law
“Nothing in this section shall be construed to prevent any State from enforcing any State law that is consistent with this section. No cause of action may be brought and no liability may be imposed under any State or local law that is inconsistent with •this section.” (§ 230 (e)(l)(3) , italics added.)
In
Zeran v. America Online, Inc.
(4th Cir. 1997)
Other courts have applied
Zeran’s
reasoning to bar not only defamation claims, but other tort causes of action asserted against interactive service providers. (See, e.g.,
Kathleen R. v. City of Livermore
(2001)
Section 230(c)(1) thus immunizes providers of interactive computer services (service providers) and their users from causes of action asserted by persons alleging harm caused by content provided by a third party. This form of immunity requires (1) the defendant be a provider or user of an interactive computer service; (2) the cause of action treat the defendant as a publisher or speaker of information; and (3) the information at issue be provided by another information content provider.
Appellants concede for purposes of this appeal that eBay is an interactive computer service provider.
7
And
The substance of appellants’ 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, or the posting of compilations of information generated by those defendants and other third parties. Under section 230, eBay cannot be “treated as the publisher or speaker” of content supplied by other information content providers. (§ 230 (c)(1).) If by imposing liability under Civil Code section 1739.7 we ultimately hold eBay responsible for content originating from other parties, we would be treating it as the publisher, viz., the original communicator, contrary to Congress’s expressed intent under section 230(c)(1) and (e)(3). 8
While the fact eBay does not create the description may be of no significance to liability under Civil Code section 1739.7 as appellants maintain, it is highly significant for purposes of assessing the application of section 230. Appellants do not dispute the fact, judicially noticed by the trial court,
9
that it was dealers Fitzgerald and Scheinman, not eBay, who chose their own category description for the item offered for sale. Thus, for purposes of applying section 230 immunity, we consider it was the individual defendants who falsely identified the product 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 on 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.’ ”
(English v. General Electric Co., supra,
Apart from the cause of action under Civil Code section 1739.9, which we have held is barred, appellants’ negligence cause of action is based on allegations that eBay itself misrepresented the safety of purchasing items from the individual defendants and knew or should have known the individual defendants were conducting unlawful practices but failed to ensure they comply with the law. In an attempt to plead around section 230 with respect to these causes of action, appellants generally allege eBay was an information content provider in that it was responsible for the creation of information, or development of information, for the online auction it provided through the Internet; that eBay did not act as an Internet service provider; and the information at issue (descriptions of collectibles as autographed) did not concern the publication of obscene or similarly objectionable materials. 11
These conclusory and argumentative allegations are followed by more specific averments. Appellants more specifically described the information purportedly developed by eBay for its “safety program,” identifying it as consisting of a color-coded star symbol, a Power Sellers endorsement, and a Feedback Forum. Appellants alleged: “eBay encourages its users to rely upon its ‘Feedback Forum’ prior to engaging in a sales transaction. The Feedback Forum purportedly allows dealers and consumers to rate a sales transaction with a compliment (a ‘Positive Feedback’), a criticism (a ‘Negative Feedback’), or other comments (a ‘Neutral Feedback’). eBay has advertised that, ‘A positive eBay rating is worth its weight in gold.’ A dealer or consumer who achieves a designated level of Positive Feedback is awarded a star symbol display next to the user name, which is color coded to indicate the amount of Positive Feedback received by the user, ffl]. . .In addition to the Feedback Forum, eBay designed a ‘Power Sellers’ endorsement, which purportedly is an award given to select eBay dealers based on the volume of sales and Positive Feedback ratings. ... In reality, however, eBay’s ‘safety’ programs have contributed to enormous damage to autographed sports memorabilia consumers. For example, the Feedback Forum allows anyone to rate a dealer, even if there has never been a sales transaction between the parties. Thus, Fitzgerald and Scheinman have at least hundreds of Positive Feedback ratings which are unrelated to any sales transactions. Most, if not all, of these Positive Feedback ratings are self-generated or provided by other co-conspiring dealers.” (Boldface in original, italics added.)
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
We reach the same conclusion with regard to appellants’ gеneral assertion that eBay knew or should have known about the individual defendant’s illegal or fraudulent conduct but failed to take steps to ensure they complied with the law. 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 that
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,
Finally, taking as true the fact eBay makes the statement on its Web site that a positive eBay rating is “worth its weight in gold,” such an assertion cannot support a cause of action for negligent misrepresentation regardless of federal statutory immunity because it amounts to a general statement of opinion, not a positive assertion of fact. An essential element of a cause of action for negligent misrepresentation is that the defendant must have made a misrepresentation as to a past or existing material fact.
(Christiansen
v.
Roddy
(1986)
IV. UCL Cause of Action
Appellants’ UCL cause of action is based upon the same allegations as their negligence claim: that eBay misrepresented the forged collectibles offered for sale in its auctions; failed to furnish certificаtes of authenticity; was aware of the fraudulent nature of the collectibles but failed to disclose such information to consumers; and “made use of various forms of marketing and advertising to falsely advertise, call attention to, endorse, or give publicity to the sale of forged collectibles . . . .’’On appeal, appellants argue the sufficiency of only those allegations regarding eBay’s safety programs, seeking to distinguish them as statements made by eBay itself. They plead eBay knew or reasonably should have known their marketing and advertising was untrue and/or misleading. For the reasons explained above, because eBay’s liability would be based upon the misrepresentations of the individual defendants, to the extent these allegations state a cause of action, it is inconsistent with and barred by section 230.
Disposition
The judgment is affirmed.
Haller, Acting P. J., and McConnell, J., concurred.
Appellants’ petition for review by the Supreme Court was denied October 16, 2002.
Notes
Under Evidence Code section 459, we take judicial notice of the mаnner in which eBay describes its operations from its Web site at <http://www.ebay.com/community/aboutebay/ overview/index.html> (as of June 26, 2002). The company “overview” page of its Web site provides in part: “eBay enables trade on a local, national and international basis. It features a variety of international sites, specialty sites, categories and services that aim to provide users with the necessary tools for efficient online trading in the auction-style and fixed price formats.” (Ibid.)
Appellants specifically allege that Camp, Hyder and Osacky purchased their forged items from Stanley Fitzgerald through eBay auctions. They allege that Dermody purchased forged items from Phil Scheinman through eBay auctions. Appellants allege Gentry purchased forged items having either a “Stan’s Sports Memorabilia [certificate of authenticity]” or a “Donald Frangipani [certificate of authenticity].” We infer from these allegations that Gentry purchased his items either from Fitzgerald, who as indicated, was alleged to be doing business as Stan’s Sports Memorabilia or from the Marino defendants, who according to appellants’ allegations used Frangipani to create false certificates of authenticity. Appellant Pommerening alleges he purchased his forged baseball “through an eBay auction” without identifying the source of the faked autograph or certificate of authenticity. We similarly infer he purchased his item from either Fitzgerald or Scheinman from appellants’ allegations that the Marino defendant sold most of their forged items through larger dealers, including Fitzgerald and Scheinman, who then sold their forged items to consumers via eBay.
The statute defines a collectible as “an autographed sports item, including, but not limited to, a photograph, book, ticket, plaque, sports program, trading card, item of sports equipment or clothing, or other sports memorabilia sold or offered for sale in or from this state by a dealer to a consumer for five dollars ($5) or more.” (
“ ‘Autographed’ means bearing the actual signature of a personality signed by that individual’s own hand.” (
“ ‘Consumer’ means any natural person who purchases a collectible from a dealer for personal, family, or household purposes. ‘Consumer’ also includes a prospective purchaser meeting these criteria.” (
“ ‘Description’ means any of the following: [1Q (A) Any representation in writing, including, but not limited to, a representation in an advertisement, brochure, catalog, flyer, invoice, sign, or other commercial or promotional material. flQ (B) Any oral representation, (C) Any representation included in a radio or television broadcast to the public in or from this state.” (
“ ‘Promoter’ means a person who arranges, holds, organizes, or presents a trade show featuring collectibles, autograph signings, or both.” (
“ ‘Person’ means any natural person, partnership, corporation, limited liаbility company, company, trust, association, or other entity, however organized.” (
Describing the role of the “large-scale dealers” in the second amended complaint, appellants allege: “The Marino defendants sold most of their forged sports items to a number of large-scale dealers, each of whom had knowledge of the fraudulent nature of the items. The largest dealers included Defendants Fitzgerald and Scheinman. fiD • • • Defendant Fitzgerald sold the forged sports items to consumers through his entities known as ‘Stan’s Sports Memorabilia’ and ‘Stan The Man Sports Memorabilia[]’[.] Most of Defendant Fitzgerald’s offers and sales were effected through eBay auctions. [ID . . . Defendant Scheinman sold the forged sports items to consumers through his entity known as ‘Smokey’s Sportscard, Inc.’ Most of Defendant Scheinman’s offers and sales were effected through eBay auctions.” Appellants allege that Camp, Hyder, Osacky and Dermody purchased their forged collectibles frоm either Fitzgerald or Scheinman through eBay auctions.
Although eBay originally raised section 230’s immunity only with respect to its demurrers to appellants’ negligence and UCL causes of action, in its reply to appellants’ opposition it asserted section 230 likewise extended to appellants’ cause of action under Civil Code
Section 230 itself contains Congress’s specific findings and policy statement:
“(a) Findings
“The Congress finds the following:
“(1) The rapidly developing array of Internet and other interactive computer services available to individual Americans represent an extraordinary advance in the availability of educational and informational resources to our citizens.
“(2) These services offer users a great degree of control over the information that they receive, as well as the potential for even greater control in the future as technology develops. “(3) The Internet and other interactive computer services offer a forum for a true diversity of political discourse, unique opportunities for cultural development, and myriad avenues for intellectual activity.
“(4) The Internet and other interactive computer services have flourished, to the benefit of all Americans, with a minimum of government regulation.
“(5) Increasingly Americans are relying on interactive media for a variety of political, educational, cultural, and entertainment services.
“(b) Policy
“It is the policy of the United States-'ll) to promote the continued development of the Internet and other interactive computer services and other interactive media;
“(2) to preserve the vibrant and competitive free market that presently exists for the Internet and other interactive computer services, unfettered by Federal or State regulation;
“(3) to encourage thе development of technologies which maximize user control over what information is received by individuals, families, and schools who use the Internet and other interactive computer services;
“(4) to remove disincentives for the development and utilization of blocking and filtering technologies that empower parents to restrict their children’s access to objectionable or inappropriate online material; and
“(5) to ensure vigorous enforcement of Federal criminal laws to deter and punish trafficking in obscenity, stalking, and harassment by means of computer.” (§ 230(a), (b).)
The statute defines the term “Interactive computer service” as “any information service, system, or access software provider that provides or enables computer access by multiple users to a computer server, including specifically a service or system that provides access to the Internet and such systems operated or services offered by libraries or educational institutions.” (§ 230(f)(2).) The term “Information content provider” is defined as “any person or entity that is responsible, in whole or in part, for the creation or development of information provided through the Internet or any other interactive computer service.” (§ 230(f)(3).) Even if appellants had not conceded the issue, the allegations of the second amended complaint indicate eBay’s Web site enables users to conduct sales transactions, as well as provide information (feedback) about other users of the service. In this way, eBay provides an information service that enables access by multiple users to a computer server and brings it within the broad definition of an interactive computer service provider. (Cf.
Schneider
v.
Amazon.com, Inc., supra,
“Preеmption of state law by federal law is found in ‘three circumstances.’ [Citations.] [1Q First, there is so-called ‘express preemption’: ‘Congress can define explicitly the extent to which its enactments pre-empt state law.’ [Citations.] ftQ Second, there is so-called ‘field preemption’: ‘[S]tate law is pre-empted where it regulates conduct in a field that Congress intended the Federal Government to occupy exclusively.’ [Citations.] Third, there is so-called ‘conflict preemption’: ‘[Sjtate law is pre-empted to the extent that it actually conflicts with federal law.’ [Citations.] Such conflict must be ‘of substance and not merely trivial or insubstantial.’ [Citation.] It exists when it is ‘impossible ... to comply with both state and federal requirements’ [citations] or when state law ‘stands as an obstacle to the accomplishment and execution of the full purposes and objectives’ underlying federal law [citations]. Although ‘state law is pre-empted to the extent that it actually conflicts with
federаl law’ [citation], it is preempted only to that extent and no further [citation].”
(Peatros
v.
Bank of America
(2000)
We need not reach the question of whether the operation of eBay’s Web site is a matter for which judicial notice is appropriate. As indicated, the court granted eBay’s unopposed request for judicial notice and appellants do not challenge that action on appeal. Any objection on this point has been waived.
(Younan v. Caruso
(1996)
The Attorney General of California filed an amicus curiae brief in this matter contending section 230 should not be read so broadly as to grant immunity to eBay against appellants’ claims. We granted AOL leave to file another amicus curiae brief. Urging us to consider the legislative history of section 230, the Attorney General argues we must reject Zeran and its progeny and hold it does not immunize interactive computer service providers that act as distributors, that is, who publish information that they know to be false, fraudulent, defamatory, obscene, unlawful or otherwise objectionable. We are of the view that the very language used by Congress in stating section 230’s goals reflects the breadth of the statute’s purpose, i.e., “to promote the continued development of the Internet and other interactive computer services and other interactive media” and to “preserve the vibrant and competitive free market that presently exists for the Internet and other interactive computer services, unfettered by Federal or State regulations.” (§ 230(b)(1), (2).) Such language does not reflect the limitations proposed by the Attorney General. The plain effect of Congress’s words is to shelter service providers for providing access to another’s offensive or objectionable information: “any information provided by another . , . (§ 230(c)(1).)
We note the fact appellants allege eBay is an information content provider is irrelevant if eBay did not itself create or develop the content for which appellants seek to hold it liable. It is not inconsistent for eBay to be an interactive service provider and also an information content provider; the categories are not mutually exclusive. The critical issue is whether eBay acted as an information content provider with respect to the information that appellants claim is false or misleading.