Antitrust Law Daily Wrap Up, ANTITRUST—CalCtApp: eBay Seller Could Not Amend Complaint to Base it on Theoretical Federal Antitrust Violation, (Feb 7, 2013)

By E. Darius Sturmer, J.D.

An antique seller was not entitled to amend a business tort complaint against online auction/retail site operator eBay, Inc. for a sixth time, a California appellate court has ruled in a not-for-publication decision (Ruins-CA v. eBay, Inc., January 29, 2013, Aronson, R.). The plaintiff was a seller on eBay until her account was permanently blocked by eBay after a lengthy dispute over the authenticity, and her alleged misrepresentations, of the antiques and vintage textiles she was offering for sale on the site.

The individual sought reversal of the trial court’s sustaining of demurrer, without leave to amend, in order to replead a claim for intentional interference with prospective economic advantage to add a theory that eBay’s alleged conduct—prohibiting buyers and sellers who first made contact on the site from engaging in transactions with each other outside of eBay—was anticompetitive and qualified as independently wrongful conduct under federal antitrust law.

However, she asserted no federal antitrust claim, did not plead any of the elements of a Sherman Act violation, and offered no new arguments in support of a repeatedly-failed California Cartwright Act claim that had been part of the suit. The individual had not opposed demurrer with respect to the state antitrust claim, which the trial court had again found legally deficient for failure to allege the elements of an antitrust violation with sufficient particularity and for failure to identify the relevant market.

The appellate court noted that the court below had pointed out that plaintiffs’ allegations for intentional interference with prospective business advantage were deficient because they were stated in conclusory terms and similarly relied on eBay’s presumed liability for other causes of action such as breach of contract, trade libel, and negligence to demonstrate “independently wrongful” conduct. Because the trial court had sustained eBay’s demurrer to those other causes of action without leave to amend, plaintiffs could not rely on those or the dismissed antitrust claims to support the intentional interference claim.

Despite their referencing of federal antitrust law, the individual and her business failed to allege facts demonstrating that eBay engaged in independently wrongful conduct for purposes of liability on the intentional interference claim, the appellate court decided. It was impossible to conclude that the conduct was wrongful from an antitrust perspective, given that the plaintiffs had acknowledged their failure to plead the elements of a claim for violation of Sec. 2 of the Sherman Act and had made no argument that they could rectify those shortcomings. Moreover, the plaintiffs had largely abandoned their allegation that eBay’s conduct was independently wrongful for other reasons.

The plaintiffs’ explanation of how certain eBay actions amounted to actionable anticompetitive conduct was immaterial, given the failure to plead the elements of a Sherman Act claim. Even if it were assumed that the plaintiffs could define a relevant market to support a claim under Sec. 2 of the Sherman Act, it was not clear that the company’s alleged communications with the plaintiffs’ customers (telling them not to do business with the plaintiffs outside of eBay) would provide a sufficient basis for an antitrust claim. Nothing in the communications imposed or threatened those customers that any consequences would result from their alleged violation of site policy. Rather, the communications merely advised the customers that transactions occurring outside of the eBay structure would not be covered by the company’s buyer protection programs, the court concluded.

The case is G045540.

Companies: eBay, Inc.

Attorneys: Joel R. Bennett for Ruins-CA and Lisa Genesta. Christopher J. Cox (Weil, Gotshal & Manges, LLP) for eBay, Inc.

Cases: Antitrust CaliforniaNews