eBay Won’t Face Automatic Bidding Class Action Lawsuit

eBay Inc. dodged a class action lawsuit regarding its automatic bidding service after the 9th U.S. Circuit Court of Appeals Tuesday upheld the dismissal issued by the lower court. Plaintiff Marshall Block alleged that the automatic bidding system breached two provisions of eBay’s User Agreement in violation of California law, unfairly limiting the amount sellers could earn offering their products on eBay.com.

In their decision to uphold the dismissal of the class action lawsuit, the panel of judges looked at the user agreements cited by Block and found that neither user agreement provision constitutes an enforceable promise.

The user agreements Block cited in the eBay class action lawsuit included a provision in the “Limitation of Liability” section which states: “We are not involved in the actual transaction between buyers and sellers,” and a provision in the contract which states, “No agency, partnership, joint venture, employee-employer or franchiser- franchisee relationship is intended or created by this Agreement.”

The panel wrote in its decision, “The first statement — ‘We are not involved in the actual transaction between buyers and sellers’ — contains no promissory language. … Rather, the statement is simply a general description of how eBay’s auction system works. … The provision is a broad description of the eBay marketplace designed to explain to eBay’s users why its liability is more limited than that of a ‘traditional auctioneer.’ Just as the sentence before the provision could hardly be read as a promise by eBay to ‘allow anyone to offer, sell, and buy just about anything, at any[]time, from anywhere,’ the provision is not a promise ‘not [to be] involved in the actual transaction between buyers and sellers.'”

In addition, the panel wrote, “The second provision — ‘No agency … relationship is intended or created by this Agreement’ — purports only to limit the relationships created by the agreement. It contains no promise by eBay not to enter into agency relationships with its users.”

Block had alleged that the automatic bidding system unfairly took the side of bidders, and failed to act as a neutral middleman, ensuring that the buyers paid less than they were willing to pay. In his original class action lawsuit, dismissed by the California federal district court in May 2012, Block gave the example of a bidder who would be willing to pay $100 for a product. The seller only sees a lesser amount that is some margin over the last bid, say $95, which is less than the buyer’s willingness to pay. “[eBay] all the while keeps secret and hidden from the seller that the bidder’s actual bid was for $100,” he argued. “Thus, if the auction were to close at that time, the seller is shortchanged $5 solely as a result of [eBay’s] intermeddling.”

Block brought the eBay class action lawsuit on behalf of anyone who sold items on eBay traditional auctions during the period from Dec. 30, 2007 through the final decision on class certification, and sought compensation its class members’ damages and injuries, in addition to restitution.

Judges Jerome Farris, Stephen Reinhardt and Paul C. Huck, senior district judge for the U.S. District Court for Southern Florida, sitting by designation, sat on the panel.

The plaintiffs are represented by Roy Katriel of The Katriel Law Firm PLLC.

The eBay automatic bidding class action lawsuit is Marshall Block v. eBay Inc., Case No. 12-16527, in the U.S. Court of Appeals for the Ninth Circuit.