A San Diego lawyer's claim that virtual auctioneer eBay breaches its contract with millions of sellers ran into a marble wall Wednesday in a Ninth Circuit courtroom.
Roy Katriel is trying to bring a class action against eBay Inc. on the ground that the company helps bidders obtain the lowest sale price possible, despite promising in its user agreement to remain neutral in all transactions.
"What they put in the agreement is very specific. They said, 'We are not involved in the actual transaction,'" Katriel told the court Wednesday. "Now it turns out they are."
Under eBay's process, bidders enter the maximum they're prepared to bid. The company's software then discloses only so much as necessary to beat the previous high bid. So if a user authorizes a $50 bid, and the previous high bid is only $40, the user gets the item for $41. That shortchanges sellers, Katriel alleges in Block v. eBay.
There's one glaring problem with his argument. "Doesn't everybody who enters a bid on eBay understand what the system is?" Judge Stephen Reinhardt asked.
The third member of the panel, visiting U.S. District Judge Paul Huck of Florida, sounded even more skeptical than Reinhardt and Farris. He compared eBay to a mediation neutral that simply shuttles offers back and forth between parties, with "no dog in the fight."
But, Katriel argued, if a party told the mediator, "I'll pay up to $80, but try to get it for me for less ... he'd be working on your behalf."
Cooley partner John Dwyer, representing eBay, had a far easier time. In fact, he faced zero questions during his 10-minute argument. He said eBay's user agreement "strongly recommends" that users also read about the automatic bidding process, which can be accessed via a drop-down menu. "He never alleges they were misled about how the automatic bidding system works," Dwyer said.
The statement about staying out of the bidding process is only a limitation of liability that makes clear eBay isn't acting as a fiduciary like some traditional auction houses, he said. "What it's saying is, 'Hey, if you think you're with Christie's or Sotheby's, you're not.'"
Thursday, March 13, 2014
Judge Huck visits the 9th Circuit
The Recorder covers the story here (ht Vanessa Blum):