Metropolitan News-Enterprise


Friday, July 23, 2004


Page 3


C.A.: Statute Does Not Immunize eBay From Liability for Defamation


By a MetNews Staff Writer


The operator of an Internet auction site is not immunized by federal law from liability for refusing to remove what it knows to be defamatory comments provided by one user about another, the Court of Appeal for this district ruled yesterday.

In a reversal of its previous conclusion on the issue, Div. Three concluded that the immunity granted to a “provider or user of an interactive community service” by 47 U.S.C. Sec. 230, a part of the Communications Decency Act passed in 1996, does not extend to a party who distributes information it knows or has reason to believe is defamatory.

The court did, however, uphold the dismissal of eBay Inc. from a suit by Roger M. Grace. Grace’s claim against eBay, Justice Walter Croskey said, is within the scope of a release that is part of the eBay user’s agreement.

Grace sued eBay and Hollywood memorabilia dealer Tim Neeley after eBay refused to remove negative comments Neeley made after selling Grace six vintage entertainment magazines.

According to Grace’s complaint, Neeley said Grace “should be banned from eBay” and was “dishonest all the way’’ for alleging in the site’s “feedback” section that the magazines he bought had arrived late and in a worse condition than advertised.

In a February opinion, which unlike yesterday’s was unpublished, Croskey said that eBay Inc. is an “interactive computer service” within the meaning of Sec. 230. The statute immunizes the “provider or user” of such a service from liability that might be imposed as “the publisher or speaker of any information provided by another information content provider.”

Grace sought rehearing, arguing that because the operator of a Web site does not “provide or enable” access to the server, it is not a provider within the meaning of the statute. In his opinion on rehearing yesterday, Croskey cited several cases that have held otherwise, and also concluded that if eBay isn’t a provider, it is immune as a user.

“We conclude based on the plain meaning of the statutory language that the term ‘user’ as used in the statute encompasses all persons who gain access to the Internet through an ISP or other service or system…including both individual computer users and website operators.”

The justice went on to say, however, that in granting immunity to a provider or user of an interactive computer service as “the publisher or speaker,” Congress did not intend to grant immunity to such a party when acting as the “distributor” or “transmitter” of information provided by another person.

Congress must, Croskey explained, be deemed to have been aware of the common law distinction between liability of a publisher and that of a distributor when it enacted the law. “In light of the common law distinction between liability as a primary publisher and liability as a distributor, we conclude that section 230(c)(1) does not clearly and directly address distributor liability and therefore does not preclude distributor liability,” he wrote.

That holding is similar to that of the First District’s Div. Two in last October’s Barrett v. Rosenthal, which held that Sec. 230 did not protect a Web site operator from application of the traditional rule that one who knowingly republishes another person’s defamatory statement may be held liable.

That case has been accepted for review by the state Supreme Court.

Croskey went on to say that the release—which describes eBay as a “venue” and requires users of the site to release all claims relating to “a dispute with one or more users”—“clearly encompasses a dispute with another user relating to comments posted by another user on eBay’s website.”

Grace argued that his dispute over liability for eBay’s distribution of defamatory material was with eBay itself, not with “another user.” He also said the court’s construction was inconsistent with a statute that says a party cannot enforce a release that purports to exculpate it from responsibility for its own intentional wrongdoing.

Grace, who is editor and co-publisher of the MetNews as well as an attorney, and argued his own appeal, said he considered the result a victory.

He characterized the position of eBay and its amici—the owners of, America Online, Google, and Yahoo—as being that “if a third party posts matter that is provably false and defamatory, they have no worry because they have immunity.” The court, he said, “has disabused them of that notion.”

Michael G. Rhodes of Cooley Godward’s San Diego office, who represented eBay, did not return a phone call seeking comment.

The case is Grace v. eBay Inc., 04 S.O.S. 3798.


Copyright 2004, Metropolitan News Company