Thursday, June 27, 2002
Court of Appeal Says eBay Not Liable in Sports Memorabilia Fraud
By a MetNews Staff Writer
Operators of online auction sites such as eBay cannot be held liable for the sale of sports memorabilia containing fraudulent autographs, the Fourth District Court of Appeal ruled yesterday.
Div. One affirmed San Diego Superior Court Judge Linda Quinn’s order dismissing eBay from a putative class action resulting from the discovery that thousands of items sold on the site contained phony autographs.
Justice Terry O’Rourke, writing for the Court of Appeal, said Quinn was correct in ruling that eBay is not a “dealer” in autographed memorabilia within the meaning of the California Autographed Sports Memorabilia Law.
Even if the Legislature intended to treat eBay as a dealer it is preempted from doing so by a federal law designed to protect facilitators of Internet communications, the justice added.
The suit came on the heels of an FBI investigation, dubbed “Operation Bullpen,” into the creation and sale of phony autographed memorabilia. The operation resulted in the seizure of $10 million worth of forged items, out of a total of up to $100 million in merchandise offered for sale in 15 states, the bureau said on its website.
Named as defendants in the San Diego Superior Court action, in addition to eBay, were five proprietors of Front Page Art, a San Diego memorabilia business, who allegedly created and distributed the items; two professional authenticators of autographed merchandise, and two dealers who sold items on eBay.
Yesterday’s ruling does not affect the case against those other defendants.
The complaint accused eBay of violating the state memorabilia law, which, among other things, requires that every such item be sold with the dealer’s express warranty of its authenticity.
The law defines “dealer” to include “an auctioneer who sells collectibles at a public auction, and also includes persons who are consignors or representatives or agents of auctioneers.”
But O’Rourke said eBay is not an auctioneer in the sense envisioned by the law, because it was not the owner or consignee of the items but merely brought together the dealers and buyers. eBay, he said, “does not sell or offer to sell collectibles because…it is in fact the individual defendants who sold the forged items to appellants.”
The justice went on to say that any action against eBay is preempted by Sec. 230 of the Telecommunications Act of 1996, which says that “[n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”
The section expressly bars any suit based on inconsistent state law.
That immunity is extremely broad, O’Rourke said, citing a 1997 Fourth U.S. Circuit Court of Appeals decision that absolved America Online from potential liability for defamatory messages posted on its bulletin boards.
Subsequent courts, the justice noted, have applied the law to grant immunity to a city whose public library allegedly allowed minors to access pornography, to AOL in connection with a claim that it negligently allowed child pornography to be disseminated through its service, and to Amazon.com when it was sued over allegedly defamatory statements made in one of its online book reviews.
O’Rourke also cited a ruling by a U.S. district judge in Washington, D.C., who held that AOL could not be held liable in former presidential aide Sidney Blumenthal’s suit against the company and gossip columnist Matt Drudge, even though AOL contracted for and promoted the Drudge Report and retained a measure of control over its contents.
The case is Gentry v. eBay, Inc., 02 S.O.S. 3185.
Copyright 2002, Metropolitan News Company