Friday, November 05, 2010

eBay contract and UCL/FAL class action certified

Ewert v. eBay, Inc., 2010 WL 4269259 (N.D. Cal.)

The plaintiffs filed a putative class action on behalf of sellers who didn’t receive the full amount of listing time they requested. They asserted claims under the CLRA, FAL, and UCL, as well as breach of contract. The breach of contract, FAL, and UCL claims were certified, but not the CLRA claims.

eBay contested typicality because the class included many sophisticated businesses as well as individual sellers, but since they were all subject to the same standard form contract that was no barrier. Likewise, there wasn’t an insurmountable conflict in the class destroying adequacy even though many sellers want their listings to end at a specific time and thus would be harmed by the requested injunction requiring eBay to extend the duration of a listing whenever there is a delay to compensate for lost listing time. Some of the injunctive relief options create no conflict, such as providing optional extension for delay or simply providing full disclosure of the potential for delay.

Because the interpretation of the standard eBay form contract was at issue, plaintiffs also showed predominance on the contract claims. Also, the UCL and FAL don’t require reliance for non-named class members; they may receive restitution without an often impossible showing of what they individually knew about the alleged fraudulent practice. The CLRA requires that consumers suffer damages; class members who knew that listings could be delayed didn’t rely on eBay’s alleged misrepresentations and weren’t damaged. However, a presumption, or at least an inference, of reliance arises whenever a plaintiff shows that a misrepresentation was material to a reasonable consumer. The alleged misrepresentations were the duration and start time offered on the Sell Your Item form used by anyone selling an item. Every member of the class was necessarily exposed to them. Materiality could thus be addressed on a class-wide basis.

eBay next contended that the court would have to inquire as to each class member is entitled to protection under the UCL and CLRA as a consumer, since corporations and other business entities aren’t generally protected by those laws. The court thought eBay was overreading the cases, which were about sophisticated businesses that negotiated individualized contracts that didn’t affect the general public. Where an action deals with form contracts, even for corporate class members, the situation is different; if a big company has sufficient interests to pursue them on its own, it will be able to opt out.

As for the CLRA, however, sellers who bought listings for business purposes aren’t “consumers” protected by the CLRA. The CLRA defines a "consumer" as "an individual who seeks or acquires, by purchase or lease, any goods or services for personal, family, or household purposes." There was little doubt that many non-consumers were included in the proposed class definitions. Plaintiffs failed to suggest any potentially viable means for avoding the necessary individualized inquiry into consumer status, and thus they failed to show predominance with respect to the CLRA claim.

As for damages, the court found that plaintiffs had offered a plausible damages calculation method (basically, a percentage of the listing price charged related to the amount of delay), with one exception. If the seller successfully sold using “Buy It Now,” which has no set duration other than a maximum, then the listing would terminate early unrelated to any eBay-side delay. A damages methodology assuming that bargained-for listing time was lost due to delay wouldn’t work. As long as Buy It Now listings were excluded, however, both damages and restitution could be calculated properly.

Since the alternative to a class action was individual claims that were unlikely to be worthwhile, individual resolution would burden the judiciary, and common treatment would not be unduly complex, the (remaining) class action was superior. Thus, the court certified a class of eBay customers who used the Sell Your Item form and chose “start listing when submitted,” excluding Buy It Now sellers who actually sold at the Buy It Now price (and also the usual people excluded from a class like this, e.g., eBay employees, lawyers for the parties, etc.).

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