Cal.
App. 4th 816; 121 Cal. Rptr. 2d 703; 2002 Cal. App. LEXIS 4329; 2002 Cal. Daily
Op. Service 5727; 2002 Daily Journal DAR 7218
LARS
GENTRY et al., Plaintiffs and Appellants, v. EBAY, INC., Defendant and
Respondent.
No. D037661.
COURT OF APPEAL OF CALIFORNIA, FOURTH APPELLATE DISTRICT, DIVISION ONE
99 Cal. App. 4th 816; 121 Cal. Rptr. 2d 703; 2002 Cal. App. LEXIS 4329; 2002
Cal. Daily Op. Service 5727; 2002 Daily Journal DAR 7218
June 26, 2002, Decided
June 26, 2002, Filed
NOTICE: CERTIFIED FOR PUBLICATION
PRIOR HISTORY: APPEAL from a judgment of the
Superior Court of San Diego County, Super. Ct. No. GIC746980. Linda B. Quinn,
Judge.
COUNSEL:
Krause & Kalfayan, James C. Krause and Patrick N. Keegan for Plaintiffs
and Appellants.
Cooley Godward, Michael G. Rhodes, Christopher R. J. Pace and Andrea S.
Hoffman for Defendant and Respondent.
Wilmer Cutler & Pickering, Patrick J. Carome, Susan P. Crawford, Samir
Jain and C. Colin Rushing for America Online, Inc., as Amicus Curiae on behalf
of Defendant and Respondent.
Bill Lockyer, Attorney General, Richard M. Frank, Chief Assistant Attorney
General, Hershel T. Elkins, Assistant Attorney General, Ronald A. Reiter,
Judith A. Fiorentini and Seth E. Mermin, Deputy Attorneys General, for the
Attorney General of California as Amicus Curiae.
JUDGES: (Opinion by O'Rourke, J., with Haller, Acting P. J., and
McConnell, J., concurring.)
OPINIONBY: 'OROURKE
OPINION: O'ROURKE, J.
Lars Gentry, Henry Camp, Mike Hyder, James Conboy, William Pommerening, and
Michael Osacky (appellants) appeal a judgment of dismissal entered after the
trial court sustained eBay, Inc.'s (eBay) demurrer to appellants' second
amended complaint without leave to amend. In that pleading, appellants alleged
eBay violated California's "Autographed Sports Memorabilia" statute
(Civ. Code, 1739.7) by failing to furnish a certificate of authenticity to
persons who purchased autographed sports-related collectibles through its Web
site. Appellants also alleged eBay was negligent and engaged in unfair business
practices under the unfair competition law (UCL) (Bus. and Prof. Code, 17200 et
seq.) based on its failure to supply such certificates as well as its acts in
distributing false certificates, permitting other false representations to be
placed on its Web site, and making its own false or misleading representations.
In part, the trial court ruled eBay was not a dealer within the meaning of
Civil Code section 1739.7 and appellants failed to plead around the statutory
immunity provided by section 230 of title 47 of the United States Code
(hereinafter section 230), which otherwise protected eBay's conduct. Appellants
contend the trial court erred in sustaining eBay's demurrers without leave to
amend because (1) they sufficiently alleged eBay is an auctioneer that provides
the requisite description of collectibles as being autographed within the
meaning of Civil Code section 1739.7; and (2) section 230 does not preempt
their causes of action against eBay.
We conclude appellants cannot state a cause of action against eBay under
Civil Code section 1739.7 because their allegations reveal eBay did not sell or
offer to sell the collectibles at issue. Additionally, we conclude imposition
of Civil Code section 1739.7 liability on eBay in this particular case, as well
as liability for negligence and violation of the UCL, is inconsistent with
section 230 because appellants' causes of action ultimately hold eBay
responsible for misinformation or misrepresentations originating with other
defendants or third parties. Because appellants cannot maintain their Civil
Code section 1739.7 claim, and section 230 otherwise immunizes eBay from civil
liability under these circumstances, we affirm the judgment of dismissal.
FACTUAL AND PROCEDURAL BACKGROUND
eBay promotes itself as the world's largest on-line marketplace for the
sale of goods and services among its registered users. n1 It operates an Internet-based
service in which it enables member sellers to offer items for sale to member
buyers in what eBay characterizes as either auction-style or fixed price
formats. To better enable users to place items for sale on its site, eBay
provides descriptions to its users under various product categories and
subcategories. For sports items, eBay's Web site has a sports product category
with the following subcategories: "SPORTS: Autographs"; "SPORTS:
Memorabilia"; "SPORTS: Sporting Goods" ' and "SPORTS:
Trading Cards." eBay's "SPORTS: Autographs" subcategory is
further organized into sub-subcategories to differentiate autographed sports
collectibles by particular leagues.
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n1 Under Evidence Code section 459, we take judicial notice of the manner
in which eBay describes its operations from its Web site at (as of June 26,
2002). The company "overview" PAGE OF ITS WEB SITE PROVIDES IN PART:
"eBay enables trade on a local, national and international basis. It
features a variety of international sites, specialty sites, categories and
services that aim to provide users with the necessary tools for efficient
online trading in the auction-style and fixed price formats." (Ibid.)
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
In September 1995, various individuals embarked on a plan to sell faked
autographed sports memorabilia to consumers. Specifically, Angelo Marino,
Gloria Marino, Gregory Marino, John Marino and Kathleen Marino (the Marino
defendants) purchased sporting goods items and photographs from retail stores,
forged signatures of professional athletes upon them, and employed Wayne Bray
and Donald Frangipani to produce false certificates of authenticity for the
items. The Marino defendants then sold most of the forged items to Stanley
Fitzgerald and Phil Scheinman, larger dealers who mostly used eBay auctions to
eventually sell the forged items to consumers. Stanley Fitzgerald did business
as "Stan The Man Memorabilia" and "Stan's Sports
Memorabilia." Phil Scheinman did business as "Smokey's Sportscard,
Inc."
Appellants are individuals who purchased forged autographed sports items
including baseballs, photographs and autographed pieces of paper or
"cuts," from Fitzgerald, Scheinman or the Marino defendants through
eBay. n2
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n2 Appellants specifically allege that Camp, Hyder and Osacky purchased
their forged items from Stanley Fitzgerald through eBay auctions. They allege
that Dermody purchased forged items from Phil Scheinman through eBay auctions.
Appellants allege Gentry purchased forged items having either a "Stan's
Sports Memorabilia [certificate of authenticity]" or a "Donald
Frangipani [certificate of authenticity]." We infer from these allegations
that Gentry purchased his items either from Fitzgerald, who as indicated, was
alleged to be doing business as Stan's Sports Memorabilia or from the Marino
defendants, who according to appellants' allegations used Frangipani to create
false certificates of authenticity. Appellant Pommerening alleges he purchased
his forged baseball "through an eBay auction" without identifying the
source of the faked autograph or certificate of authenticity. We similarly
infer he purchased his item from either Fitzgerald or Scheinman from
appellants' allegations that the Marino defendant sold most of their forged
items through larger dealers, including Fitzgerald and Scheinman, who then sold
their forged items to consumers via eBay.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
Intending to act on behalf of all purchasers of autographed sports
collectibles purchased through eBay from September 1, 1995, to the time of
trial, appellants sued the Marino defendants, Bray, Frangipani, Fitzgerald,
Scheinman and eBay. Their first amended complaint asserted causes of action
against eBay for negligence, violation of the UCL, violation of Civil Code
section 1739.7 and injunctive relief. In that pleading, appellants alleged
eBay, having identified itself as an auctioneer in press releases and provided
a venue for auctions, "violated California law by either failing to provide
a certificate of authenticity expressly warranting the [autographed sports
memorabilia] or failing to insure that such a certificate was being provided by
any other party to the auction." According to their allegations, during
the class period, eBay auctioned thousands of items of sports memorabilia
created by the Marino defendants, a substantial number of which were
accompanied by fraudulent certificates of authenticity and "expert
opinions" produced by Bray and Frangipani. eBay charged placement fees to
dealers listing an item for auction, and success fees (percentage fees) when
items were sold. Further, appellants alleged, eBay gave customers a false sense
of confidence by maintaining a forum that permitted dealers and consumers to
give positive or negative feedback to other dealers or consumers, giving
endorsements to certain dealers based on the volume of sales and positive
feedback ratings, and advising users it may suspend or terminate their account
if it finds them to have engaged in fraudulent activity in connection with the
Web site.
Appellants alleged that as early as 1996, eBay received numerous complaints
from consumers and warnings from governmental agencies that a substantial
amount of forged sports memorabilia was being auctioned on eBay, but eBay
ignored the warnings and allowed the forged sports memorabilia scheme to
continue in order to continue to reap millions of dollars in profits for
itself.
eBay generally demurred to appellants' UCL, Civil Code section 1739.7 and
injunctive relief causes of action. The trial court sustained the demurrers,
granting appellants 10 days leave to amend in order to plead around the federal
statutory immunity of section 230 as to their UCL claim and allege that eBay
provided a description of items listed on its Web site as being autographed for
purposes of their Civil Code section 1739.7 claim. The court sustained without
leave to amend eBay's demurrer to appellants' cause of action for injunctive
relief on the ground it was not an independently cognizable cause of action.
Appellants' second amended complaint added several new allegations. They
alleged: "At all relevant times, eBay was a 'dealer' as defined in Civil
Code section 1739.7(a)(4) in that, among other things, eBay engages in sales
transactions, conducted by means of written exchanges, between eBay and its
users. The written exchanges consist of a series of invitations for offers for
the purchase of collectibles made by eBay and offers to purchase made by eBay
users and culminates in the acceptance by eBay of the highest or most favorable
offer made by a participating user. eBay engages in the sale or offer for sale
of autographed collectibles in or from this state. eBay provides descriptions
of collectibles as being autographed as defined in Civil Code [sic]. It
is undisputed that eBay has never furnished a [certificate of authenticity]
with a collectible at the time of sale." Appellants further alleged eBay
"tightly regulates the transactions it conducts" on its Web site, controls
the content of its Web site by delisting items it deems questionable and
filters the Web site to prevent items from being sold. They alleged eBay
"provided descriptions of the sports items" as being autographed
under the above-identified product categories and subcategories, including the
subcategory "SPORTS: Autographs" and that, "[o]ftentimes, eBay
provided a standardized description of these sports items with a photo."
In connection with their Civil Code section 1739.7 cause of action,
appellants alleged: "During the class period, eBay, in selling or offering
to sell to a consumer collectibles in or from this state, provided a
description characterizing an item as being autographed. However, eBay has
failed to furnish consumers with a [certificate of authenticity] containing the
required disclosures and express warranties for collectibles auctioned through
its services." Appellants sought to plead around the immunity of section
230 by alleging eBay was itself responsible for creating or developing
information on its Web site, and that the information was not obscene or
otherwise similarly objectionable.
eBay again demurred. With respect to the UCL and negligence causes of
action, it argued appellants failed to plead around section 230's statutory
immunity. As to the Civil Code section 1739.7 cause of action, eBay argued: (1)
it is not a dealer and does not provide descriptions of specific collectibles
within the meaning of Civil Code section 1739.7; (2) plaintiffs did not allege
the items they purchased through eBay were sent from or received in the State
of California; and (3) it could not be held liable for aiding and abetting
sales under that statute. eBay presented the declaration of its associate
general counsel, who explained the operation of eBay's Web site and
specifically how items were assigned their general category designations. He
averred that members who wished to place an item for sale on eBay would
themselves choose the main category (e.g., "Sports") and
subcategories (e.g., "Autographs") under which their item would be
listed for sale. Thereafter, the Web site would prompt the seller to provide
other information, including the title and description of the item. eBay
requested that the court take judicial notice under Evidence Code section 452,
subdivision (h) of the fact "[a] user listing an item for sale on eBay's
web site selects the category and subcategory under which her item will appear
on eBay's web site." Appellants did not object to or otherwise oppose
eBay's request.
The trial court granted eBay's unopposed request for judicial notice and
sustained eBay's demurrers without leave to amend. It ruled appellants could
not allege eBay "provides a description of that collectible as being
autographed" within the meaning of Civil Code section 1739.7 because
eBay's Web site only included category labels, which were not descriptions of
specific collectibles and which were actually chosen by the user, not eBay. The
court also concluded the statute was silent as to aiding and abetting liability.
As for the negligence and UCL causes of action, it ruled appellants had not
pleaded around the immunity provided by section 230. It thereafter entered a
judgment of dismissal in eBay's favor. Appellants timely filed their notice of
appeal.
DISCUSSION
I. Standard of Review
(1) "An appellate court's ' "only task in reviewing a
ruling on a demurrer is to determine whether the complaint states a cause of
action." ' [Citations.] The reviewing court assumes the truth of
allegations in the complaint which have been properly pleaded and gives it a
reasonable interpretation by reading it as a whole and with all its parts in
their context. [Citations.] However, the assumption of truth does not apply to
contentions, deductions, or conclusions of law and fact. [Citation.]
Furthermore, any allegations that are contrary to the law or to a fact of which
judicial notice may be taken will be treated as a nullity. [Citations.]" (
Gulf Ins. Co. v. TIG Ins. Co. (2001) 86 Cal. App. 4th 422, 429, 103 Cal.
Rptr. 2d 305.) A party may not avoid demurrer by suppressing facts, including
those that are judicially noticeable, which prove the pleaded facts false. ( Cantu
v. Resolution Trust Corp. (1992) 4 Cal. App. 4th 857, 877, 6 Cal. Rptr. 2d
151.) Given that the principle at issue is that of " ' "truthful
pleading," ' " the court also will consider such facts. ( Rodas v.
Spiegel (2001) 87 Cal. App. 4th 513, 517, 104 Cal. Rptr. 2d 439, citing Cantu
v. Resolution Trust Corp., at pp. 877-878, italics omitted.) Where the
complaint's allegations or judicially noticeable facts reveal the existence of
an affirmative defense, the "plaintiff must 'plead around' the defense, by
alleging specific facts that would avoid the apparent defense. Absent such
allegations, the complaint is subject to demurrer for failure to state a cause
of action . . . .' ' (Weil & Brown, Cal. Practice Guide: Civil Procedure
Before Trial (The Rutter Group 2001) P 6:179, p. 6-39, italics omitted, citing Lee
v. Escrow Consultants, Inc. (1989) 210 Cal. App. 3d 915, 917, 921-922, 259
Cal. Rptr. 117, and Spray, Gould & Bowers v. Associated Internat. Ins.
Co. (1999) 71 Cal. App. 4th 1260, 1266, 84 Cal. Rptr. 2d 552, fn. 4, .)
We do not review the validity of the trial court's reasoning, only the
propriety of the ruling itself. ( Rodas v. Spiegel, supra, 87
Cal. App. 4th at p. 517.) If the factual allegations of the complaint state a
cause of action on any available legal theory, the trial court's order of
dismissal must be reversed. ( Quelimane Co. v. Stewart Title Guaranty Co.
(1998) 19 Cal. 4th 26, 38, 960 P.2d 513, 77 Cal. Rptr. 2d 709; Sindell v.
Gibson, Dunn & Crutcher (1997) 54 Cal. App. 4th 1457, 1465, 63 Cal.
Rptr. 2d 594.)
Applying these standards, we review the sufficiency of appellants'
pleadings to ascertain whether they state causes of action for violation of
Civil Code section 1739.7, negligence, and violation of the UCL.
II. Claim for Alleged Violation of the Autographed Sports Memorabilia
Statute (Civ. Code, 1739.7)
A. The Statute
Civil Code section 1739.7, Autographed Sports Memorabilia, regulates the
sale of autographed sports items, broadly termed "collectibles."
(Civ. Code, 1739.7, subd. (a)(2). n3 ) The statute generally forbids dealers of
collectibles from representing an item as a collectible "if it was not
autographed by the sports personality in his or her own hand." (Civ. Code,
1739.7, subd. (c); Upper Deck Authenticated, Ltd. v. CPG Direct (S.D.
Cal. 1997) 971 F. Supp. 1337, 1346.) It also places various obligations on such
dealers. Specifically, subdivision (b) of the statute requires dealers to
provide certificates of authenticity of a prescribed form and content. It
provides in part: "Whenever a dealer, in selling or offering to sell to a
consumer a collectible in or from this state, provides a description of that
collectible as being autographed, the dealer shall furnish a certificate of
authenticity to the consumer at the time of sale. The certificate of
authenticity shall be in writing, shall be signed by the dealer or his or her
authorized agent, and shall specify the date of sale." (Civ. Code,1739.7,
subd. (b).)
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n3 The statute defines a collectible as "an autographed sports item,
including, but not limited to, a photograph, book, ticket, plaque, sports
program, trading card, item of sports equipment or clothing, or other sports
memorabilia sold or offered for sale in or from this state by a dealer to a
consumer for five dollars ($ 5) or more." (Civ. Code, 1739.7, subd.
(a)(2).) It contains other definitions as follows:
" 'Autographed' means bearing the actual signature of a personality
signed by that individual's own hand." (Civ. Code, 1739.7, subd. (a)(1).)
" 'Consumer' means any natural person who purchases a collectible from
a dealer for personal, family, or household purposes. 'Consumer' also includes
a prospective purchaser meeting these criteria." (Civ. Code, 1739.7, subd.
(a)(3).)
" 'Description' means any of the following: [P] (A) Any representation
in writing, including, but not limited to, a representation in an
advertisement, brochure, catalog, flyer, invoice, sign, or other commercial or
promotional material. [P] (B) Any oral representation. [P] (C) Any
representation included in a radio or television broadcast to the public in or
from this state." (Civ. Code, 1739.7, subd. (a)(5).)
" 'Promoter' means a person who arranges, holds, organizes, or
presents a trade show featuring collectibles, autograph signings, or
both." (Civ. Code, 1739.7, subd. (a)(8).)
" 'Person' means any natural person, partnership, corporation, limited
liability company, company, trust, association, or other entity, however
organized." (Civ. Code 1739.7, subd. (a)(9).)
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
The statute defines a dealer as follows: " 'Dealer' means a person who
is in the business of selling or offering for sale collectibles in or from this
state, exclusively or nonexclusively, or a person who by his or her occupation
holds himself or herself out as having knowledge or skill peculiar to
collectibles, or to whom that knowledge or skill may be attributed by his or
her employment of an agent or other intermediary that by his or her occupation
holds himself or herself out as having that knowledge or skill. 'Dealer'
includes an auctioneer who sells collectibles at a public auction, and also
includes persons who are consignors or representatives or agents of
auctioneers. 'Dealer' includes a person engaged in a mail order, telephone
order, or cable television business for the sale of collectibles." (Civ.
Code, § 1739.7, subd. (a)(4).)
B. Business of Selling or Offering to Sell Collectibles
(2a) Appellants contend they stated a cause of action against eBay
under Civil Code section 1739.7 by alleging eBay is an auctioneer that engages
in the sale or offer for sale of autographed collectibles in or from this
state, provides descriptions of collectibles as being autographed, yet has
never furnished the requisite certificates of authenticity under the statute.
eBay advances several arguments in support of the proposition appellants
cannot, as a matter of law, allege it is a dealer within the meaning of Civil
Code section 1739.7. Preliminarily, it maintains we must reject the majority of
appellants' allegations--those parroting the language of the statute--as mere
legal conclusions and focus upon those allegations that flesh out the details
of the sales transactions. eBay argues the nonconclusory allegations of the
second amended complaint, combined with judicially noticeable facts as to the
operation of its Web site, demonstrate eBay (1) does not provide descriptions
within the meaning of Civil Code section 1739.7 because it is actually the user
who selects the product categories of his or her item for sale; and (2) does
not sell or offer to sell collectibles because, as appellants allege in other
portions of their pleading, it is in fact the individual defendants who sold
the forged items to appellants. We are persuaded by the latter argument.
As stated, liability as a dealer under Civil Code section 1739.7 requires
that the dealer be exclusively or nonexclusively "in the business of
selling or offering for sale collectibles in or from this state." (Civil
Code, 1739.7, subd. (a)(4).) Here, appellants' specific allegations reveal eBay
is not in the business of selling or offering to sell the collectibles at
issue; rather, it is the individual defendants who sold the items to
plaintiffs, using eBay as a venue. (3) In reaching this conclusion, we
acknowledge we are required to construe appellants' allegations liberally, with
a view towards substantial justice between the parties. (Evid. Code, 452; King
v. Central Bank (1977) 18 Cal. 3d 840, 843, 135 Cal. Rptr. 771, 558 P.2d
857; Skopp v. Weaver (1976) 16 Cal. 3d 432, 438, 128 Cal. Rptr. 19, 546
P.2d 307.) But this rule does not permit us to ignore long-established rules of
pleading. Accordingly, we apply the rule that specific allegations control
general pleadings. ( Careau & Co. v. Security Pacific Business Credit,
Inc. (1990) 222 Cal. App. 3d 1371, 1389-1390, 272 Cal. Rptr. 387; see also Stowe
v. Fritzie Hotels, Inc. (1955) 44 Cal. 2d 416, 422, 282 P.2d 890 [where
there is any inconsistency between the specific allegations upon which a conclusion
must be based and the conclusion, the specific allegations control]; Clack
v. State of California ex rel. Dept. of Pub. Works (1969) 275 Cal. App. 2d
743, 748, 80 Cal. Rptr. 274, [where a fact is pleaded in general or
conclusionary terms, followed by an inconsistent specific allegation, the
latter controls].)
(2b) The general allegation that eBay engages in the sale or offer
for sale is irreconcilable with other, more specific allegations. These
allegations describe the specific operations of the individual defendants,
expressly stating that the sellers of the forged items were Fitzgerald or
Scheinman through their respective business entities. As appellants alleged,
the scheme began with the Marino defendants' conduct in faking autographs of celebrated
sports figures on baseballs, photographs and other collectibles and forwarding
those items to Fitzgerald or Scheinman, who then placed them for sale on eBay
by, in part, designating the appropriate categories contained on the Web site.
n4 These factual allegations control. "While inconsistent theories
of recovery are permitted [citation] a pleader cannot blow hot and cold as to
the facts positively stated. [Citations.]" ( Manti v. Gunari
(1970) 5 Cal. App. 3d 442, 449, 85 Cal. Rptr. 366.)
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n4 Describing the role of the "large-scale dealers" in the second
amended complaint, appellants allege: "The Marino defendants sold most of
their forged sports items to a number of large-scale dealers, each of whom had
knowledge of the fraudulent nature of the items. The largest dealers included
Defendants Fitzgerald and Scheinman. [P] . . . Defendant Fitzgerald sold the
forged sports items to consumers through his entities known as 'Stan's Sports
Memorabilia' and 'Stan The Man Sports Memorabilia[]'[.] Most of Defendant
Fitzgerald's offers and sales were effected through eBay auctions. [P] . . .
Defendant Scheinman sold the forged sports items to consumers through his
entity known as 'Smokey's Sportscard, Inc.' Most of Defendant Scheinman's
offers and sales were effected through eBay auctions." Appellants allege
that Camp, Hyder, Osacky and Dermody purchased their forged collectibles from
either Fitzgerald or Scheinman through eBay auctions.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
C. Section 230 Immunity n5
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n5 Although eBay originally raised section 230's immunity only with respect
to its demurrers to appellants' negligence and UCL causes of action, in its
reply to appellants' opposition it asserted section 230 likewise extended to
appellants' cause of action under Civil Code section 1739.7. On appeal, the
parties have fully argued section 230's application to all of appellants'
causes of action against eBay.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
Notwithstanding our conclusion above, we additionally hold, under the facts
presented, placing liability upon eBay for failing to provide a warranty under
Civil Code section 1739.7 would be inconsistent with and hence preempted by
section 230, which was incorporated by Congress into the final version of the
Communications Decency Act (and the Telecommunications Act) of 1996. (See
Sen.Rep. No. 104-230, 2d Sess., pp. 86-88 (1996); Pub.L. No. 104-104, § 509
(Feb. 8, 1996) 110 Stat. 56.) The operative provision of Section 230 states:
"[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." (47 U.S.C. 230(c)(1).) The statute further provides:
"(e) Effect on other laws [P] . . . [P]
"(3) State Law
"Nothing in this section shall be construed to prevent any State from
enforcing any State law that is consistent with this section. No cause of
action may be brought and no liability may be imposed under any State or local
law that is inconsistent with this section." (§ 230 (e)(1)(3), italics
added.)
In Zeran v. America Online, Inc. (4th Cir. 1997) 129 F.3d 327 (Zeran),
certiorari denied (1998) 524 U.S. 937 [118 S. Ct. 2341, 141 L. Ed. 2d 712], the
court held section 230, by its "plain language," created a federal
immunity to any cause of action that would make interactive service providers
liable for information originating with a third party user of the service. ( Id.
at p. 330.) "Specifically, § 230 precludes courts from entertaining claims
that would place a computer service provider in a publisher's role. Thus,
lawsuits seeking to hold a service provider liable for its exercise of a
publisher's traditional editorial functions--such as deciding whether to
publish, withdraw, postpone or alter content--are barred." (Zeran, supra,
at p. 330.) Reiterating Congress's findings and policy statements in section
230(a), (b), n6 the court observed: "Congress recognized the threat that
tort-based lawsuits pose to freedom of speech in the new and burgeoning Internet
medium. The imposition of tort liability on service providers for the communications
of others represented, for Congress, simply another form of intrusive
government regulation of speech. Section 230 was enacted, in part, to maintain
the robust nature of Internet communication and, accordingly, to keep
government interference in the medium to a minimum. . . . [P] None of this
means, of course, that the original culpable party who posts defamatory
messages would escape accountability. While Congress acted to keep government
regulation of the Internet to a minimum, it also found it to be the
policy of the United States 'to ensure vigorous enforcement of Federal criminal
laws to deter and punish trafficking in obscenity, stalking, and harassment by
means of computer.' [Citation]. Congress made a policy choice, however, not to
deter harmful online speech through the separate route of imposing tort
liability on companies that serve as intermediaries for other parties'
potentially injurious messages." (Zeran, supra, at pp.
330-331.)
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n6 Section 230 itself contains Congress's specific findings and policy
statement:
"(a) Findings
"THE CONGRESS FINDS THE FOLLOWING:
"(1) The rapidly developing array of Internet and other
interactive computer services available to individual Americans represent an
extraordinary advance in the availability of educational and informational
resources to our citizens.
"(2) These services offer users a great degree of control over the
information that they receive, as well as the potential for even greater
control in the future as technology develops.
"(3) The Internet and other interactive computer services offer
a forum for a true diversity of political discourse, unique opportunities for
cultural development, and myriad avenues for intellectual activity.
"(4) The Internet and other interactive computer services have
flourished, to the benefit of all Americans, with a minimum of government
regulation.
"(5) Increasingly Americans are relying on interactive media for a variety
of political, educational, cultural, and entertainment services.
"(b) Policy
"It is the policy of the United States-
"(1) to promote the continued development of the Internet and
other interactive computer services and other interactive media;
"(2) to preserve the vibrant and competitive free market that
presently exists for the Internet and other interactive computer
services, unfettered by Federal or State regulation;
"(3) to encourage the development of technologies which maximize user
control over what information is received by individuals, families, and schools
who use the Internet and other interactive computer services;
"(4) to remove disincentives for the development and utilization of
blocking and filtering technologies that empower parents to restrict their
children's access to objectionable or inappropriate online material; and
"(5) to ensure vigorous enforcement of Federal criminal laws to deter
and punish trafficking in obscenity, stalking, and harassment by means of
computer." (§ 230(a), (b).)
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Other courts have applied Zeran's reasoning to bar not only
defamation claims, but other tort causes of action asserted against interactive
service providers. (See, e.g. Kathleen R. v. City of Livermore (2001) 87
Cal. App. 4th 684, 692, [104 Cal. Rptr. 2d 772] [Court of Appeal affirmed
judgment of dismissal in city's favor holding a city was immune under § 230
from liability under state causes of action for misuse of public funds,
nuisance and premises liability for library's acts in providing computers
allowing access to pornography]; Doe v. America Online, Inc. (Fla. 2001)
783 So. 2d 1010, 1013-1017 [following Zeran in concluding § 230 directly
preempted Florida law in a negligence action based upon America Online, Inc.'s
(AOL) distribution of information depicting child pornography; the court
rejected the argument that allegations AOL knew or should have known about the
distribution of such materials created liability distinct from that of any
publisher]; Schneider v. Amazon.com, Inc. (Wash. App. 2001) 108 Wn. App.
454, [31 P.3d 37] [Internet book vendor was immune from tort (negligent
misrepresentation, interference with business expectancy) and contractual
liability arising from allegedly false statements about the plaintiff and his
business made by third parties in the book review section]; PatentWizard,
Inc. v. Kinko's Inc. (D.S.D. 2001) 163 F. Supp. 2d 1069, 1071-1072
[defamation liability]; Ben Ezra, Weinstein, & Co. v. America Online,
Inc. (10th Cir. 2000) 206 F.3d 980, 984-985; Doe v. Oliver (Conn.
Super. Ct. 2000) 46 Conn. Supp. 406, [755 A.2d 1000, 1003-1004] [barring claims
for negligence, negligence per se, failure to prevent transmission of e-mail in
violation of a Connecticut statute, intentional nuisance and infliction of
emotional distress based upon sending of on-line e-mails]; Blumenthal v.
Drudge (D.D.C. 1998) 992 F. Supp. 44, 49-52 [barring defamation claims
against AOL for statements made in the Drudge Report, an on-line gossip column,
even though AOL had contracted for the reports, retained certain editorial
rights as to its content, and aggressively promoted the report; the court
expressed sympathy with the plaintiff but concluded Congress had made a policy
choice to provide immunity "even where the interactive service provider
has an active, even aggressive role in making available content prepared by
others"].)
Section 230(c)(1) thus immunizes providers of interactive computer services
(service providers) and their users from causes of action asserted by persons
alleging harm caused by content provided by a third party. This form of
immunity requires (1) the defendant be a provider or user of an interactive
computer service; (2) the cause of action treat the defendant as a publisher or
speaker of information; and (3) the information at issue be provided by another
information content provider.
Appellants concede for purposes of this appeal that eBay is an interactive
computer service provider. n7 And appellants do not expressly challenge the
application of section 230 to liability based on content placed on eBay's Web
site by eBay's users or other third parties. Rather, they contend section 230
does not apply because they seek to enforce eBay's independent duty under the
statute to furnish a warranty as the " 'provider' of descriptions,"
not as a publisher. We disagree.
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n7 The statute defines the term "Interactive computer service" as
"any information service, system, or access software provider that
provides or enables computer access by multiple users to a computer server,
including specifically a service or system that provides access to the Internet
and such systems operated or services offered by libraries or educational
institutions." (§ 230(f)(2).) The term "Information content
provider" is defined as "any person or entity that is responsible, in
whole or in part, for the creation or development of information provided
through the Internet or any other interactive computer service." (§
230(f)(3).) Even if appellants had not conceded the issue, the allegations of
the second amended complaint indicate eBay's Web site enables users to conduct
sales transactions, as well as provide information (feedback) about other users
of the service. In this way, eBay provides an information service that enables
access by multiple users to a computer server and brings it within the broad
definition of an interactive computer service provider. (Cf. Schneider v.
Amazon.com, Inc., supra, 31 P.3d at p. 40 & fn. 13 [noting Amazon.com's
Web site permitted visitors to comment about authors and their work and thus
provided an information service that necessarily enabled access by multiple
users to a service].)
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The substance of appellants' allegations reveal they ultimately seek to
hold eBay responsible for conduct falling within the reach of section 230,
namely, eBay's dissemination of representations made by the individual
defendants, or the posting of compilations of information generated by those
defendants and other third parties. Under section 230, eBay cannot be
"treated as the publisher or speaker" of content supplied by other
information content providers. (§ 230 (c)(1).) (4) (See fn. 8.) If by
imposing liability under Civil Code section 1739.7 we ultimately hold eBay
responsible for content originating from other parties, we would be treating it
as the publisher, viz., the original communicator, contrary to Congress's
expressed intent under section 230(c)(1) and (e)(3). n8
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n8 "Preemption of state law by federal law is found in 'three
circumstances.' [Citations.] [P] First, there is so-called 'express
preemption': 'Congress can define explicitly the extent to which its enactments
pre-empt state law.' [Citations.] [P] Second, there is so-called 'field
preemption': '[S]tate law is pre-empted where it regulates conduct in a field
that Congress intended the Federal Government to occupy exclusively.'
[Citations.] [P] Third, there is so-called 'conflict preemption': '[S]tate law
is pre-empted to the extent that it actually conflicts with federal law.'
[Citations.] Such conflict must be 'of substance and not merely trivial or
insubstantial.' [Citation.] It exists when it is 'impossible . . . to comply
with both state and federal requirements' [citations] or when state law 'stands
as an obstacle to the accomplishment and execution of the full purposes and
objectives' underlying federal law [citations]. Although 'state law is
pre-empted to the extent that it actually conflicts with federal law'
[citation], it is preempted only to that extent and no further
[citation]." ( Peatros v. Bank of America NT & SA (2000) 22
Cal. 4th 147, 157-158, [91 Cal. Rptr. 2d 659, 990 P.2d 539].) These three
circumstances should not be viewed as rigid categories. (See English v.
General Elec. Co. (1990) 496 U.S. 72, 78, [110 L. Ed. 2d 65, 110 S. Ct.
2270]; Peatros v. Bank v. America, supra, 22 Cal. 4th at p. 158,
fn. 1; Smiley v. Citibank (1995) 11 Cal. 4th 138, 148, fn. 3, [44 Cal.
Rptr. 2d 441, 900 P.2d 690]), and indeed, they may overlap at times. (See English
v. General Electric Co., at pp. 79-80, fn. 5 [110 S. Ct. at p. 2275]
["[F]ield pre-emption may be understood as a species of conflict
pre-emption . . . ."].) Here, Congress has made a clear expression of
intent to preempt state law, but only to the extent the state law is inconsistent
or conflicts with section 230. As indicated, subdivision (e)(3) of section 230
provides, "[n]o cause of action may be brought and no liability may be
imposed under any State or local law that is inconsistent with this
section." Thus, the relevant inquiry in this case is not whether section
230 preempts inconsistent state laws--Congress has manifestly stated it
does--but what is the scope of section 230's reach for purposes of assessing
its preemptive effect.
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(2c) In connection with appellants' argument relating to the
sufficiency of their Civil Code section 1739.7 cause of action, appellants
point out they alleged eBay provided its own descriptions of collectibles
through its lists of product categories, but also assert, to the extent the
individual defendants created the ultimate descriptions of their faked
collectibles, eBay provided those descriptions within the meaning of the
statute by making them available to the users of its Web site. In opposition to
eBay's demurrer, they argued: "It does not matter under [Civil Code
section] 1739.7 who 'creates' the original specific description of the
memorabilia, because the obligation to furnish a warranty arises when a dealer
'provides' the description in offering or selling the item and the description
characterizes the item as being autographed. . . . Therefore, although the
specific description of an item originates with the seller, eBay, by making the
description available over its auction website . . ., then 'provides' the
description to its consumers."
While the fact eBay does not create the description may be of no
significance to liability under Civil Code section 1739.7 as appellants
maintain, it is highly significant for purposes of assessing the application of
section 230. Appellants do not dispute the fact, judicially noticed by the
trial court, n9 that it was dealers Fitzgerald and Scheinman, not eBay, who
chose their own category description for the item offered for sale. Thus, for
purposes of applying section 230 immunity, we consider it was the individual
defendants who falsely identified the product as authentically autographed in
order to place their items on eBay for sale. On the basis of appellants'
allegations, holding eBay responsible for providing a warranty under Civil Code
section 1739.7 when it merely made the individual defendant's false product
descriptions available to other users on its Web site, or provided the Web site
on which the individual defendants designated their collectibles as
autographed, puts eBay in the shoes of the individual defendants, making it
responsible for their publications or statements. We therefore conclude
enforcement of appellants' Civil Code section 1739.7 cause of action is
inconsistent with section 230 because it would " 'stand[] as an obstacle
to the accomplishment and execution of the full purposes and objectives of
Congress.' " ( English v. General Elec. Co. (1990) 496 U.S. 72, 79,
[110 L. Ed. 2d 65, 110 S. Ct. 2270].) n10
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n9 We need not reach the question of whether the operation of eBay's Web
site is a matter for which judicial notice is appropriate. As indicated, the
court granted eBay's unopposed request for judicial notice and appellants do
not challenge that action on appeal. Any objection on this point has been
waived. ( Younan v. Caruso (1996) 51 Cal. App. 4th 401, 406, [59 Cal.
Rptr. 2d 103, fn. 3].)
n10 The Attorney General of California filed an amicus curiae brief in this
matter contending section 230 should not be read so broadly as to grant
immunity to eBay against appellants' claims. We granted AOL leave to file
another amicus curiae brief. Urging us to consider the legislative history of
section 230, the Attorney General argues we must reject Zeran and its
progeny and hold it does not immunize interactive computer service providers
that act as distributors, that is, who publish information that they know to be
false, fraudulent, defamatory, obscene, unlawful or otherwise objectionable. We
are of the view that the very language used by Congress in stating section
230's goals reflects the breadth of the statute's purpose, i.e., "to
promote the continued development of the Internet and other interactive
computer services and other interactive media" and to "preserve the
vibrant and competitive free market that presently exists for the Internet
and other interactive computer services, unfettered by Federal or State
regulations." (§ 230(b)(1), (2).) Such language does not reflect the
limitations proposed by the Attorney General. The plain effect of Congress's
words is to shelter service providers for providing access to another's
offensive or objectionable information: "any information provided by another
. . . ." (§ 230(c)(1).)
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
III. Negligence Cause of Action
(5a) Apart from the cause of action under Civil Code section 1739.9,
which we have held is barred, appellants' negligence cause of action is based
on allegations that eBay itself misrepresented the safety of purchasing items
from the individual defendants and knew or should have known the individual
defendants were conducting unlawful practices but failed to ensure they comply
with the law. In an attempt to plead around section 230 with respect to these
causes of action, appellants generally allege eBay was an information content
provider in that it was responsible for the creation of information, or
development of information, for the online auction it provided through the Internet;
that eBay did not act as an Internet service provider; and the
information at issue (descriptions of collectibles as autographed) did not
concern the publication of obscene or similarly objectionable materials. n11
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n11 We note the fact appellants allege eBay is an information content
provider is irrelevant if eBay did not itself create or develop the content for
which appellants seek to hold it liable. It is not inconsistent for eBay to be
an interactive service provider and also an information content provider; the
categories are not mutually exclusive. The critical issue is whether eBay acted
as an information content provider with respect to the information that
appellants claim is false or misleading.
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These conclusory and argumentative allegations are followed by more
specific averments. Appellants more specifically described the information
purportedly developed by eBay for its "safety program," identifying
it as consisting of a color-coded star symbol, a Power Sellers endorsement, and
a Feedback Forum. Appellants alleged: "eBay encourages its users to rely
upon its 'Feedback Forum' prior to engaging in a sales transaction. The
Feedback Forum purportedly allows dealers and consumers to rate a sales
transaction with a compliment (a 'Positive Feedback'), a criticism (a 'Negative
Feedback'), or other comments (a 'Neutral Feedback'). eBay has advertised that,
'A positive eBay rating is worth its weight in gold.' A dealer or consumer who
achieves a designated level of Positive Feedback is awarded a star symbol
display next to the user name, which is color coded to indicate the amount of
Positive Feedback received by the user. [P] . . . In addition to the Feedback
Forum, eBay designed a 'Power Sellers' endorsement, which purportedly is an
award given to select eBay dealers based on the volume of sales and Positive
Feedback ratings. [P] . . . In reality, however, eBay's 'safety' programs have
contributed to enormous damage to autographed sports memorabilia consumers. For
example, the Feedback Forum allows anyone to rate a dealer, even if
there has never been a sales transaction between the parties. Thus, Fitzgerald
and Scheinman have at least hundreds of Positive Feedback ratings which are
unrelated to any sales transactions. Most, if not all, of these
Positive Feedback ratings are self-generated or provided by other co-conspiring
dealers." (Boldface in original, italics added.)
None of these allegations place eBay outside the immunity for service
providers. As eBay points out, the allegations reveal that eBay's Feedback
Forum is comprised of negative or positive information provided by third party
consumers and dealers. Likewise, the star symbol and "Power Sellers"
designation is simply a representation of the amount of such positive
information received by other users of eBay's Web site. Appellants' negligence
claim is based on the assertion that the information is false or misleading
because it has been manipulated by the individual defendants or other
co-conspiring parties. Based on these allegations, enforcing
appellants' negligence claim would place liability on eBay for simply compiling
false and/or misleading content created by the individual defendants and other
coconspirators. We do not see such activities transforming eBay into an
information content provider with respect to the representations targeted by
appellants as it did not create or develop the underlying misinformation.
(E.g., Ben Ezra, Weinstein, and Company, Inc. v. America Online, Inc., supra,
206 F.3d 980, 985-986 [AOL's communication of errors in stock information
provided by other entities, and deletion of stock symbols and other alteration
of information from its data base to correct such errors was not "creation
or development" of information under § 230's definition of an information
content provider].) We are constrained from enforcing such liability under
California law because it would treat eBay as the publisher or speaker of the
individual defendants' materials, and thereby conflict with section 230.
We reach the same conclusion with regard to appellants' general assertion
that eBay knew or should have known about the individual defendant's illegal or
fraudulent conduct but failed to take steps to ensure they complied with the
law. This claim seeks to hold eBay responsible for having notice of illegal
activities conducted by others on its Web site, and for electing not to take
action against those third parties, including by withdrawing or somehow
altering the content placed by them. This is the classic kind of claim that Zeran
found to be preempted by section 230, as one that seeks to hold eBay liable for
its exercise of a publisher's traditional editorial functions. (Zeran, supra,
129 F.3d at p. 330.) Such claims have been uniformly rejected by the courts
that have considered them. (E.g., Doe v. America Online, Inc., supra,
783 So. 2d 1010 [holding plaintiff's negligence claim based on the allegation
AOL knew or should have known third parties used its service to distribute
child pornography was preempted by § 230]; Doe One v. Oliver, supra,
755 A.2d at pp. 1003-1004 [holding plaintiffs failed to state claims upon which
relief could be granted for negligence, negligence per se and breach of
contract based on AOL's failure to prevent transmission of e-mail because they
were precluded by § 230]; Schneider v. Amazon.com, Inc., supra,
31 P.3d at pp 41-42. 42 [holding plaintiffs' claim based on Amazon.com's
failure to remove an offensive posting, an "exercise of editorial
discretion," was protected under § 230].)
Finally, taking as true the fact eBay makes the statement on its Web site
that a positive eBay rating is "worth its weight in gold," such an
assertion cannot support a cause of action for negligent misrepresentation
regardless of federal statutory immunity because it amounts to a general statement
of opinion, not a positive assertion of fact. (6) An essential element
of a cause of action for negligent misrepresentation is that the defendant must
have made a misrepresentation as to a past or existing material fact. ( Christiansen
v. Roddy (1986) 186 Cal. App. 3d 780, 785, [231 Cal. Rptr. 72].) "The
law is quite clear that expressions of opinion are not generally treated as
representations of fact, and thus are not grounds for a misrepresentation cause
of action. [Citations.] Representations of value are opinions.
[Citation.]" ( Neu-Visions Sports, Inc. v. Soren/McAdams/Bartells (2000)
86 Cal. App. 4th 303, 308, [103 Cal. Rptr. 2d 159], citing BAJI No. 12.32, 5
Witkin, Summary of Cal. Law (9th ed. 1988) Torts, § 678, pp. 779-780; and
Rest.2d Torts, § 538A ["[a] representation is one of opinion if it
expresses only [P] (a) the belief of the maker, without certainty, as to the
existence of a fact; or [P] (b) his judgment as to quality, value,
authenticity, or other matters of judgment"].) (5b) Although the
line of demarcation between expressions of fact and opinion can be unclear at
times, this is not such a case. This kind of vague, highly subjective statement
as to the significance of a positive rating is not the sort of statement that a
consumer would interpret as factual or upon which he or she could reasonably
rely.
IV. UCL Cause of Action
Appellants' UCL cause of action is based upon the same allegations as their
negligence claim: that eBay misrepresented the forged collectibles offered for
sale in its auctions; failed to furnish certificates of authenticity; was aware
of the fraudulent nature of the collectibles but failed to disclose such
information to consumers; and "made use of various forms of marketing and
advertising to falsely advertise, call attention to, endorse, or give publicity
to the sale of forged collectibles . . . ." On appeal, appellants argue
the sufficiency of only those allegations regarding eBay's safety programs,
seeking to distinguish them as statements made by eBay itself. They plead eBay
knew or reasonably should have known their marketing and advertising was untrue
and/or misleading. For the reasons explained above, because eBay's liability
would be based upon the misrepresentations of the individual defendants, to the
extent these allegations state a cause of action, it is inconsistent with and
barred by section 230.
DISPOSITION
The judgment is affirmed.
Haller, Acting P. J., and McConnell, J., concurred.
Appellants' petition for review by the Supreme Court was denied October 16,
2002.