eBay Not Liable for Defamatory Feedback–Sturm v. eBay

By Eric Goldman

Sturm v. eBay, No. 1-06-CV-057926 (Cal. Superior Ct. July 27, 2006) [sorry, my copies are pretty poor: page 1, page 2]

Your mother always said “if you can’t say anything nice, don’t say anything at all.” This maxim may end up becoming the mantra of eBay users giving feedback about their trading partners. Say nice things, and everyone is happy. Leave negative feedback, and you may get sued. See, e.g., this article. This risk of liability is the dark side of the “Web 2.0″ and the emphasis on “user-generated content.” It’s all fun and games until someone serves a subpoena–and when users realize that responding candidly to those seemingly innocuous requests for feedback might lead to the courthouse, we should expect to see either platitudes or silence.

As bad as this situation is, it becomes untenable if the website hosting the user’s critiques can be liable as well. With the risk of liability, the website’s incentives are very clear–if in doubt, take it down. After all, any individual item of content has very low value–far less than the cost of litigating (or even haggling). The result would be that the targets of critiques (such as merchants) could force websites to take down negative content and leave up positive content. With the public discourse so skewed, the feedback mechanism becomes worthless.

(I expand a little on these thoughts here).

Fortunately, eBay has beat the rap so far. The two reported cases are Gentry and Grace. Gentry was a straightforward 47 USC 230 win for eBay. In contrast, in Grace, the intermediate appellate court found that 47 USC 230 didn’t apply (due to the silly publisher/distributor distinction) but eBay was nevertheless protected by a release of liability in its contract. The CA Supreme Court agreed to hear the case, but then dismissed the case summarily without an opinion. As a consequence, the funky Grace opinion was vacated.

The latest case on eBay’s liability for its feedback forum is a CA trial court opinion, Sturm v. eBay. According to an email I got from Sturm (reposted with permission):

“I sued the guy who wrote it about a year ago and we agreed to settle on a retraction and no money. That wasn’t good enough for eBay which required a court order. So I sued the guy again and won the order (but no money because we already settled). eBay didn’t accept the order so I sued eBay.”

The eBay lawsuit ran into the 47 USC 230 brick wall. With the Grace case wiped away, the court simply cites to the Gentry case. Sturm tries to overcome the adverse precedent by arguing that eBay adds a bunch of eBay-owed content to the defamatory feedback–eBay’s logo, its navigation, its summary statistics, its compilation of the feedback in reverse chronological order. eBay also “takes ownership” of the feedback posting in the sense that users can’t remove the posts once published.

No matter–as the court rightly points out, even if eBay adds all this content around the feedback, it doesn’t change that the feedback is from a third party. Indeed, even if eBay took ownership of the feedback itself and edited it, 230 should still protect eBay (see, e.g., Schneider, Blumenthal, Ramey). So the court grants the demurrer without leave to amend.

UPDATE: I’ve edited the facts above to reflect Sturm’s story. It does seem like Sturm ran into a bit of a jam. eBay says it won’t retract feedback without a court order. Sturm got a court order but eBay still didn’t retract the feedback. I’m not sure why eBay refused the order, but what else was Sturm supposed to do? Sturm writes to me: “Originally this was nontrivial because I was selling my gemstone collection and the guy posted that I sold fake gemstones and junk and, for example, I inadvertantly auctioned Columbian emeralds appraised in the thousands of dollars for eight bucks.” I can imagine his frustration having complied with eBay’s stated requirements and still not getting the expected results.

UPDATE 2: Elise Ackerman of the SJ Mercury News has a nice story explaining the situation in a lot more detail.

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