August 02, 2006
eBay Not Liable for Defamatory Feedback--Sturm v. eBay
By Eric Goldman
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.
Posted by Eric at August 2, 2006 05:26 PM | Derivative Liability
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So now ebay owns the content, but takes no liability? Wouldn't it make more sense to place liability with ownership/control?
If the writer controls the content (and can thus remove it), it's reasonable for ebay to have no liability. They are merely a venue for the discussion. But once ebay takes control (and effectively, ownership of the feedback), shouldn't they also take on liability for it?
Posted by: RC at August 9, 2006 12:53 PM
I understand the logic, and I think we could construct a good policy argument in support of it. However, Congress has made a different policy choice, and there is logic to support that choice too. Otherwise, if feedback is easily manipulated, it's highly likely that negative feedback will disappear one way or another from the system, destroying the value of the reputational system. Eric.
Posted by: Eric Goldman at August 9, 2006 01:10 PM
There's definitely a flip side to this where the eBay seller really is bad, and then they retaliate when you leave them a bad review. I've had this happen when a seller gave me negative feedback after I reported in his feedback that he never sent me the item. It can get worse as sellers threaten to take you to court if you give them negative feedback. Elise Ackerman of the SJ Mercury News also gave the flip side here:
Personally, I feel that things should err on the side of the buyers, not the sellers. If one buyer gives a bad review, that can easily be offset by hundreds of other buyers giving positive reviews. It's the old, one's an accident, two's a trend. Having sellers threaten lawsuits over a review even if it is defammatory is just way overboard. Even in the article today where the buyer retracted his negative review, he wasn't satisfied. People have a right to complain. That should be part of the First Amendment.
Posted by: GC at August 10, 2006 01:51 AM
"People have a right to complain. That should be part of the First Amendment."
And people also have a right to defend themselves against defamation. Do you argue that if profit is involved, it's not seemly for the victim to turn to the courts?
The interesting point of the Sturm story is not Ebay's initial reaction, or their right or lack thereof to take that action. It is about their continued refusal to comply, even after the courts made clear that the remark was in violation of the law, and both the victim and perpetrator requested removal.
I think with further research into Ebay's behavior you'll find it was in keeping with what they've become: arrogant and drunk with power.
Look into the state and local governments that have been bullied and bludgeoned by Ebay's legal swat teams. Check out reports of congressional campaigns and pockets that are fat from Ebay lobbying. It's time we stopped embracing them as the fresh-faced internet kids that made good. Their hands are as dirty as any old fashioned industrial robber baron and they make a mockery of much of what is best about the online phenomenon.
But even that is not the point.
1.73 million people earn their living on Ebay today. With one commandment from Meg or Bill, Ebay could put a half million people on the unemployment line. Ebay has the power of the world's largest employer, but it operates in a vacuum, accountable to no one.
Have they proved themselves capable of handling such power responsibly? Stories such as the Sturm case add to a growing list that suggests Ebay thinks it is above everything and everyone, including the law.
And that is the real point. Should the web community defend and stand by it's thugs? When do we admit right out loud that the emperor is neked?
Posted by: Judy With a C at August 10, 2006 09:52 PM