Block v. eBay

Block v. eBay, #105CV035930 (Cal. Superior Ct. filed Feb. 17, 2005). Important new class action lawsuit against eBay. Internet News and Reuters have focused on the claim that eBay acts as a shill bidder by exhorting high bidders to up their maximum bid. If the bidder actually responds to the request, then eBay raises the bid even if no other higher bidders emerge.

This claim is somewhat interesting, but I’m much more interested in the claims that eBay is an auction house governed by California’s Auction Act. As far as I can recall (let me know if my memory is fading), this is the first lawsuit against eBay making this claim. (In the Gentry case, the plaintiffs claimed eBay was a seller of sports memorabilia, and I believe some governments have made inquiries to eBay). Whether eBay is an auction house/auctioneer or not is a bet-your-business issue that eBay simply cannot afford to lose. Therefore, it was a high-risk move for Lerach Coughlin to put this issue on the table. This may make eBay more willing to settle; but it also might mean that eBay will invest whatever resources it takes to win this point.

I’m sure seeing this class action claim makes eBay wish that it could have retained the mandatory arbitration clause that implicitly got struck down in the Comb v. PayPal case.