Spyware Case Against EBay Tossed Out for Now

     SAN FRANCISCO (CN) – Angry eBay sellers must amend claims that the auction website planted spyware on their computers and opened them up to fraud, a federal judge ruled.
     Maggie Campbell hopes to represent a class of sellers suing eBay and its wholly owned payment processor PayPal. Her October 2012 complaint alleged that eBay fails to protect “sellers from the fraud of unscrupulous buyers” through its buyer-is-always-right policy during disputes between buyers and sellers.
     Campbell, who said she uses eBay to sell bicycles and bicycle parts, claims this policy wrongfully deprives sellers of both their goods and the money they received for the goods, which PayPal refunds to buyers. But the sites allegedly do not refund sellers the listing fees for their items after disputes.
     Among other things, the class also claims eBay plants spyware on sellers’ computers through its seller-protection software; tricks people into creating seller accounts by falsely representing that they can sell anything, when eBay in fact heavily restricts what people can list for sale; and forces buyers and sellers to communicate solely through the website so it can “change people’s messages to suit its purposes.”
     EBay sought dismissal, saying the plaintiffs lacked standing to bring claims and failed to support their claims with sufficient facts. It added that sellers all signed its user agreement, which included its policy on restricted sale items, when they create accounts.
     U.S. District Judge Yvonne Gonzalez Rogers dismissed the complaint with leave to amend Thursday.
     Campbell’s arguments failed to allege that eBay’s policies actually damaged her, and revolved instead around theoretical situations, Rogers wrote. Among other things, Campbell did not claim that eBay ever resolved a dispute between her and a buyer in favor of the buyer, that eBay prevented her from listing a specific item for sale, or that eBay ever restricted her accounts in any way, according to the ruling.
     “As a result, plaintiff fails to allege a claim and, more significantly, fails to allege a basis for standing. Thus, the motion to dismiss on standing grounds is granted,” Rogers wrote.
     EBay argues that the terms of its user agreement and prohibited items policy, which Campbell admits to having signed, bars many of the claims.
     Rogers agreed but noted that Campbell can amend her complaint to “address the nature of the restrictions that are the basis of her complaint and why those restrictions are not part of the agreement she acceded to as part of her user agreement with eBay.”
     Rogers also dismissed claims for breach of fiduciary duty, finding that the plaintiffs failed to establish a fiduciary relationship between themselves and eBay.
     Campbell argued that eBay owed a fiduciary duty to its buyers and sellers because it acted as the agent of their transactions and had the power to edit their correspondences.
     Rogers was not convinced.
     “Plaintiff’s argument is without substance or apparent merit under applicable California law,” she wrote.
     “In short, the FAC does not allege facts to show the nature of the fiduciary relationship or the breach of that duty, and the opposition does little to explain how plaintiff would cure this problem,” Rogers added, abbreviating first amended complaint. “Mere conclusory allegations on this point will not suffice.”
     The judge dismissed claims of fraud and unfair competition for the same reason, saying that Campbell failed to state a plausible claim.
     Claims under the California Legal Remedies Act also failed as “unclear,” according to the ruling.
     Campbell failed to prove that eBay’s allegedly fraudulent practices, such as forcing sellers to add shipping costs to sale prices, actually injured her, the judge found.
     An amended complaint that sets “forth facts sufficient to establish each claim, the defendants against whom it is stated, and the legal grounds upon which it is based” is due Oct. 22.

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