E- tailers win antitrust ruling
Court backs ebay in closing disputed customer account
SAN JOSE — eBay scored a victory when a California appeals court sided with the Internet shopping site in a long- standing antitrust case, sending a warning to customers that they had better follow the rules in the online marketplace.
The California Court of Appeal in Orange County ruled last week that San Jose- based eBay did not violate antitrust laws when it pulled the plug on one person’s account in April 2009 over concerns that she was allegedly misleading potential buyers. The court’s decision — widely seen as a victory for eBay and e- commerce companies like Etsy and Amazon — gives some legal backup to online retailers that kick people offline for not following company rules, analysts said.
“eBay was really the innovator in the ( online) marketplace, so they really set the rules for the industry,” said Gil Luria, an eBay analyst and managing director at Wedbush Securities. “This case goes to reinforce that as the marketplace, you get to set the rules.”
Lisa Genesta, of La Quinta, was booted from eBay for allegedly misrepresenting herself and the antique and vintage items she sold through her company, Ruins- CA. She started selling on eBay in 1999, according to court documents, and first got in trouble in 2008, when eBay removed the items she was selling from the site and sent warning messages to buyers. Genesta sued eBay for allegedly forcing her out of business and interfering with her livelihood, violating antitrust laws, libel, threatening her customers and causing her emotional distress.
During the appeals that stretched nearly three years, the courts have repeatedly sided with eBay. The judge’s ruling last week squashed Genesta’s complaints for the fifth time, saying she had no proof for her claims, ending the dragged- out case for good.
Luria said the ruling sends a message about the control eBay has over the actions on its site, which since its launching in 1995 has grown from the online equivalent of a garage sale into a $ 14 billion marketplace giant.
“Once those red flags go up, they’re very fast at shutting the door,” he said.
eBay did not immediately respond to questions from this newspaper. The firm representing eBay, Weil Gotshal & Manges in Redwood City, declined to comment on the case.
Analyst Rob Enderle of the San Jose- based Enderle Group said that putting limits on its sellers is the only way eBay can protect its good customers. The problem comes, however, when eBay closes an account too hastily— and it’s been known to frustrate well- meaning customers by shutting them out.
“eBay has to be able to assure quality, which is why they have this right” to close accounts, he said. “Customers should largely be OK with that, unless they are wrongfully terminated.”
But Luria said the innocent customers are a small number .
Last week’s court ruling isn’t likely to increase the number of customers kicked off.
“If there’s not enough consumers,” he said, “they don’t make money.”