eBay Live Auctions – The Case in Review…

Upon further review, the lawsuit against eBay filed by Windsor Auctions, Jewelry Auctions and Universal Live, lays out a chronological order of events dating back as far as 2004. According to court documents, Universal Live contracted directly with eBay Live as a live auction seller. Windsor and Jewelry Auctions began selling on the live auction platform in mid 2004, however, Windsor and Jewelry Auctions are clients of eBay partner Live Auctioneers, LLC (at that time).

Live Auctioneers bills itself as a “partner” of eBay and provides services to eBay Live sellers. Upon Windsor and Jewelry Auctions attempting to contract with eBay Live they are contacted by Live Auctioneers representatives and informed that Live Auctioneers handles eBay live auction accounts.

Universal Live is an established direct to eBay client and is not required to contract for services through Live Auctioneers, LLC. Windsor and Jewelry Auctions contract with Live Auctioneers (as eBay no longer accepts clients directly for its own platform) and Windsor/Jewelry Auctions are added to the 700+ live auction eBay Live client roster of Live Auctioneers.

Enter – the competitor. Paramount Auctions and Jewelry Overstock Auctions are direct to eBay Live clients, however, have an advantage over ALL other eBay Live auction clients by way of a tool (located on the Catalog Management page), which it utilizes to push its listings to the front of eBay core before all other eBay Live auction listings.

The amended Windsor complaint (in which eBay seeks to quash with another 12B6 Motion to Dismiss) has all the elements of a prima facie case (Prima facie – Latin for “on its first appearance”).

• Universal complains to eBay that the end times on live auction lots are inaccurate and confuse potential eBay bidders.
• Windsor and Jewelry Auctions also complain to eBay that the end times on live auction lots are inaccurate and confuse potential bidders.

However, Paramount Auctions and Jewelry Overstock are flowing their items through eBay core with accurate end times, on their live auction lots, during a period in time in which Universal, Windsor and Jewelry Auctions are operating on the very same platform and complaining to eBay that the end times on their respective lots are inaccurate.

Windsor and Jewelry Auctions approach Paramount and Jewelry Overstock to request information as to how their competitor is pushing their lots through the front of eBay core. Upon discovering the method (tool) being used to accomplish this feat (which eBay claims to the Plaintiffs that it has no remedy to fix), Windsor and Jewelry Auctions contact eBay representatives at eBay Live and informs them how the competitor (Paramount and Jewelry Overstock) are manipulating the system by way of a “tool” located on the Catalog Management Set-Up page.

The complaint states that Windsor/Jewelry Auctions requests that eBay offer the use of the “tool” to all live auction sellers and/or at the very least, shut it down in order to level the playing field. eBay appears to have done nothing in either direction, as the “tool” is still be utilized by Paramount and Jewelry Overstock Auctions to push their listings to the front of eBay core - to this very day.

Windsor and Jewelry Auctions (for all of their pleading) continues to operate on the eBay Live Auction platform through Live Auctioneers. Their contract with Live Auctioneers, LLC is not renewed and they then become direct to eBay clients. Shortly thereafter, Windsor and Jewelry Auctions are suspended from eBay.

Note: Windsor’s suit is filed in December 2007 and they are suspended within a few short months after the filing of their lawsuit against eBay.

In the meantime, Universal (a “like” eBay direct client) joins the Windsor action, however, is still operating on the same platform and has not been suspended. What did Windsor/Jewelry Auctions do to eBay to suffer the wrath of a full suspension of all of their eBay user names? It appears (on the surface) as though the filing of the action would be the most likely cause to suspend the plaintiffs, in which case, Windsor and Jewelry Auctions may have a substantial claim for punitive damages against eBay.

Note: All three Plaintiffs are (or were) multi-million dollar enterprises, utilizing the eBay Live Auction platform.

eBay’s 12B6 Motion to Dismiss - appears to be an attempt to justify the suspensions based upon their user boilerplate Agreement. Can eBay’s user Agreement be held to be valid in light of the circumstances surrounding this case? If Windsor’s claim is that eBay retaliated against it for the filing of its lawsuit - holds firm - eBay may have liability for suspending the Plaintiff without cause no matter what their user Agreement sets forth. The double-edged sword that comes into play (for eBay) may be that if eBay suspended Windsor and Jewelry Auctions for simply filing the action but, eBay allows the third Plaintiff to continue operating (while Windsor/Jewelry Auctions are suspended) what is the reasoning offered by eBay for the sole suspension of the original plaintiff? In contrast, if eBay suspends the new Plaintiff in the case, eBay has stepped into a land mine of double punitives.

What’s confusing is that if eBay stated - to all three Plaintiffs - that they (eBay) had no remedy for the inaccurate end times displaying on live auction lots, how did it come to pass that Universal complains to eBay (prior to Windsor and Jewelry Auctions arrival on the platform), that the end times on auction lots were inaccurate, while another live auction seller (Paramount and Jewelry Overstock) are using a tool, which offers near accurate end times (displaying on their live auction lots) during a period in time, when all three Plaintiffs (Windsor, Jewelry Auctions and Universal Live) are eventually operating on the same platform, at the same time?

(In an unrelated matter, eBay suspended the use of the Auction Extender tool (which has nothing to do with the “tool” used on eBay Live Auctions). The difference between these two separate instances may be that eBay openly informed and allowed regular eBay sellers to use the Auction Extender tool and then changed their policy to prevent its use. But, in the Windsor case, the “tool” in question (not the Auction Extender tool) was not announced to ALL Live Auction sellers and only one seller was utilizing the tool out of 900+ eBay direct and eBay Live Auction clients. In fact, no one but, Paramount/Jewelry Overstock even knew the tool existed and how it operated for more than a few years.

According to the Plaintiffs, eBay Live representatives not only knew the tool existed but, may have also assisted the competitor in its use.

Did eBay have a duty to “act” (in some type of capacity) upon learning that a Live Auction seller was using a tool, which could expose it to claims of unfair competition by “like” sellers? If all eBay direct clients executed the same agreement (which eBay has sealed with the court), then all could (or should) be considered “like” sellers on the same platform. If this is the case, how does eBay defend the use of a “tool” which offered an economic advantage to just one seller over all of their other eBay Live Auction sellers?

If the Plaintiffs complained to eBay that such an economic advantage was indeed “in use” on their platform, what liabilities come along with the inaction on the part of eBay to stop the use of the “tool” in an effort to prevent an unfair competitive advantage, over all other ”like” sellers on the same platform?

What may truly be the hardest question to answer posed to eBay, is that if all three Plaintiffs repeatedly questioned eBay as to the disparity in end times displaying on Live auction lots and, eBay representatives denied the existence of such a “tool”, however, allowed another “like” seller to continue using the “tool” while eBay denied it had no remedy to repair the problem, eBay may end up in the proverbial “hot seat” with not only these three Plaintiffs but, their own eBay direct clients and those of Live Auctioneers, LLC. The “worst” possible truth that come out at depositions and through supporting documents, is that eBay Live personnel not only ”knew” of the tools’ existence but, that eBay had plans to automate the tool but, never followed through to the possible detriment of these specific Plaintiffs and all other live auction sellers.

In my opinion (as is all the information stated above), eBay appears to be staving off the discovery process by way of filing multiple 12B6 Motions to Dismiss. The eBay Live Auction platform is to be shut down in December of this year and along with that shut down, comes the potential that witnesses and documentation may not be as readily accessible to the Plaintiffs, as it would be, if the platform was to remain active.

It is, as always, the discovery process and depositions, which can shed light on ”what happened” and “how it happened” however, the Plaintiffs (in this case), have to get past the pleading stage and  begin that process, which will undoubtedly - separate fact from fiction.

As an aside, I sent an email to Windsor and they have agreed to forward Legal Eagles emails and other documentation (to review and post), which is applicable to their case. I have been informed that any documents under seal by the court will not be shared with Legal Eagles. 

Plaintiffs Attorneys: Berliner Cohen
Defendants Attorneys: Cooley Godward