DOJ Drops Appeal Of Section 230 Ruling In eBay EPA Case
UPDATE: 4-25-25
Less than 24 hours after DOJ dropped their appeal of dismissal of the EPA case against eBay, subsidiary TCGPlayer has 4 new auctions listed - making eBay once again a direct seller on their own platform competing against 3rd party sellers with no disclosure.
This is clear and compelling evidence against eBay's claims stated in their Section 230 based defense that eBay is "never itself a seller" & only "a pure 3rd party, peer to peer marketplace" - why did DOJ not pursue this further?
After previously requesting more time to file their opening brief, the US Department of Justice has decided to drop their appeal of Section 230 dismissal in EPA case which sought to hold eBay liable for illegal items sold on their site.
The voluntary motion to dismiss means the appeal will not move forward, the previous ruling will stand and both sides have agreed to pay their own court costs pertaining to any action which had been taken in the appeal thus far.
At issue was the September 30, 2024 ruling by Judge Orelia E. Merchant which found that section 230 of the Communications Decency Act (CDA) prevents the EPA from holding eBay responsible for users’ sales on the marketplace, hinging on a broad reading of the law’s text that “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”
Liz Morton
eBay faced an estimated potential ~$2 Billion in fines related to the violations alleged in this case, not to mention further potential lawsuits that could have come from the multiple shareholder rights firms investigating possible breaches of fiduciary duty related to these claims.
As part of their defense, eBay argued that it is "never itself a seller" and is instead "a pure third-party, peer-to-peer online marketplace."
While it may be true eBay did not directly sell the specific items in question in this lawsuit, their blanket statements saying the company is "never itself a seller" have been demonstrably false at least since August 2023, when eBay set up shop on its own platform as its owned-subsidiary TCGPlayer.
Interestingly, eBay changed TCGPlayer policies and appeared to have stopped selling items under that account on September 23rd, 2024 - the week before the case was dismissed.
Liz Morton
That suggested eBay may have been concerned that provably false statement about "never being a seller" could become an issue on appeal or that the FTC under new leadership might look into the anticompetitive concerns the practice raised which were cited in a petition urging the Commission to investigate eBay's acquisition of TCGPlayer.
And coincidentally, TCGPlayer resumed selling on eBay, with a single auction started on February 24th - the same day the DOJ was granted their request for more time to decide whether or not to move forward with this appeal.
The fact that TCGPlayer stopped selling on eBay while the threat of an appeal was hanging over their heads and has only resumed selling now that it looks like the DOJ may back down is very interesting timing indeed.
Side note: the office complex where eBay TCGPlayer's operations currently reside just also happens to also be the home of three federal agencies - including US Defense IG & EPA-CID, the Criminal Enforcement Division of the Environmental Protection Agency.
Whether the appeal would be pursued by the Trump administration was difficult to guess - while environmental protection enforcement may not generally be high on their priority list, taking on Section 230 has been a priority in other areas for the administration.
For example, Trump's pick to lead the Federal Communications Commission, Brendan Carr, has come out swinging against Section 230, largely aimed Big Tech battles over social media censorship.
Charles Gasparino
Carr, who wrote the Project 2025 chapter on the FCC, has also backed efforts to amend the the law, saying “The FCC should work with Congress on more fundamental Section 230 reforms that go beyond interpreting its current terms. Congress should do so by ensuring that Internet companies no longer have carte blanche to censor protected speech while maintaining their Section 230 protections."
But while much of the current Section 230 debate has centered around social media companies, the law often works as a "get out of liability free card" for purely commercial marketplaces too.
Sullivan & Cromwell LLP were recently named a Product Liability “Practice Group of the Year” by Law360, citing the firms Section 230 win for eBay as one of their crowning achievements that will "have significant impact on all online marketplaces" - and they're not wrong.
Notably, Walmart is pursuing a Section 230 defense trying to duck liability for massive organized retail crime, theft and fraud facilitated through their marketplace in a class action lawsuit filed against the company last year.
The victims of this sophisticated triangulation fraud scheme allege Walmart profits from and fails to prevent the digital shoplifting, saying the company is complicit in the crimes as they knowingly recruit and do not properly vet fraudulent sellers from China and have not taken action to stop the fraud even after it was reported to them.
Liz Morton
Unfortunately, the current legal and regulatory framework has so far allowed these multi-billion dollar tech giants to avoid accountability for illegal activity on their sites.
Corporations have very little incentive to do anything beyond Minimum Viable Compliance box checking exercises when they know they are legally insulated from liability and can afford to keep litigation tied up for years should anyone try to challenge the status quo.
Meanwhile, millions of American small businesses and consumers suffer very real and devastating economic harm and criminals are emboldened and enabled to continue expanding their illegal activities across the web.
Liz Morton
The Walmart case is still ongoing, but Walmart has filed a motion to dismiss and now that the eBay ruling will stand unchallenged, that will certainly bolster Walmart's arguments.
eBay also continues to lobby at the state and federal level against new laws that would weaken Section 230 protections or seek to hold marketplaces as well as sellers accountable for product liability issues.
Liz Morton
Full unopposed motion for voluntary dismissal United States v eBay:
Stay tuned for updates in this developing story!
