DOJ & EPA Stall Appeal Of Precedent-Setting eBay Section 230 Case
The Department of Justice has asked for an extension of time to file their opening brief appealing the Section 230-based dismissal of the EPA lawsuit which sought to hold eBay liable for prohibited and restricted chemicals and pesticides as well as illegal emissions control cheat devices sold on the platform.
The motion filed on February 21 cites the fact that the immunity and statutory issues in play are legally complex with significant and potentially far-reaching implications as well as administrative changes due to the recent presidential election as reasons for requesting a 45 day extension, pushing the deadline to file out until April.
Both the immunity and statutory issues presented in this appeal are important and legally complex. In addition, the underlying question implicated by the appeal - whether and under what circumstances entities like eBay can be held liable for unlawful sales conducted on their platforms - is significant and potentially far-reaching...
...Given all of these considerations, additional time is needed for the
United States to determine whether to pursue this appeal as well as what issues (if any) to raise on appeal and—if appeal is authorized—to prepare, finalize, and file the United States’ opening brief.
The filing goes on to say Acting Solicitor General Sarah Harris has not yet decided whether to authorize any appeal in the case, raising the possibility the DOJ under the Trump administration may choose not to pursue the appeal which was started under the Biden administration last year.
In addition, the Solicitor General of the United States must authorize all appeals to the lower appellate courts in cases handled by divisions of the Department of Justice and United States Attorneys. See 28 C.F.R. § 0.20(b). The Acting Solicitor General has not yet determined whether to authorize this appeal.
Due both to the complexity of this case and the press of other matters—including numerous decisions and matters associated with the recent change in Administration — the government requires additional time to determine whether to authorize the appeal in this case and, if appeal is authorized, to determine what issues the United States will raise on appeal.
In addition, if appeal is authorized, the United States’ brief will need to be reviewed by, among others, the Office of the Solicitor General, the Front Office of the Environment and Natural Resources Division, trial counsel, the United States’Attorney’s Office for the Eastern District of New York, the Environmental Protection Agency, and any other affected agencies and components.
At issue is a Sept. 30 ruling by Judge Orelia E. Merchant which found that section 230 of the Communications Decency Act (CDA) prevents 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 case will be pursued by the Trump administration is difficult to say - while environmental protection enforcement may not generally be high on their priority list, taking on Section 230 could be.
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 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 if the eBay ruling goes unappealed, it will certainly bolster Walmart's arguments.
The motion for extension in the eBay case was granted on February 24th, giving DOJ until April 24th to make their next move.
Full motion for extension for time to file opening brief:
I can’t be the only one doing this, eBay have not thought this through. We will have to use a different platform for these sales unless eBay sees sense and provides an opt out.
Additionally I do not like being dictated to in this way. I’ve used eBay for 22 years and it’s worked fine, so why mess it up??