eBay Demands Identities Of EcommerceBytes Sources In $100M+ Cyberstalking Suit
UPDATE 11-1-24
Judge Patti Saris has issued a ruling on motions for summary judgement in the eBay cyberstalking case, clearing the way for plaintiffs Ina and David Steiner to pursue punitive damages from the company and other named defendants for some claims.
Punitive damages for defamation were not allowed, due to the fact that the Craigslist ads, pornography mailed to neighbors and false Person of Interest reports supplied to the Natick Police were all determined to have primarily occurred within Massachusetts
On the claims of trespass, false imprisonment, and Massachusetts Civil Rights Act violations, Judge Saris ruled Massachusetts law would apply, so punitive damages would not be available for those claims either.
The Steiners' remaining claims of intentional infliction of emotional distress and civil conspiracy covered not just the physical stalking and surveillance but also the broad range of criminal conduct that was carried out online, emanating from eBay's San Jose, California headquarters.
That connection was enough for Judge Saris to rule that punitive damages for those claims can be pursued in this case, as California would have countervailing interest in deterring malicious and extreme conduct by corporations domiciled in their state.
Recent filings in the case also reveal the "9 figures" in damages being sought by the Steiners to be a stunning $700 Million, broken out amongst the various named defendants.
Liz Morton
UPDATE 10-4-24
Today's eBay cyberstalking case hearing explored whether Ina & David Steiner of EcommerceBytes can pursue punitive damages on top of $100M+ already sought in compensatory damages.
eBay argues no, saying Massachusetts law should apply and doesn't allow punitive damages in this case. The Steiners contend California law should apply, which would allow it.
Judge Patti Saris appeared to be leaning toward MA law for most issues - but was particularly interested in arguments about defamation & whether Craigslist ads posted by eBay security personnel pretending to be the Steiners were published locally/within MA or nationally.
While Craiglist postings are viewable by anyone across the internet, the ads themselves appear to have been posted on the localized site for the Boston/Natick area, directing respondents to show up at the Steiners' home address - all of which would be squarely in MA.
Judge Saris took arguments from both sides under advisement, but did not issue an immediate ruling.
UPDATE 9-25-24
Per clerk's notes on today's in person hearing, Magistrate Judge Paul G. Levenson granted eBay's motion to compel the disclosure of identities of some EcommerceBytes sources without prejudice, but according to a Law360 reporter in attendance, that doesn't necessarily mean it was a win for eBay. (Paywalled)
Search Law360
"Nothing exists," Ina and David Steiner's counsel, Todd Garber, told Magistrate Judge Paul Levenson during a brief hearing on eBay's motion seeking to compel the bloggers to disclose those sources...
..."It sounds like what you're saying essentially is 'we can't identify any particular person who says they will no longer work with us, but that it stands to reason that such people would exist, and we just don't know who they are,'" Judge Levenson said...
...Part of the problem apparently stemmed from confusion over whether the Steiners were being asked to name prior sources or just potential sources they anticipate drying up out of fear of facing the same sort of harassment, one of the claims in their lawsuit against eBay, Garber said.
...Pirozzolo told the judge on Wednesday that since the Steiners are pleading the loss of potential sources as a basis for their claim, "we are having a hard time understanding at this point the good faith basis for these allegations and request for damages."
"I think that point is made in your papers," Judge Levenson responded. "The plaintiff says we have hypothesized that prospective sources would be deterred by the conduct that's alleged in the complaint," and presumably plan to call an expert. "It sounds like that's the state of play."
The judge ordered Garber to provide responses to the disputed requests by the end of the week.
eBay is seeking to force the publishers of EcommerceBytes, Ina and David Steiner, to disclose the identities of some of their news sources as part of their defense in cyberstalking civil lawsuit that could potentially cost the company over $100 Million in damages.
The bizarre corporate plot unfolded in the summer of 2019, targeting the Steiners for their reporting on eBay and seeking to unmask the identity of Fidomaster/ unsuckEBAY, a frequent commenter and source who also sparked the ire of top executives at the company.
Court records revealed sordid details of the harassment that included disturbing deliveries of live insects, bloody pig masks and funeral wreaths as well as threatening messages, doxxing that ultimately escalated to in-person stalking and an attempted break-in at the hands of high-level eBay security personnel.
Liz Morton
Senior Director Security Jim Baugh, Director of Global Resiliency David Harville, Security Manager Philip Cooke, Senior Manager of Global Intelligence Stephanie Popp, Global Intelligence Manager Stephanie Stockwell, and Security Analyst Veronica Zea were all also charged, pleaded guilty and have been sentenced for their roles in these crimes.
eBay signed a deferred prosecution agreement with the Department of Justice that forced the company to admit to a detailed recitation of all the relevant facts involving six felony offenses - two counts of stalking through interstate travel, two counts of stalking through electronic communications services, one count of witness tampering and one count of obstruction of justice - with eBay paying a $3 Million fine and undergoing 3 years of enhanced compliance monitoring in order to avoid further criminal prosecution related to this matter.
But importantly, that $3 Million was paid to the US Treasury, not the victims, leaving the Steiners to pursue compensation through the civil court system.
The ongoing lawsuit names the seven criminal defendants plus eBay Inc., ex-CEO Devin Wenig, ex-Communications Chief Steve Wymer, ex-SVP Global Operations Wendy Jones, and security company Progressive F.O.R.C.E Concepts (PFC), alleging direction and support for the harassment came from the very top of eBay's c-suite.
Judge Patti Saris has been strongly urging the parties to engage in mediation to work toward settling at least some of the civil claims, saying in a recent hearing "I don't see any way in which a jury could decide this with the number of defendants...I just don't have a big enough courtroom for that number and it's confusing to a jury."
Saris has suggested if the lawsuit goes to trial, the proceedings may need to be split up, with claims against eBay, the c-suite executives, and the named criminal defendants tried in seperate groups in an effort to address the logistical challenges posed by such a complex case.
But all efforts at mediation so far have failed, with both parties unable to come to an agreement about the financial scope of damages that should be considered for negotiating a settlement.
The Steiners say their business, Steiner Associates LLC, was harmed by the harassment in part because some sources are now afraid to speak with them, which negatively impacted their ability to continue to produce content and reporting as they had previously, resulting in a drop in traffic to their site and advertisers discontinuing their relationships with EcommerceBytes.
They are seeking $12 million in damages for alleged harm to the business, according to court filings, but they have refused to provide any information that would identify those would be sources, citing "reporter's privilege," a legal doctrine through which reporters can keep information about their confidential sources private.
In response, eBay's lawyers are seeking to force the Steiners to disclose the identities of sources who have stopped providing information since the harassment, if they want to include harm from the loss of such sources in the lawsuit, saying that refusing to reveal the sources “improperly prevents defendants from investigating plaintiffs’ damages claims. If plaintiffs wish to protect the confidentiality of their sources behind a claim of privilege, they cannot pursue theories of liability that put the identities of those sources at issue.”
"Plaintiffs are free to preserve the confidentiality of their sources, and they are free to pursue damages based on the alleged loss of those sources as a result of the Natick events," eBay's lawyers went on to say, "but Plaintiffs are not free to do both."
eBay says its request is "limited," as they only want the Steiners to reveal the identities of sources that stopped working with them, and that it would be willing to restrict any disclosure only to its outside counsel to mitigate any concerns.
The Steiners have disclosed some redacted emails from sources, many of which appear to be "letter to the editor" submissions with the author requesting anonymity, citing fear of retaliation from eBay.
But if EcommerceBytes honored those requests for anonymity and published the letters with identifying information redacted or withheld, the court and/or a jury could find that doesn't rise to the level of a "lost" source.
It may typically be reasonable for plaintiffs in a civil case to be expected to provide documentation to back up their claims for damages, but the outrageous and retaliatory criminal conduct in this case and underlying First Amendment and press freedom issues in play significantly complicate the matter.
Many headlines have focused on the salacious nature of the harassment, but at its core this case is fundamentally about free speech - the Steiners were explicitly targeted for their reporting on eBay and its executives and subjected to a "White Knight Strategy" specifically designed to try to trick them into outing an anonymous source and frequent commenter, Fidomaster/unsuckEBAY.
Liz Morton
Notably, US Attorney Seth Kosto called out the White Knight Strategy as particularly egregious, abhorrent to First Amendment values and cause for significant sanction in his sentencing memorandum in the criminal case against Security Manager Philip Cooke.
First, Cooke and his co-conspirators targeted the Victims based on what they had written and published, and because they had made space for others to publish in comments beneath the Newsletter’s articles. Journalism about public companies, especially the world’s largest ecommerce brands, is important to investors, merchants, and customers alike.
That some at eBay disagreed with the Newsletter’s coverage, and that Baugh shared that sentiment as justification to target the Victims, is abhorrent to First Amendment values.
While there is no good reason to harass and intimidate anyone, the logic that led to the Victims’ suffering is absurd. Accepting for purposes of argument that Cooke and others were focused on Fidomaster and his online critiques, they harassed the Victims as a means of identifying and discrediting Fidomaster. That Cooke and others targeted innocent third parties is worthy of significant sanction...
...Cooke asserts that, in the August 6 meeting, he tried to talk his colleagues out of at least some parts of the harassment campaign. But what remained, even in his telling, was a series of increasingly harassing messages directed to a journalist, to set up a sting, to enable Gilbert to make a false offer of assistance, to predispose Victim 1 to help eBay with its Fidomaster problem.
Source: USA v. Cooke 1:20-cr-10126 Doc 21
While some may point out the First Amendment applies to the government, not private corporations, those close to the case have drawn attention to the broader values that amendment represents and acknowledge the chilling effects this kind of unchecked corporate power could have on free speech.
Judge William G. Young admonished Veronica Zea at her sentencing, saying her failure to recognize and defend the principles of free speech have broad implications beyond just this case.
When did you learn about the First Amendment, isn't that something they taught before you got out of school? We're talking about speech.
It is properly said that the First Amendment doesn't protect the speech that we like, that's easy, it protects the speech that we hate. You should have understood that.
It is no excuse that this was your first job. And the implications of this case, this particular case, your case, resonate throughout society...
...you are saddled with the knowledge that when it came to you, you did not fight for or defend the First Amendment of our Constitution, it seems that you did not even recognize it. That's extraordinarily sad.
The Steiners' attorneys say eBay had previously requested unredacted versions of all of the 307 documents over which "reporter's privilege" had been claimed, only expressing their willingness to limit the disclosure in the most recent filings.
They go on to explain that upholding news reporters' ability to keep their promises of confidentiality to sources is a matter of public interest and integral to maintaining the free flow of information that enables the press to hold powerful people and institutions to account.
Since the request to ID sources is the most contentious, given the free speech and press freedom issues involved, Magistrate Judge Paul G. Levenson will hear eBay's arguments as to why they believe the Steiners should be compelled to reveal "limited" source information if they wish to continue pursuing damages based on that information in a hearing set for September 25th.
eBay is also seeking additional disclosures from the Steiners regarding relationships with advertisers as well as site traffic and business records, again asserting the plaintiffs must show more directly how the criminal conduct negatively impacted their business.
Previously, EcommerceBytes' Advertising page said they have "over 600,000 monthly site visitors" - a stat that was quoted by many news outlets covering the story, including 60 Minutes last year, and that was still shown on their site as recently as January 12, 2024.
But it appears that number was changed to over 100,000 monthly site visitors sometime between January and May 2, 2024.
That timeframe coincidentally matches up to about the time when the Steiners retained new counsel, after firing their previous attorney, Rosemary Scapicchio, in May.
Unfortunately, the information disclosed in these most recent filings does not show anywhere close to 600,000 visitors in many months even prior to 2019, and there are other outside influences eBay could point to (like Google search engine ranking updates) as possible contributing factors to any drop in traffic that may have occurred.
The Steiners face similar challenges about their claims to lost advertising revenue - while they list several companies which had previously advertised on their site but did not renew their commitment after the scandal became public, eBay says they must provide more details showing that was the direct result of the criminal conduct.
Decisions on the other issues raised with what eBay calls "deficiencies" in the Steiners' responses to interrogatories will likely follow after the source information arguments have been heard and ruled on.
In addition to the $12 Million in alleged damages to the business, the Steiners are also seeking compensation for various alleged personal injuries.
While neither side has disclosed an exact amount, court documents put those alleged damages at "9 figures" - meaning a minimum of $100 Million and a maximum of just under a Billion with the actual figure likely somewhere in between.
$100 Million+ may seem like chump change to a company currently valued at a market cap of ~$31 Billion, the stakes of such a payout would be incredibly high for eBay with the risk of shareholder lawsuits to follow - just like in the currently ongoing EPA lawsuit against the company related to pesticides, chemicals, and illegal emissions-control cheat devices sold on the site.
eBay has pushed back on these claims, saying the Steiners have only provided documents related to their medical history from 2019 (when the events occurred) to the present and that limiting the timeframe of disclosure in this way would prevent eBay and an eventual jury from determining whether the alleged injuries were caused by the criminal conduct or may be attributable to other causes that predated the events, such as pre-existing medical conditions.
And that $100 Million+ and $12 Million currently being sought are only compensatory damages - the Steiners are also seeking punitive damages, though an exact amount has not been disclosed in court filings.
Compensatory damages are meant to compensate victims for loss or injury, while punitive damages are designed to punish a defendant for outrageous conduct and/or to reform or deter the defendant and others from engaging in similar conduct in the future.
As such, the amount of punitive damages awarded in civil lawsuits can often be higher than compensatory damages - especially in cases of corporate wrongdoing where a jury may feel it is in the public interest to deter the defendant and other companies from continuing unethical or illegal activities.
Given the already high stakes of a potential $100 Million+ in compensatory damages, it's unsurprising that eBay is seeking to stop the possibility of punitive damages being added on top, arguing that Massachusetts law (where the bulk of the criminal conduct occurred) does not allow for such damages.
The Steiners take the position that for this part of their claims, California law allowing punitive damages should be applied since that is where eBay is headquartered, where the named individual defendants were employed, and where planning and support for the criminal acts took place.
Whether the Steiners are entitled to seek punitive damages or not has reportedly been a significant roadblock in settlement discussions, with Judge Patti Saris scheduled to hear arguments on the issue in a hearing on October 4th.
If the case does not settle and instead goes to trial in 2025, we can expect to see eBay vigorously defend itself, with already concluded depositions providing a preview of the lines of questioning and evidence they may present.
For example, this exchange with one of eBay's lawyers, Jack Pirozzolo, questioning Ina Steiner as a representative of Steiner Associates LLC.
Q Do you recognize this document?
A It's an email from David to me on 23 February 14, 2012. "How's this DW."...I don't -- I don't really 4 recall this exchange, but yes, I recognize that it's an email exchange between David and me.
Q And I want to focus on the email on the bottom. So it says, "How's this DW," is the subject?...And then, "What if I write to Alan Marks?" Who is Alan Marks?
A An eBay PR person.
Q And in this, you're asking for an interview opportunity with Devin Wenig?
A No, I'm -- it's a draft of a letter that I was running by David to say what do you think about this as a draft, as an email to Alan.
Q So at the time you were thinking of seeking an interview with Mr. Wenig?...And this is a draft proposed email that you were going to send?...
...A Yes. I was pointing out the fact that I had asked for an interview in September and again in January and was told that it could happen after Q1. And so I was suggesting that I write to Alan Marks with that information and say how can we make this happen.
Q And you're sending a draft of this to David?... Mr. Steiner, who is one of the publishers of EcommerceBytes?...And then he writes back to you,"Well, I always like the tactic better of slapping eBay with a series of negative stories to get their attention, or leaking some stuff they don't want published. When they don't respond, publish shitty stuff about them. Teaches them to get back to you faster."...is that reference to a tactic something that you at the EcommerceBytes website actually engaged in?
A No.
Q Is that tactic something that did actually happen?
A No.
Q And in what respect is a statement of using this tactic of slapping eBay with a series of negative stories to get their attention, or leaking some stuff that they don't want published, consistent with your "stellar reputation as an unbiased and impartial reporting source"?
A It isn't. I didn't -- I mean, in looking at this, I don't even recall it.But I can tell you that I would not have taken this seriously.
Q Does this represent Steiner LLC's approach to reporting?
A No.
Q Does this represent your approach to reporting?
A No.
Q And in your view, would such a tactic be considered ethical?
A No.
Q In fact, it would be inconsistent 14 with the ethics of Steiner -- Steiner Associates, LLC, correct?
A Yes. And that's why I didn't take it seriously. I'm looking at the times here, and I'm a late person and David's a morning person, and I can see that I wrote this at quarter of 12:00 in the evening, asking him, because otherwise, if he had been awake, I would have said, "Hey, let's discuss some tactics or get" -- you know -- I'm sorry, not discuss tactics, but, "Hey, what do you think about this letter that I'm thinking about sending to the eBay PR department?"
I was really eager to get an interview with Devin Wenig, which I ultimately did.And so when -- it looks like this is an early morning, so I was probably still in bed, and he was awake. And so this was David being not serious, and then this is the kind of thing where then when I read it, I would have just picked up the intercom and said, "Hey, what do you really think of the letter?"
Q And so even though it's written by one of the two publishers, it doesn't actually reflect the tone of the organization of Steiner Associates, LLC?
A It's completely inappropriate if it were serious. And if I had indeed done such a thing, David would be horrified, and he knew that I wouldn't do such a thing. And, in fact, when -- I mean, when he says, "or leaking some stuff that they don't want published," it's nonsensical, because a company would have to -- how would we have -- how would we be able to leak information about eBay?
If we had information, we would have published it, not leaked it.
Q And so you'll agree with me, even though this communication was made by somebody who was a co-equal at the top of your organization...it does not actually reflect the values of that organization?
A That -- that is true.
Many married couples can no doubt relate to sending humorous or tongue-in-cheek messages to a spouse that would not normally be taken as seriously as most business emails, but eBay is likely to seize on the obvious comparison to "inappropriate" communications between Wenig and Wymer, which the men have attempted to shrug off as hyperbole or simply "speaking off the cuff."
Jason Del Rey
In court documents, copies of text messages showed Wenig twice instructing his communications chief, Steve Wymer, to “take her down,” referring to the EcommerceBytes owner and writer Ina Steiner. On Thursday, Wenig told Recode in a statement that those texts “have been wildly misinterpreted and taken completely out of context in some media reports.”
“I was speaking off the cuff to a communications executive about my desire to be more aggressive in our PR effort; never in my wildest dreams would I fathom that, later, someone might associate that communication with the type of activity mentioned in the Massachusetts complaint,” Wenig said in the statement...
...Similarly, a person who worked closely with Wymer in a previous job told Recode that they would be shocked if the communications executive was involved with the alleged crimes. The same source admitted that the communications executive could sometimes come across as extreme in work discussions.
“It’s hyperbole,” the person said of Wymer’s language in the text messages revealed in the affidavit. “Steve wouldn’t crush an ant. But in the heat of the sport, he will say things that are extreme.”
Ironically, the journalist who wrote that piece for Vox was Jason Del Rey - who previously hosted Recode's Code Conference 2016, asking Wenig for his thoughts on the controversy then brewing between Gawker Media and PayPal co-founder Peter Thiel.
Is it right for a billionaire to put large amounts of money secretly behind lawsuits seemingly to settle a political a personal score and to try to put a publication out of business?
Wenig's answer took a very staunch position defending a free press.
I'm gonna answer the broader question which is, I side with a free media and a free press.
I think we've got to be very careful. It is a nuanced argument there's always a pull and tug but something feels like it's different. All First Amendment rights aren't created equal.
There's a strong public interest in a free press and rich and powerful people have First Amendment rights too but if you allow that to be unfettered and what that causes is a real stifling of voices and a real concentration of media.
...We're not going to like the result of that and that really goes back all the way to the Constitution. So I don't want to get into all of that but we've got to be really careful that powerful voices don't knock down what I call divergent points of view.
You know this immediate kerfuffle, I don't like the media actor [Gawker]. I don't read what they do. I don't find it particularly valuable but that's irrelevant.
What's more relevant is that you shouldn't be allowed to drive media companies from expressing divergent points of view and I think we've got to be really careful about that.
Despite his comments on the subject of free speech and press freedom, Wenig's emails and text messages in this case show a disdain for the media that stands in stark contrast to the public persona he projects.
Court documents in the ongoing cases revealed details of eBay's troubled past with independent media publishers, including Wenig and Wymer hiring a consulting firm that recommended creating and promoting company-friendly content in an effort to push coverage they didn't like down in search results.
While that plan was supposedly not put into action at the time, current eBay leadership seems to have taken at least some of those ideas to heart, hiring for communications roles to "protect eBay's reputation" by "leveraging media relationships to elevate eBay’s brand and reputation...fostering relationships with key media... [and] placing executive profiles, bylines & speaking ops that further the company narrative."
Most recently, an exclusive deal eBay inked with New York Times-owned The Athletic raised troubling media ethics and integrity concerns.
Liz Morton
Wenig and Wymer also discussed how they could "eff with" Ina Steiner by promoting a list of seller blogs and websites that did not include EcommerceBytes.
Notably, many sites on that list just happened to provide more favorable coverage of eBay in general and Wenig's leadership as CEO in particular.
Other messages between Wenig (Executive 1) and Wymer (Executive 2), showed increasingly amped up reactions not just to EcommerceBytes' coverage, but to mainstream media attention from the likes of the Wall Street Journal as well.
Surprisingly, Wenig is no stranger to the media business - prior to joining eBay, he was CEO of Thomson Reuters Markets, the financial and media businesses of Thomson Reuters Corporation.
eBay founder Pierre Omidyar's public positions on free speech and press freedom may also strike some as particularly ironic, given the implications raised in the cyberstalking case, especially since he was still an active member of eBay's Board of Directors when the criminal conduct occurred and did not step down until September 2020.
Omidyar has funded and supported many independent journalism projects through his philanthropic Omidyar Network, First Look and Luminate Media, and other endeavors, including working with Concordia Studio in 2020 to produce A THOUSAND CUTS - a documentary about the CEO/Founder of news site Rappler, Maria Ressa, and the fight for press freedom in the Philippines.
Concordia Studio is funded by Apple co-founder Steve Jobs' widow, Laurene Powell Jobs, who had also previously collaborated with Omidyar on various philanthropic and media projects.
Concordia Studio was also involved in "Whatever It Takes", a documentary about the cyberstalking events featuring exclusive access and interviews with the Steiners.
Interviews
The film was produced by Allyson Luchak and Ben Travers, who had previously worked with the Steiners original lawyer, Rosemary Scapicchio on Trial 4, a documentary series about the fight to free Sean Ellis from wrongful conviction after serving 22 years for the murder of a Boston police officer which he did not commit.
In fact, Whatever It Takes executive producers Jonathan Silberberg and Nicole Stott from Concordia Studio both worked on A Thousands Cuts as well, giving them a direct connection to Omidyar's Luminate Media.
Strangely, the Omidyar Network website appears to have recently removed previous posts mentioning their financial involvement and support of Rappler after the Philippine Securities and Exchange Commission revoked their certificates of incorporation and held that the issuance of Philippine Depositary Receipts (PDRs) to Omidyar Network were in violation of the country's Constitution.
Engaging with a production team that has ties to Omidyar-backed projects/ organizations could raise questions about conflicts of interest or bias and seems like an odd choice, given the traumatic experiences of the victims and ongoing litigation involved.
The debut of Whatever It Takes at the South by Southwest Film Festival earlier this year also coincides with the timing around when the Steiners sought new representation in this case, though it's unclear if their experience with the documentary played a part in their decision to fire Scapicchio.
eBay specifically mentioned the documentary in their interrogatories, asking if the Steiners either individually or their company had received compensation for any media appearances.
They also requested for the Steiners to turn over all documents and communications with any journalists, producers, publishers, documentarians and filmmakers related to the criminal conduct - to which, as with many of the other requests, the Steiners objected, saying such a request is overly broad, burdensome, and irrelevant to the present litigation.
The voluminous interrogatories and depositions that have been placed on the public docket so far cover a wide range of subjects and seek to disclose many details of the Steiners' business operations as well as confidential sources and proprietary information.
Is eBay simply employing a time honored legal strategy of attempting to bury the plaintiffs in paperwork and legal expenses in hopes of forcing a settlement or is there more to this apparent fishing expedition?
Stay tuned for updates and remember, Value Added Resource subscribers get exclusive access to our eBay cyberstalking case document archive - subscribe to VAR+ today!
