DETROIT – Online auction giant eBay was held in default because they failed to respond in a timely fashion to a class action lawsuit alleging it is engaging in monopolistic business activities in restraint of trade, and could be held liable for compensatory and other damages to people who have paid artificially high fees to sell items online.
eBay is the largest online auction/sales service in the country with an estimated 90 percent of the national online auction market, and its name has become synonymous with online auctions.
The suit alleges that eBay has forced sellers to accept payment only from PayPal, which is a wholly-owned eBay subsidiary. So the seller has no choice but to pay a fee to eBay and then an additional fee to PayPal. The practice is in violation of the Sherman Anti-Trust Act, according to the suit.
eBay, a publicly held Delaware corporation with its main office in San Jose, CA, purchased PayPal in 2002. Since then, according to the lawsuit, executives at the companies have taken a number of steps to wipe out any competition. For instance, in 2006 Google Checkout announced it was available for consumer use on eBay with transaction fees of 2 percent, considerably lower than the 3 percent charged by PayPal. Just three days later eBay announced that sellers were banned from requesting payment from Google Checkout.
Then in 2008 eBay “tightened the noose around the necks of sellers” by announcing a new payment policy that effectively eliminated payments by cash, cashiers or personal check or money order, according to the suit. This action left PayPal as the only viable option for sellers.
“All of the acts and activities of defendant. … were performed willfully, intentionally, maliciously, and knowingly,” the suit maintains.
The class action suit could potentially cover tens of thousands of eBay customers. There is no estimate on how much money eBay could be forced to pay out if the suit is successful, but it could be a substantial sum and have national implications.
“It’s been more than two months since we filed the class action suit and they have failed to respond even though the chief litigation attorney for eBay and PayPal sent me an email and called me the day after it was filed. They even considered and rejected a settlement proposal by us,” said Peter Macuga, the lead attorney for the plaintiffs who spent a year researching the case. “Unless they can get the default removed by a judge, they have lost on the issue of liability; we will not give up on this fight.”
eBay filed a motion on Friday seeking to have the default order overturned by the U.S. District Court Eastern District.
There is no timetable for the court to act.
Macuga, Liddle & Dubin, P.C., is one of the leading class action firms in the Midwest, specializing in consumer, environmental contamination and governmental liability cases.
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Contact: Megan Brown, The Rossman Group 517-487-9320