eBay has defeated a lawsuit that the US Department of Justice raised last fall, which alleged that eBay violated environmental protection and public safety laws by allowing users to sell hundreds of thousands of banned products.
Among products targeted by the DOJ suit were at least 343,011 “aftermarket products for motor vehicles” used to “tamper with or disable vehicle emissions control systems” and at least 23,000 “unregistered, misbranded, or restricted use pesticides.” The DOJ also took issue with sales of products containing methylene chloride, which is used as a “thinning agent in paint and coating removal products.” Most uses of that chemical were banned by the Environmental Protection Agency this April to prevent causing cancer, liver harm, and death.
In her order, US District Judge Orelia Merchant agreed with eBay that the DOJ failed to prove that eBay was liable for selling some of these targeted products. Ultimately, Merchant ruled that whether the products violated environmental laws or not, Section 230 barred all of the DOJ’s claims, as eBay is shielded from liability for third-party postings (in this case, listings) on its platform.
“eBay contends that it does not actually ‘sell’ any item listed on its platform,” Merchant wrote, pointing to a precedent set in a 2004 lawsuit where the jewelry company Tiffany attempted to sue eBay over counterfeit items. Merchant agreed with the Second Circuit, which affirmed that “eBay did not itself sell counterfeit Tiffany goods; only the fraudulent vendors did,” mainly due to the fact that eBay “never physically possesses” the goods that are sold on its platform. For the same reason, Merchant found that eBay never sold any of the restricted items the DOJ flagged last year.
While the entire motion to dismiss was granted, the DOJ did succeed in arguing that eBay had violated the Toxic Substances Control Act (TSCA) and the Methylene Chloride Rule by not removing some listings for products containing methylene chloride.
Under those laws, the DOJ persuasively alleged that eBay was a “retailer” who introduced and “distributed in commerce” products containing methylene chloride, Merchant’s order noted.
eBay’s attempt to defend against that claim by narrowly arguing that the TSCA should only be applied to the literal first seller to introduce a product to market not only failed, Merchant said, but also threatened to “undermine the TSCA’s regulatory scope” as a law designed to protect the public from any introduction of harmful substances.
However, none of that matters, eBay argued, because Section 230 bars that claim, too. Merchant agreed that without “allegations… eBay fails to remove third-party listings (conduct that is plainly immune under Section 230),” and the government’s complaint “would not state a claim.”
eBay vows to help prevent toxic sales
Perhaps the government had hoped that eBay might settle the lawsuit, as the company did last February in a DOJ case over the sales of pill presses. Similar to the DOJ’s bid to hold eBay liable for enabling product sales causing environmental harms, the DOJ had accused eBay of selling pill presses tied to fentanyl drug rings amid an opioid epidemic killing 100,000 people annually at its peak. Both suits were designed to stop eBay from distributing products causing harms, but only one succeeded.
In the pill press case, eBay did not invoke the Section 230 shield. Instead, eBay admitted no wrongdoing while agreeing to “pay $59 million” and voluntarily removing products targeted by the DOJ. In a statement, eBay said this was “in the best interest of the company and its shareholders as it avoids the costs, uncertainty, and distraction associated with protracted litigation.”
eBay did not appear concerned that the environmental lawsuit might have similarly long legs in court. An eBay spokesperson told Ars that the company appreciated the court’s “thoughtful review,” which “found that the government’s lawsuit should not be permitted to move forward.”
“Maintaining a safe and trusted marketplace for our global community of sellers and buyers is a fundamental principle of our business at eBay,” eBay’s spokesperson said. “As we have throughout our history, eBay will continue to invest significant resources to support its well-recognized and proactive efforts to help prevent prohibited items from being listed on our marketplace.”
Because Merchant granted eBay’s motion to dismiss the DOJ’s lawsuit over alleged environmental harms with prejudice, the DOJ will not have a chance to re-file the case in the same court but could possibly appeal to a higher court.
The DOJ declined Ars’ request for comment.