Thursday, September 21, 2006
The eBay user agreement has to be one of the most widely read/entered-into contracts of all time. eBay claims nearly 200 million registered users, all of whom putatively entered into the agreement. Yet, despite this ubiquity, surprisingly few court cases have addressed its validity. Until very recently, I knew of only three: Bergraft (an unpublished NJ state trial court opinion), Ploharski (an unpublished ruling from ND Ga), and Grace (a CA appellate court case that was subsequently depublished by the CA Supreme Court).
Then, in the last 10 days, two cases addressing eBay's user agreement showed up in Westlaw, including what I think is the first binding appellate court precedent (now that the Grace case is depublished). Both cases efficiently, and without much fuss, upheld the formation and terms of the eBay user agreement.
In Nazaruk v. eBay, 2006 WL 2666429 (D. Utah Sept. 14, 2006), the plaintiff sued over feedback left in eBay's feedback forum. eBay moved to dismiss based on (among other things) improper venue due to the mandatory venue clause in the user agreement. The court agreed. This must be particularly satisfying for eBay because a previous case, Comb v. PayPal, had deemed its mandatory arbitration clause unconscionable (the case interpreted PayPal's agreement, not eBay's, but they were virtually identical at the time).
In Durick v. eBay, 2006 WL 2672795 (Oho Ct. App. Sept. 11, 2006), the plaintiff tried to sell some items that were putatively prohibited by eBay's user agreement. eBay suspended the plaintiff, who then sued eBay claiming that it was in breach of contract for suspending him. The court found that eBay's user agreement was binding on the plaintiff, it clearly prohibited the items, and thus eBay didn't breach the agreement by suspending him.
Among other interesting aspects, the actual terms restricting the items in question were located in two policies that were incorporated by reference into eBay's general prohibited items policy, which in turn was incorporated by reference into eBay's user agreement. Thus, like the user interaction process in the Specht case, the restrictions were two links away from the page where the user clicked "I agree." The court didn't seem fazed at all by this multiple-level incorporation by reference; it was not even acknowledged expressly.