Marshall Block v. Ebay, Inc. ( 2014 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
MARSHALL BLOCK, On Behalf of No. 12-16527
Himself and All Others Similarly
Situated, D.C. No.
Plaintiff-Appellant, 3:11-cv-06718-
CRB
v.
EBAY, INC., OPINION
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of California
Charles R. Breyer, Senior District Judge, Presiding
Argued and Submitted
March 12, 2014—San Francisco, California
Filed April 1, 2014
Before: Jerome Farris and Stephen Reinhardt, Circuit
Judges, and Paul C. Huck, Senior District Judge.*
Opinion by Judge Farris
*
The Honorable Paul C. Huck, Senior District Judge for the U.S.
District Court for Southern Florida, sitting by designation.
2 BLOCK V. EBAY
SUMMARY**
California Law
The panel affirmed the district court’s Fed. R. Civ. P.
12(b)(6) dismissal of Marshall Block’s diversity putative
class action, alleging that ebay.com’s Automatic Bidding
system breached two provisions of eBay’s User Agreement
in violation of California law.
The panel held that Block failed to state a claim for
breach of contract because under California law the two
challenged provisions in the User Agreement did not
constitute enforceable promises by eBay. The panel also held
that Block failed to state a claim under California’s Unfair
Competition Law and failed to state a claim for intentional
interference with prospective economic advantage.
COUNSEL
Roy A. Katriel (argued), The Katriel Law Firm, San Diego,
California, for Plaintiff-Appellant.
John Charles Dwyer (argued), Cooley LLP, Palo Alto,
California; Michael G. Rhodes and Benjamin F. Chapman,
Cooley LLP, San Diego, California, for Defendant-Appellee.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
BLOCK V. EBAY 3
OPINION
FARRIS, Senior Circuit Judge:
Marshall Block argues that ebay.com’s Automatic
Bidding system breaches two provisions of eBay’s User
Agreement, violates California’s Unfair Competition Law,
and constitutes intentional interference with prospective
economic advantage.1 The district court dismissed Block’s
complaint pursuant to Rule 12(b)(6). We have jurisdiction
under 28 U.S.C. § 1291, and we affirm.
I.
One of the ways in which goods are sold on eBay,
possibly the “world’s largest online marketplace,” is through
traditional auctions. Bidding in traditional auctions is
conducted through eBay’s Automatic Bidding system. In this
system, a bidder submits the maximum amount he is willing
to pay for an item, and this amount is kept confidential from
other bidders and the seller. eBay’s software then enters bids
on behalf of the bidder, at predetermined increments above
the current bid, until the user wins the auction or would need
to exceed his maximum.
Block, a seller on eBay, argues that the Automatic
Bidding system violates two provisions of the eBay User
Agreement, entered into by each eBay user. First, a provision
in the “Limitation of Liability” section states: “We are not
involved in the actual transaction between buyers and
1
In his complaint, Block also asserted a cause of action for unjust
enrichment, but he does not appeal the district court’s dismissal of that
claim.
4 BLOCK V. EBAY
sellers.” Second, the contract provides: “No agency,
partnership, joint venture, employee-employer or franchiser-
franchisee relationship is intended or created by this
Agreement.”
On behalf of himself and similarly situated sellers, Block
filed suit on December 30, 2011. On May 7, 2012, the
district court granted eBay’s motion to dismiss Block’s
complaint. The court granted Block leave to amend his
complaint with regard to his intentional interference and UCL
claims, though Block declined to amend. The district court
entered judgment on June 18, 2012, and Block timely
appealed.
II.
A.
We review the dismissal of a complaint pursuant to Rule
12(b)(6) de novo. See Zadrozny v. Bank of N.Y. Mellon,
720 F.3d 1163, 1167 (9th Cir. 2013). “To survive a motion
to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to state a claim to relief that is plausible on
its face.” Salameh v. Tarsadia Hotel, 726 F.3d 1124, 1129
(9th Cir. 2013) (quoting Zixiang Li v. Kerry, 710 F.3d 995,
999 (9th Cir. 2013)).
B.
We begin with Block’s claim for breach of contract.
Under California law, “[a] contract must be so interpreted as
to give effect to the mutual intention of the parties as it
existed at the time of contracting, so far as the same is
ascertainable and lawful.” Cal. Civ. Code § 1636; see also
BLOCK V. EBAY 5
Reilly v. Inquest Tech., Inc., 160 Cal. Rptr. 3d 236, 249 (Ct.
App. 2013). It is not the parties’ subjective intent that
matters, but rather their “objective intent, as evidenced by the
words of the contract.” Reilly, 160 Cal. Rptr. 3d at 249
(quoting Founding Members of the Newport Beach Country
Club v. Newport Beach Country Club, Inc., 109 Cal. App. 4th
944, 956 (2003)). If a contract is reduced to writing, “the
intention of the parties is to be ascertained from the writing
alone,” Cal. Civ. Code § 1639, the words being interpreted in
their “ordinary and popular sense,” id. § 1644, provided that
the language “is clear and explicit, and does not involve an
absurdity,” id. § 1638. Finally, “[t]he whole of a contract is
to be taken together, so as to give effect to every part, if
reasonably practicable, each clause helping to interpret the
other.” Id. § 1641; see also Serv. Employees Int’l Union,
Local 99 v. Options — A Child Care & Human Servs.
Agency, 133 Cal. Rptr. 3d 73, 79–80 (Ct. App. 2011).
Block argues that the Automatic Bidding system violates
two provisions in the User Agreement. However, as the
district court ruled, neither provision constitutes an
enforceable promise by eBay.
1.
The first statement — “We are not involved in the actual
transaction between buyers and sellers” — contains no
promissory language. See Souza v. Westlands Water Dist.,
38 Cal. Rptr. 3d 78, 89 (Ct. App. 2006) (“If a contract is to be
a basis of liability for the [defendant]’s violation of [a rule]
. . . it must be a contract in which the [defendant] promises to
abide by [that rule].”). Rather, the statement is simply a
general description of how eBay’s auction system works.
Although Block cites Lavi v. Pelican Investment Corp., 36 F.
6 BLOCK V. EBAY
App’x 923 (9th Cir. 2002), and Multimatic, Inc. v. Faurecia
Interior Systems USA, Inc., 358 F. App’x 643 (6th Cir. 2009),
in arguing that legal obligations can be created through
present-tense statements, these cases are distinguishable. See
Lavi, 36 F. App’x at 924 (holding, in a context in which it
was clear that the pertinent statements conveyed promises, a
contract describing the sale of land in the present tense
intended the property to be transferred in the future);
Multimatic, 358 F. App’x at 647–48 (interpreting a
confidentiality agreement protecting trade secrets each side
“possesses” to cover both pre-existing and future trade
secrets).
The provision’s explanatory function is not confusing:
You will not hold eBay responsible for other
users’ content, actions or inactions, items they
list or their destruction of allegedly fake
items. You acknowledge that we are not a
traditional auctioneer. Instead, our sites are
venues to allow anyone to offer, sell, and buy
just about anything, at any[]time, from
anywhere, in a variety of pricing formats and
locations, such as stores, fixed price formats
and auction-style formats. We are not
involved in the actual transaction between
buyers and sellers. While we may help
facilitate the resolution of disputes through
various programs, we have no control over
and do not guarantee the quality, safety or
legality of items advertised, the truth or
accuracy of users’ content or listings, the
ability of sellers to sell items, the ability of
buyers to pay for items, or that a buyer or
BLOCK V. EBAY 7
seller will actually complete a transaction or
return an item.
The provision is a broad description of the eBay marketplace
designed to explain to eBay’s users why its liability is more
limited than that of a “traditional auctioneer.” Just as the
sentence before the provision could hardly be read as a
promise by eBay to “allow anyone to offer, sell, and buy just
about anything, at any[]time, from anywhere,” the provision
is not a promise “not [to be] involved in the actual transaction
between buyers and sellers.”
This is consistent with provisions elsewhere in the User
Agreement. Several provisions are written in an informal,
conversational style, indicating that the agreement is not
simply a set of legally enforceable promises, but also an
introduction to the eBay marketplace for new users. The
agreement opens with, “Welcome to eBay,” and later states:
“Buyers and sellers share the responsibility for making sure
purchases facilitated by eBay are exciting, rewarding and
hassle-free.”
In contrast to the provision in question, other clauses in
the agreement contain explicit promissory language. These
communicate promises both by the user (e.g., “While using
eBay sites, services and tools, you will not . . . violate any
laws . . . .”), and by eBay (e.g., “If we resolve a dispute in the
buyer’s favor, we will refund the buyer for the full cost of the
item . . . .”).
Block argues that interpreting the “not involved”
provision to be unenforceable yields an absurd outcome, as
nothing in the contract would prevent eBay from blatantly
manipulating auctions. We reject the argument. Even if
8 BLOCK V. EBAY
auction manipulation by eBay could not be remedied through
an action for breach of contract, it might be the proper subject
of a suit on other grounds. On Block’s reading, any time the
eBay platform functioned in a manner that was not purely
neutral, whether through deliberate interference or an
unintended software defect, eBay would violate the provision.
We conclude that the provision can be plausibly read only as
a general description of eBay’s services intended to focus the
user on the Limitation of Liability section.
2.
The second provision — “No agency . . . relationship is
intended or created by this Agreement” — purports only to
limit the relationships created by the agreement. It contains
no promise by eBay not to enter into agency relationships
with its users. Contrary to Block’s argument, it is irrelevant
to interpretation of this provision that, to qualify for an
exemption from a Chicago tax, eBay certified to the State of
Illinois that it “does not act as an agent of users who sell
items on its website, and acts only as a venue for user
transactions.” City of Chicago, IL v. eBay, Inc., No. 08 C
3281, 2009 WL 5184016, at *3 (N.D. Ill. Dec. 21, 2009).
This statement is not part of the User Agreement and is not
made in a contractual context.
Neither the “not involved” provision, nor the “no agency”
provision, constitutes an enforceable promise by eBay. The
district court properly dismissed Block’s claim for breach of
contract.
BLOCK V. EBAY 9
C.
The California’s Unfair Competition Law authorizes suit
by “a person who has suffered injury in fact . . . as a result of
. . . unfair competition,” Cal. Bus. & Prof. Code § 17204,
which includes “any unlawful, unfair or fraudulent business
act or practice and unfair, deceptive, untrue or misleading
advertising,” id. § 17200.
Block argues that eBay committed unlawful conduct
through 1) breach of contract and 2) intentional interference
with prospective economic advantage. Neither of these
alleged violations is adequately pled.
He also alleged that eBay violated California’s False
Advertising Law and engaged in a fraudulent business act or
practice. These theories turn on the same analysis, see In re
Tobacco II Cases, 207 P.3d 20, 29 & n.8 (Cal. 2009), and
each requires only that “members of the public are likely to
be ‘deceived,’” id. at 29 (quoting Kasky v. Nike, Inc., 27 Cal.
4th 939, 951 (2002)). However, for a private plaintiff to
bring suit under the UCL, he must also allege “actual
reliance,” id. at 39: that “the defendant’s misrepresentation or
nondisclosure was ‘an immediate cause’ of the plaintiff’s
injury-producing conduct . . . [such that] in its absence the
plaintiff ‘in all reasonable probability’ would not have
engaged in the injury-producing conduct,” id. (quoting Mirkin
v. Wasserman, 5 Cal. 4th 1082, 1111 (1993) (Kennard, J.,
concurring in part and dissenting in part)). There is “a
presumption, or at least an inference, of reliance . . . wherever
there is a showing that a misrepresentation was material.” Id.(quoting Engalla v. Permanente Med. Grp., Inc., 938 P.2d
903, 919 (Cal. 1997)). A misrepresentation is material if “a
reasonable [person] would attach importance to its existence
10 BLOCK V. EBAY
or nonexistence in determining his choice of action in the
transaction in question.” Id. (quoting Engalla, 938 P.2d at
919). Further, when a UCL claim rests on allegations of
fraud, it must satisfy Rule 9(b). Kearns v. Ford Motor Co.,
567 F.3d 1120, 1125 (9th Cir. 2009).
Block alleged that the “not involved” and “no agency”
provisions fraudulently misrepresent that eBay “is acting as
merely a neutral venue that is accurately transmitting bids for
bidders to the seller.” According to Block, he “reasonably
relied on [these] representations and assurances.” Block does
not allege reliance with greater specificity, but argues that
eBay’s misrepresentations were material, thus reliance can be
presumed.
Block’s argument fails: he could not have relied on the
alleged misrepresentations, nor would they have been
material. As the complaint concedes, the Automatic Bidding
system is described on eBay’s website. Further, in a version
of the pertinent page attached to the complaint, eBay makes
clear that the Automatic Bidding system will be used in all
traditional auctions. Block does not allege that, at the time he
executed the User Agreement, these disclosures were
unavailable, or that he was unaware of the Automatic Bidding
system. Thus, even if the User Agreement had represented
that eBay would directly transmit bids to sellers, Block has
not plausibly alleged that he relied on this representation.
Moreover, since a reasonable person in Block’s position
could not have relied on such a representation, it would not
have been material. Block fails to state a claim under the
UCL.
BLOCK V. EBAY 11
D.
Finally, we consider Block’s claim for intentional
interference with prospective economic advantage. To state
a claim for intentional interference under California law, a
plaintiff must allege, inter alia, that “the defendant engaged
in an independently wrongful act,” understood as an act
“proscribed by some constitutional, statutory, regulatory,
common law, or other determinable legal standard.” Korea
Supply Co. v. Lockheed Martin Corp., 63 P.3d 937, 953–54
(Cal. 2003). Block argues that eBay committed two
independently wrongful acts: breach of contract and violation
of the UCL. He fails to set forth a claim in either respect. He
has not stated a claim for intentional interference.
AFFIRMED.