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When is an auction not an auction? San Jose, Calif.’s 5-year-old eBay.com, which bills itself as “the world’s online marketplace,” claims not to be in the auction business. Instead, eBay maintains, it is merely the “modern incarnation of the traditional newspaper classified advertisement, automated and accelerated for the 21st Century.” James F. Krause is not buying that definition. Krause, of San Diego, Calif.’s Krause & Kalfayan, has sued eBay on behalf of collectors who say that eBay is violating California law by auctioning off unauthenticated — often fake — sports memorabilia. Gentry v. eBay, No. GIC 746980. SEEKING A CLASS ACTION Krause contends that eBay is much more than an Internet-based classified service. “If you look at what a live auctioneer does and compare it to what eBay does, they’re exactly the same,” he says. “The interchanges between eBay’s buyers and sellers are exactly like the interactions between auctioneers and the audience, with the same give and take,” he insists. The suit, filed in San Diego County Superior Court, charges eBay with negligence and violation of an 8-year-old Civil Code section requiring a dealer to provide a certificate of authenticity for autographed sports memorabilia. The individual transactions are not large. Krause says that typically people pay between $25 and $40 for the items that are not properly authenticated. That’s why he’s hoping the case qualifies as a class action. The case comes in the wake of Operation Bullpen, an investigation and merchandise seizure conducted by the U.S. attorney in San Diego in April. More than 20 members of an alleged forgery ring, were charged, and law enforcement officials seized upward of 10,000 baseballs, trading cards and posters — even a baseball purportedly autographed by Mother Teresa. Krause denies that he solicited potential clients. Instead, he says, he found a Web site with a lengthy discussion of fake memorabilia posted, at richardsimonsports.com/hofauto2.htm. At that site, New York-based memorabilia dealer Richard Simon says that “garbage is still being sold on eBay.” Krause contacted Simon and asked what he knew about trafficking in sports memorabilia. “He was extremely angry, and once he found out we were lawyers, he requested we look at this,” Krause says. At any given time, eBay has as many as 4 million listings for upward of 35,000 autographed sports memorabilia items for sale. But according to a notice on the Web site, “eBay does not examine items listed on its site and does not have the expertise to evaluate items.” pages.ebay.com/help/ community/auth-overview.html. EBay does offer an off-site authentication service for sports memorabilia, but eBay users have to contact the service provider, Professional Sports Authenticator (PSA) of Pasadena, Calif. Sellers who send an item to PSA for authentication are entitled to use a logo that identifies the item as authentic. In any case, eBay’s response to Krause’s complaint has been a claim of “safe harbor” under Sec. 230 of tit. 47 of the U.S. Code, which says that service providers are not liable for information provided by a third-party user. eBay is being represented by Michael G. Rhodes, of the San Diego office of Cooley Godward, who was not available for comment. However, in court papers, eBay claims not to be an “auctioneer” because California law “defines an auctioneer as an ‘individual’ and describes the auctioneer as holding ‘himself or herself’ out as an auctioneer.” Additionally, there is no “intervening ‘exchange’ between eBay and the users,” and eBay does not accept the “most favorable offer made by member of the participating audience.”

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