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Class Action Defense Cases–McCready v. eBay: eBay Not A Debt Collector Under Federal FDCPA Or Reporting Agency Under Federal FCRA, And eBay Lawfully Produced Documents Pursuant To Subpoena, Seventh Circuit Holds

Fair Debt Collection Practices Act Requires Affirmative Action, Fair Credit Reporting Act Does Not Apply to Commercial Activity,

On July 10, 2006, a federal appellate court consolidated two appeals and (1) agreed with eBay’s defense team that eBay was not subject to the federal FDCPA (Fair Debt Collection Practices Act) or the federal FCRA (Fair Credit Reporting Act), and (2) affirmed that eBay compliance with a subpoena for records did not violate the federal ECPA (Electronic Communications Privacy Act) or the federal SCA (Stored Communications Act): it therefore affirmed the dismissals entered in both underlying lawsuits. McCready v. eBay, Inc., ___ F.3d ___, 2006 WL 1881142 (7th Cir. 2006). For clarity, we address the two lawsuits separately. The first lawsuit arose from the fact that plaintiff utilized eBay’s services to operate an online business through which he would buy and sell goods. Several eBay users became unhappy with their business dealings with plaintiff; they used eBay’s “Feedback Forum” to explain their dissatisfaction, and several of them notified eBay of their complaints. eBay told plaintiff of the complaints and explained that his accounts would be suspended if the complaints were not resolved. Ultimately, eBay suspended plaintiff’s accounts but offered to reinstate them if he reimbursed monies to the claimants. “Rather than make good on his sales, [plaintiff] embarked on retaliatory litigation,” Slip Opn., at 2, and a summary of that litigation is described in the Note below. Relevant here, plaintiff filed a federal court complaint against eBay alleging violations of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692 et seq., the Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681 et seq., the Electronic Fund Transfers Act (EFTA), 15 U.S.C. §§ 1693 et seq., Title 11 of the U.S. Bankruptcy Code, and nine (9) state law claims. Id., at 3. The district court granted the defense motion to dismiss the FDCPA and FCRA claims, and declined to exercise supplemental jurisdiction over the state law claims; the parties stipulated to dismissal with prejudice of the bankruptcy claim. Id., at 4.

With respect to the FDCPA claim, the Seventh Circuit observed that eBay simply suspended plaintiff’s accounts until he resolved the outstanding fraud complaints and never threatened to take collection against him; the Court held that such conduct could not be deemed an attempt to “collect” a debt. McCready, at 8. With respect to the FCRA claim, plaintiff asserted that eBay’s “Feedback Forum” constituted a “consumer report, id., at 9. The Court quickly dispatched this claim on several grounds:

[G]iven the broad statutory purpose of preserving individuals’ privacy, a “consumer” . . . must, at minimum, be an identifiable person . . . . Moreover, the FCRA applies only to “consumer reports” which are used for consumer purposes; “[i]t does not apply to reports utilized for business, commercial or professional purposes.” . . .

eBay’s Feedback Forum sorts information according to eBay users’ self-anointed “usernames,” which leaves intact their anonymity outside the eBay universe to the extent they desire to retain it. And it is clear that the Feedback Forum is used to inform eBay’s users’ decision to buy from, or sell to, a particular user, an inherently commercial activity. Because the Feedback Forum cannot be considered a “consumer report,” by extension eBay cannot be considered a “consumer reporting agency” within the FCRA. Nor does eBay exert any control over what is said in the Forum, which contains mere opinions of people not in eBay’s employ.

Slip Opn., at 9-10 (citations omitted). (The Court next affirmed dismissal of the Bankruptcy Code claim and refusal to exercise jurisdiction over the state law claims; those topics are not discussed here.)

The second lawsuit arose out of a lawsuit between plaintiff and another eBay user, during the course of which eBay was served with a subpoena and produced documents concerning plaintiff pursuant to that subpoena. McCready, at 5-6. Plaintiff filed suit against various parties, and included eBay for allegedly violating the federal Electronic Communications Privacy Act (ECPA) and the federal Stored Communications Act (SCA). The Seventh Circuit held that “[g]ood faith reliance on a subpoena is a complete defense to actions under the ECPA and SCA,” and that there was nothing to indicate that the subpoenas served on eBay were improper. Id., at 14-15.

NOTE: In addition to affirming the district court’s order, the Seventh Circuit issued an order to show cause why plaintiff should not be sanctioned for abuse of process in light of “the litany of his repetitive and frivolous legal maneuvers.” Slip Opn., at 2. This summary does not include the case eBay filed in California for declaratory relief, ultimately leading to a judgment that permitted eBay to terminate its relationship with plaintiff. Id., at 3. As the Court explained, “[Plaintiff] has used the federal and state courts to harass eBay, Inc. and eBay’s customers. Acting pro se, [plaintiff] has brought suits in many different courts, including: twice in the United States District Court for the Central District of Illinois, the United States District Court for the Eastern District of Michigan, United States Bankruptcy Court for the Northern District of Illinois, and Iroquois County (Illinois) Circuit Court. Although [plaintiff’s] choice of for a may differ, his allegations (and the respective outcomes) do not. In fact, [plaintiff] has been wildly unsuccessful in each instance.” Id., at 1-2.

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