A class action suit alleging the online ticket broker StubHub aids and abets scalpers is shaping up as a test of a law that protects Internet service providers from liability for the illegal activity of their users.

The protection of Section 230 of the Communication Decency Act “extends to such websites” as StubHub and “[a] contrary finding would have severe consequences for the millions of people who buy and sell items on the Internet,” StubHub argues in a motion to dismiss the suit, which was filed in January by a frustrated Bruce Springsteen fan.

Sharon Fehrs says she was unable to buy tickets online to a Springsteen concert at the Portland (Ore.) Rose Garden when they went on sale through the official outlet, but discovered that StubHub “almost immediately offered on its Web site numerous premier tickets … at prices greatly exceeding the price at which the tickets were officially offered.”

“Defendants' conduct constitutes, at the least, the act of aiding and abetting a violation” of Portland's anti-scalping ordinance, the complaint alleges.

The ordinance makes it a crime for “any person to sell or offer for sale any ticket for an event at any municipally-owned facility, or for any event at the Rose Garden Arena, at a price greater than the retail price printed thereon or at a price greater than the original retail price.”

StubHub, which is now owned by eBay, collects a 15 percent commission from ticket sellers and a 10 percent commission from buyers while also providing shipping services for tickets. Co-founder Eric Baker said in a 2004 Stanford Magazine article, “I’m probably the one person from Stanford’s business school who decided to take his MBA and become a ticket scalper.”

But in the motion to dismiss, StubHub says it provides only a “marketplace where third parties, not Defendants, offer for sale tickets.” And it invokes the “broad immunity” of Section 230, which says that “no provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”

“Congress created Section 230 specifically to immunize website operators like eBay and StubHub from claims seeking to hold them liable for the actions of third parties who use their websites,” the motion says.

The defense has previously come in handy for eBay. In Gentry v. eBay Inc., 99 Cal.App.4th 816 (2002), a California appeals court found the auction website immune under Section 230 from claims that it should be liable for a user's sales of fake sports memorabilia.

Multnomah County Superior Court Judge Marilyn E. Litzenberger is scheduled to hear the motion to dismiss April 3. In an opposition brief, Fehrs has urged her to follow the lead of a San Francisco judge, who ruled in 2000 that a plaintiff could overcome Section 230 by showing

actual, rather than constructive, knowledge of illegal sales, and some affirmative action by the computer service, beyond making its facilities available in the normal manner, designed to accomplish the illegal sales. Stoner v. eBay Inc.

“[T]he breadth of the immunity sought by defendants is not as broad as they assert and is very much fact bound,” Fehrs argues.

By Peyton Burgess
3/27/08