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eBay user subject of auctioneer's libel suit

An auctioneer of automobiles accuses a rival of posting disparaging remarks about its business tactics, and claims the comments resulted in lost sales.

eBay feedback, the post-transaction commentary that buyers and sellers use to build their reputations on the auction site, is at the center of a libel lawsuit filed earlier this week.

Yesterday, Washington, D.C.-based FedTrust filed suit in federal court against Specialty Car Sales of Miami, alleging that the owners and employees of Specialty posted two messages about a FedTrust manager, James Glynn, through eBay's feedback system. FedTrust claims that the posted commentary resulted in lost sales of more than $75,000 after bidders backed out of FedTrust auctions.

FedTrust operates a regional distribution center in Miami and considers Specialty Car Sales to be a competitor there. The lawsuit alleges that the messages were left by David Talarico Jr., a business partner of Specialty Car Sales; owner Adam Yunis; and by New York City resident Martha Castillo. Blackstone said that Castillo bid on several items placed up for auction by Yunis and said he suspects a deeper connection between the two.

"They had to know each other," said Glynn's lawyer, Franklin Blackstone of Arter & Hadden.

The comments posted on eBay, supposedly left by Talarico and Castillo, warned potential buyers about Glynn, FedTrust's Miami-based manager. One said that Glynn was "Very secretive--dishonest about origin of his cars, stay away," and the other read, "Would not disclose source of cars--low life liar I have carfax [a vehicle-history tracing service]."

Contacted by CNET News.com, Yunis said he had not posted the messages, but it was possible that some of his employees or associates could have. Yunis said he has had negative dealings with Glynn and had emailed Glynn directly.

Referring to the postings, he said, "There's nothing there that seems libelous to me. It's all true."

After being contacted by Blackstone, eBay suspended the two users who left the negative messages. However, the auction site has not removed the messages from Glynn's feedback record.

"We're not the ones that determine whether statements made on there might be libelous," said eBay spokesman Kevin Pursglove. In a similar case on eBay last year, he added, "the plaintiff made her case before a judge and only then did we remove the offending language from the feedback forum."

FedTrust hasn't yet named eBay as a defendant, but Blackstone said he may add the firm to the lawsuit. Blackstone said he didn't name the company initially because he thought it might be protected by a provision of the Communications Decency Act that shields Internet service providers from being sued over messages placed by their users. However, Blackstone has asked eBay to remove the negative feedback.

"If they've suspended the user IDs, they should remove the statements of the people," Blackstone said.

But eBay's Pursglove said the users were suspended because they violated the user agreement by emailing bidders during an open auction, not because of the content of their feedback. And eBay won't remove the feedback until a court orders it to do so, he added.

Rich Gray, an attorney with San Jose law firm Bergeson, Eliopoulos, Grady & Gray, said eBay's failure to remove the messages could open the company up to a suit by FedTrust.

eBay's user agreement forbids "actions which may undermine the integrity of the feedback system" and gives eBay the right to delete any information users place on the site. That agreement is essentially a contract between eBay and its buyers and sellers, Gray said.

"If the feedback undermines the integrity of the feedback system, you've breached the user agreement with eBay by posting it," Gray said. "[eBay] has the right and the duty to remove it. They're playing with fire."