Judge Tosses Coin Graders' EBay Antitrust Suit (Law360)

By Abigail Rubenstein

A California federal judge on Monday dismissed a putative class action alleging eBay Inc. schemed to raise the value of certified coins in the online auction market by restricting it to coins graded by a handful of authorized coin graders.

U.S. District Judge Ronald M. Whyte dismissed with prejudice the fourth amended complaint lodged against the Internet auction giant by coin grader Universal Grading Service, its president and a pair of independent coin dealers. The judge said the suit could not be saved by further amendments.

The lawsuit concerned eBay's policy of allowing only coins that have been graded by one of five authorized grading services to be listed for sale on its website as "certified coins."

According to eBay, the policy was aimed at to combating fraudulent listings involving coins and other similar items.

But the lawsuit contended the policy stemmed from a conspiracy between eBay and trade groups the American Numismatic Association and the Professional Numismatists Guild Inc. to drive up the prices for certified coins. The plaintiffs alleged eBay went along with the scheme because it derives higher commissions from the sale of expensive coins.

The plaintiffs first filed suit in New York in 2008, but the case was moved to California. The original suit targeted the trade groups, which eventually settled with the plaintiffs as the litigation progressed, leaving eBay as the only defendant.

In March, the California court dismissed the plaintiffs' antitrust claims with prejudice to the extent they were based on alleged per se violations of the Sherman Act, but gave the plaintiffs a chance to amend their complaint to bring their Sherman Act claims under the rule of reason and to make certain other allegations.

The latest iteration of the complaint sought to bring claims on behalf of various classes including coin grading companies not authorized under the policy; those who purchased "certified" coins after the implementation of the policy; coin sellers who were in possession of coin inventories graded by companies not authorized by the policy; those who attempted to list coins as "certified" which had been graded by nonauthorized grading services and whose listings were removed by eBay for violating the policy; and those who allegedly paid higher commissions to eBay as a result of the policy.

EBay moved to dismiss the latest version of the complaint, and Judge Whyte found that the plaintiffs' claims could not survive the motion.

Judge Whyte ruled that the plaintiffs had failed to show that there was a conspiracy, saying the supposed scheme did not make economic sense and that the adoption of the policy was supported by pro-competitive justifications.

The judge further concluded that the plaintiffs had not sufficiently pled their claims that eBay engaged in an illegal tying arrangement or was attempting to secure a monopoly, and he also nixed the plaintiffs' state law antitrust claims.

Noting that the plaintiffs already had four chances to amend their complaint, Judge Whyte dismissed all claims with prejudice.

"We are pleased with the court's decision, which confirms eBay's position that plaintiffs' claims against eBay had no merit," eBay spokeswoman Amanda Miller told Law360.

An attorney for the plaintiffs was not immediately available for comment on Tuesday.

The plaintiffs are represented by Marina Trubitsky of Marina Trubitsky & Associates PLLC.

EBay is represented by John C. Dwyer, Michael G. Rhodes and Benjamin F. Chapman of Cooley LLP.

The case is Universal Grading Service LLC et al. v. eBay Inc. et al., case number 5:09-cv-2755, in the U.S. District Court for the Northern District of California.

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Related Contacts
Michael Rhodes Partner, San Francisco
John C. Dwyer Partner in Charge – Palo Alto
Related Practices & Industries

Antitrust & Competition