By Sean McLeron

A North Carolina appeals court ruled Tuesday that StubHub Inc. could not be held liable for the resale of illegally overpriced tickets by independent brokers on its website, reversing the lower court in a putative class action over marked-up Hannah Montana tickets.

StubHub is entitled to immunity from any liability based on ticket prices because it did not "sell the tickets or act as the seller's agent thereby falling outside the scope of the fee limitation provision," of North Carolina law," the North Carolina Court of Appeals said in a unanimous ruling.

Jeffrey and Lisa Hill filed the action against StubHub in 2007 after paying more than $380 above face value for four "Miley Cyrus as Hannah Montana" tickets to a Massachusetts accountant who had sold hundreds of tickets on the site.

The Hills claimed they were entitled to recover compensatory and punitive damages based on the company's alleged violation of a state law that bars the resale of a ticket for more than $3 above face value, the ruling said.

A trial court agreed with the Hills, ruling last March that StubHub was not entitled to immunity from liability because its conduct "constituted an unfair and deceptive trade practice."

In reversing that ruling and remanding the case to the trial court for an entry of summary judgment in favor of StubHub, the state appeals court said StubHub could not be held liable because it did not "materially contribute" to the creation of unlawful material.

"Although the record might support a determination that [StubHub] encouraged the posting of 'market-based' prices on its website or was cognizant of the risk that tickets sold on its website would be priced in excess of face value, such evidence does not suffice to support a conclusion that [StubHub's] website essentially ensured that unlawful content would be posted," Judge Sam Ervin IV said in Tuesday's ruling.

StubHub's attorney David Lender said the decision is good news for companies engaged in e-commerce.

"We are very pleased with this ruling," Lender said in a statement. "StubHub was able to demonstrate that it did not materially contribute to the unlawful ticket prices set by the seller and should therefore be protected under the Communications Decency Act. This decision will be significant for many e-commerce-based organizations."

Counsel for the plaintiffs were not immediately available for comment Thursday.

Judges Cheri Beasley, Sam Ervin IV and Cressie H. Thigpen Jr. sat on the panel for the North Carolina Court of Appeals.

StubHub is represented by David Lender, Eric Hochstadt and Kristen Echemendia of Weil Gotshal & Manges LLP, Michael G. Rhodes of Cooley Godward Kronish LLP and John H. Culver III of K&L Gates LLP.

The plaintiffs are represented by Charles E. Coble and Jeffrey E. Oleynik of Brooks Pierce McLendon Humphrey & Leonard LLP and Kara W. Edmunds and Jeffrey K. Peraldo of the Law Offices of Jeffrey K. Peraldo PA.

The case is Hill v. StubHub Inc., et al., case number 11-685 in the North Carolina Court of Appeals.

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