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Judge orders eBay case to California

California here they come. That’s the conclusion of a June 10 decision by U.S. District Court senior Judge Charles Sifton in the case of Universal Grading Service v. eBay, Inc.

The claim has been pending since early 2008 in the U.S. District Court for the Eastern District of New York.

Defendants include eBay, the American Numismatic Association,  the Professional Numismatists Guild, and outgoing ANA President Barry Stuppler’s coin firm. The 20,000 word complaint (including nine separate exhibits) makes a number of technical allegations, and then some substantive ones.

Key point in the second amended complaint is allegation of anti-competitive conduct in a class-action complaint that demands a jury trial. The plaintiffs claim damages in excess of $75,000, exclusive of costs, interest and attorney’s fees.

Basis for the claim is an allegation of conduct “constituting violation of antitrust policies pursuant to 15 U.S.C. §§1 and 2 (the Sherman Act),” a century-old anti-trust law, as well as a claimed violation of anticompetitive conduct under the Clayton Act, another federal statute, and New York General Business Law § 340 (the Donnelly Act).

There is also a claim for “civil conspiracy and trade libel” pursuant to New York common law. Under the rules of defamation, truth is an affirmative (and absolute) defense to trade libel, if the action complained of actually took place.

The summons and complaint were filed in late August 2008. There are four plaintiffs: Universal Grading Service, LLC, a New Jersey company in the business of grading coins;  John Callandrello, a shareholder of UGS; Joseph Komito, a New Jersey coin dealer who buys and sells coins on Internet sites including eBay; and Vadim Kirichenko, a New York coin dealer who also uses eBay and other means to sell coins.

In a nutshell, they claim a “conspiracy between [Barry Suppler & Co., LLC], ANA, PNG and eBay to obstruct the ability of the smaller coin grading services to participate in the coin marketplace on eBay.”
The basis of the claim: In 2001, eBay “formed a group that became known as the ‘Internet rules committee’ made up of coin industry insiders, including Barry Stuppler, in his capacity as then ANA governor and chairman of the ANA Consumer Protection Committee (the precursor to the Coins Community Watch Group), Doug Winter, a PNG dealer; and R. Steven Ivy” of Heritage.

eBay developed a policy permitting “only coins that have been graded by five grading services (NGC, NCS, PCGS, ICG, and ANACS) to be listed for sale on eBay as “certified” coins.” The protagonists claim these actions are anti-competitive and illegal.

Sifton’s  decision responded to the defendant’s motion to dismiss the complaint for failure to state a claim for which relief can be granted or, alternatively, to move the venue to California, where eBay and the Stuppler firm are located.

“Aside from plaintiffs’ allegation that the injury to their reputations occurred in their places of residence, which in plaintiff Kirichenko’s case is New York, the state of New York has no material connection to the facts in this case,” Sifton wrote.

Sifton believed shipping the case off to the U.S. District Court for the Northern District of California would best serve all parties.

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