We are investigating a potential action relating eBay on behalf of long-term eBay shareholders who have held eBay shares since 2017.

The basic gravamen of the investigation is as follows:

A.  eBay’s Sale and Distribution of Aftermarket Defeat Products

Vehicle manufacturers install a variety of hardware and software elements of design in motor vehicles and motor vehicle engines to comply with the Clean Air Act (“CAA”) and obtain certificates of conformity with the EPA’s emission standards.

Third party entities develop products that are designed to alter, replace, or disable manufacturer installed elements of design, including Emission-Related Elements of Design. These products, which are marketed as products bypass or defeat Emission-Related Elements of Design, and are known as Aftermarket Defeat Products.” Aftermarket Defeat Products can cause motor vehicles to emit hundreds to thousands of times more pollution than a motor vehicle with properly function emission controls.

eBay.com lists for sale products intended for use in “motor vehicles” as that term is defined in the CAA and its regulations promulgated thereunder. 40 C.F.R. § 85.1703. A 2019-2020 review by the Environmental Protection Agency (“EPA”) of automotive products sold or offered for sale on eBay.com identified at least 39,821 Aftermarket Defeat Products of various types designed for use on motor vehicles with certificates of conformity. In December 2019, a DoJ investigator purchased an Aftermarket Defeat Product from a seller on eBay. In September 2020, the EPA issued a Notice of Violation to eBay identifying the sale, offer for sale, or causing the sale or offer for sale of 39,821 Aftermarket Defeat Products as violations of the CAA. The EPA determined that between January 1, 2017 and September 3, 2020, eBay sold, offered for sale, and/or caused the sale or offer for sale of at least 343,011 Aftermarket Defeat Products designed for use in vehicles manufactured by Ford, General Motors, Nissan and Dodge. This occurred despite the existence of a policy indicating that certain Aftermarket Defeat Products are prohibited for sale on its site.

B.  eBay’s Sale of Methylene Chloride-Containing Products

Methylene chloride is a dangerous chemical substance used as a solvent and a stripping agent in paint and coating removal products. Inhalation of methylene chloride poses a risk of acute lethality and neurological impairment. Methylene chloride is also a likely human carcinogen. Pursuant to Section 6(a) of the Toxic Substances Control Act (“TSCA”), the EPA promulgated a rule (the “Methylene Chloride Rule”) to address the risk acute lethality presented by methylene chloride, which prohibits “retailers … from distributing in commerce methylene chloride, including any methylene chloride-containing products, for paint and coating removal” after November 22, 2019. 40 C.F.R. § 751.105(c).

In May 2020, the EPA began investigating the availability of methylene chloride and methylene chloride products for paint and coating removal on eBay.com. Between May and July 2020, it documented the distribution of approximately 1,000 products containing methylene chloride. In July 2020, the EPA issued a Notice of Potential Violation to eBay identifying numerous products containing methylene chloride and offered for paint or coating removal that were distributed through eBay.com in violation of the Methylene Chloride Rule. The EPA also served a subpoena pursuant to Section 11 of TSCA seeking additional records of methylene chloride containing products for paint and coating removal distributed in commerce after November 22, 2019. The EPA subsequently identified at least 5,614 items containing methylene chloride for paint and coating removal that were distributed in commerce by eBay in violation of the Methylene Chloride Rule. ¶ 180. In June 2020, an investigator purchased Kean-Strip Aircraft (OLD FORMULA) Chloride Paint Remover on eBay. As recently as April 2023, eBay offered for sale products containing methylene chloride for paint and coating removal.

C. eBay’s Sale of Pesticide Products

In September 2016, the EPA began identifying listings of unregistered, misbranded, or restricted use pesticides on eBay.com. On February 14, 2017, the EPA issued eBay a letter requesting information concerning the sale and distribution of these products and eBay efforts, if any, to address sales not compliant with the Federal Insecticide, Fungicide and Rodenticide Act (“FIFRA”). ¶ 194. On March 9, 2017, eBay responded that it was not subject to FIFRA and refused to provide the requested information. The EPA thereafter conducted its own investigation and identified hundreds of listings on eBay.com that resulted in the sale and distribution of thousands of unregistered, misbranded or restricted use pesticides. ¶On May 10, 2023, an investigator purchased an unregistered pesticide on eBay.

On June 10, 2020, EPA issued a Stop Sale, Use or Removal Order (“SSURO”) to eBay pursuant to FIFRA Section 13, 7 U.S.C. § 136k, ordering it “to immediately stop the distribution and sale of the pesticides” identified in the attachments to the order.. The SSURO was accompanied by a letter from Diana J. Saenz Acting Director in the Waste and Chemical Enforcement Division in the Office of Civil Enforcement to eBay Chief Executive Officer and Director Jamie Iannone and Director of Global Policy and Regulatory Management Mike Carson requesting that “eBay notify the agency of what steps it intends to take to prevent future sales of violative pesticides on its website an ensure its future compliance with FIFRA.”^[1]  Despite the issuance of the SSURO, eBay continued to list and sell numerous pesticides that were unregistered, misbranded or classified as restricted use – including the pesticides specifically listed in the SSURO.

On July 16, 2021, the EPA issued an amended SSURO to eBay that included additional unregistered, misbranded or restricted use pesticides. The accompanying letter from Acting Director Saenz stated that the amended SSURO “shall not act as a waiver by the EPA of any enforcement or other authority available to the EPA under federal law, including the EPA’s authority to seek civil penalties under Section 14(a) of FIFRA for the violations alleged in the SSURO or any other violation.” eBay, however, continues to sell and offer for sale products subject to the SSURO and the amendment. ¶¶ 225, 233-34.

D. The DoJ Action

On September 27, 2023, the DoJ sued eBay for alleged violations federal law pursuant to Sections 203, 204 and 205 of the CAA (42 U.S.C. §§ 7522-7524) related to the sale and offering for sale aftermarket products for motor vehicles and motor vehicle engines, Sections 15 and 17 of the TSCA (15 U.S.C. §§ 2614 and 2616) for the distribution in commerce of methylene chloride-containing products for paint and coating removal, Sections 12, 13, and 16 of FIFRA (7 U.S.C. §§ 136j, 136k, and 136n(c)) for the distribution and/or sale of unregistered, misbranded and restricted use pesticides, and for ongoing violations of various SSUROs related to such products.  As alleged in the complaint:

eBay unlawfully sells, offers for sale, causes the sale of, distributes, and/or distributes in commerce products in violation of the CAA, TSCA, and FIFRA.  Some of these products cause motor vehicles to emit, in the aggregate, massive amounts of air pollution.  Others pose an imminent, and in some cases potentially lethal, danger to human beings. eBay has the power, the authority, and the resources to stop the sale of illegal, harmful products on its website.  It has chosen not to; instead, it has chosen to engage in these illegal transactions.”

(emphasis added).  The complaint establishes that despite notice of these violations by the EPA, eBay’s misconduct related to the sale and offer for sale of the unlawful products on its platform continues unabated.

Also on September 27, 2023, Reuters published an article reporting that eBaycould face billions of dollar in liability due to allowing the sales of at least 343,011 aftermarket defeat devices, at least 23,000 unregistered, misbranded or restricted use pesticides, at least 5,614 paint and coating removal products containing methylene chloride and for violations of the SSUROs.  CBS News and CNBC published similar articles regarding eBay’s potential liability of $2.7 billion.

Current eBay shareholders who have held eBay stock since at least 2017, can seek corporate reforms, the return of funds back to the company, and a court approved incentive award at no cost to them whatsoever.

If you would like to learn more about this matter at no cost to you, please us at jgrabar@grabarlaw.com or call 267-507-6085.