Dating Site Operator's Suit Against PayPal Advances

SAN JOSE, Calif. — A suit targeting PayPal's acceptable-use policy has survived a round in court after a federal judge ruled that the alternative payment processor can't dismiss claims over its refusal to work with a pair of dating websites.

InfoStream, which operates SeekingArrangement.com and WhatsYourPrice.com, claimed in a suit filed at federal court in San Jose, Calif., that PayPal suspended their accounts for "sexual nature" but continued to service competing dating services AshleyMadison.com and ArrangementSeekers.com.

SeekingArrangement.com caters to  members seeking dates who refer to themselves as either "sugar daddy, sugary mommy or sugar baby users." WhatsYourPrice.com, meanwhile, is a "marketplace" site that "allows members to buy and sell the opportunity of going out on a first date."

The suit has roots back to 2007 when PayPal suspended the sites' accounts after it said that they incorporate options such as "Dating — Casual/Intimate Encounter" and "Married Dating/Discreet Affair (meeting for purposes of having sex)."

But last year InfoStream and its CEO, Lead Way, said they learned that not only has PayPal passively accepted a continued relationship with identical, competing websites such as Ashley Madison.com and ArrangementFinders.com, and that PayPal actively has for years “pre-approved” them, finding the sites to be in compliance with the AUP.

As a result, InfoStream sued PayPal — despite claims outside the statute of limitations — alleging breach of contract, bad faith and unfair business practices, as well as antitrust claims.

Infostream in the suit alleged that “PayPal manipulates the downstream markets for its own benefit” by “choosing market winners in downstream markets with the intent to benefit itself by increasing revenue and in maintenance of its market power in the confidential payment services market.”

U.S. District Judge Susan Illston last week agreed with Infostream, ruling that PayPal's can't dismiss claims of breach of contract, breach of the implied covenant of good faith and fair dealing and unfair competition law under California Business and Professions Code § 17200.

Illston said PayPal's argument to dismiss claims in the case "is further complicated by the fact that the AUP prohibits use of PayPal for 'activities that relate to sales of ... certain sexually oriented materials or services.' ”

"The AUP does not prohibit activities related to the sale of all sexually oriented services," she ruled. "If a contract is capable of more than one reasonable interpretation, it is ambiguous."

Illston also ruled that the state's statute of limitations is validated in the case because of the "inherently secretive nature of PayPal's conduct."

"[I]t is reasonable that plaintiffs could not have discovered PayPal's 'motivations' until plaintiffs were explicitly informed of PayPal's 'pre-approval' of identical competitor websites," Illston said.

The federal judge, however, dismissed Infostream's antitrust and fraud claims against PayPal.

Infostream claimed in antitrust allegations that the result of PayPal’s activities is that competitors in the downstream market have been driven out, leaving the specialty online dating services market with fewer choices, diminished pricing competition and inferior products.

Illston granted the plaintiffs leave to amend the Sherman Act and fraud claims, and ordered an amended complaint to be filed by today.
  

View order granting, denying motion to dismiss

Related:  

Copyright © 2024 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More News

Justices Alito, Thomas Invoke Victorian-Era Morality Law, Raising Censorship Concerns

Several national publications reported this week on widespread concern among Free Speech advocates after U.S. Supreme Court Justices Samuel Alito and Clarence Thomas repeatedly invoked during a hearing the infamous segregation-era law the Comstock Act, which was the cornerstone of U.S. censorship of sexual material from the 1870s until the 1970s.

Skinfluential Management's FansFuel Acquires Fanwire

Creator stats and affiliate marketing platform FansFuel has acquired creator account management tool Fanwire.

Nebraska AV Bill Moves Forward Despite Privacy, Free Speech Concerns

Nebraska’s unicameral Legislature has given first-round approval to LB 1092, the state’s version of the age verification bills being sponsored around the country by anti-porn religious conservative activists.

AEBN Celebrates 25th Anniversary

The Adult Entertainment Broadcast Network (AEBN) is celebrating its 25th year in business this week.

Performers in Meta Blacklisting Lawsuit Seek to Preserve Antitrust Claims

Adult Performance Artists Guild board officers Alana Evans, Kelly Pierce and Ruby have informed a California court that, although they want to drop their lawsuit claiming that Meta conspired with OnlyFans to blacklist rival premium fan platforms’ talent, they may still pursue antitrust claims in the future.

FSC, Co-Plaintiffs to Ask US Supreme Court to Review Constitutionality of Texas Age Verification Law

Free Speech Coalition (FSC) and its co-plaintiffs in the challenge to Texas’ controversial age verification law have petitioned the United States Court of Appeals for the 5th Circuit to stay its recent decision upholding the law, because they intend to appeal to the U.S. Supreme Court to review the law’s constitutionality.

FSC Vows to Fight Florida Age Verification Law

Free Speech Coalition (FSC) has issued a statement vowing to continue fighting Florida’s new age verification law, which was signed by Gov. Ron DeSantis on Monday as part of a comprehensive bill targeting minors’ use of social media.

Kansas Republican Aims to Create New Bureaucracy to 'Investigate' Porn Websites

Republican state legislators succeeded Monday in moving forward Kansas’ version of the age verification bills being sponsored around the country by anti-porn religious conservative activists, despite serious concerns raised by House Democrats about the cost of establishing a new bureaucracy tasked with investigating websites for pornographic content.

SK Intertainment Launches 'Skinfluential Management' Agency, FansFuel Joint Venture

Mr. Skin/Mr. Man parent company SK Intertainment has launched new creator agency Skinfluential Management, as well as a new joint venture with Showbizz Media's creator stats and affiliate marketing platform, FansFuel.

Industry Attorney, Free Speech Champion Clyde DeWitt Passes Away at 75

Noted industry attorney Clyde DeWitt passed away on Friday in Las Vegas at 75, according to friends and colleagues.

Show More