A law suit against PayPal is pretty much useless. They followed the law. They are only a money transfer service and are forced to obey the law like every other company. Pretty much any credit card company would have done the same thing. It's even possible that it was a card company that pushed it though PayPal to begin with. When an unauthorized claim was made they were bound by law to reverse the funds. Your one and only recourse is to sue the buyer.
Laws can vary from state to state and you may be forced to file the lawsuit in their home state or even in California where eBay's servers are located.
Speak to a real attorney, not a bunch of strangers on the internet, and find out what it's going to cost you in time and money.
You have to find a lawyer that is willing to take your case. It won't be cheap and you'll end up paying much more than $500 for that. Assuming you can find a lawyer, he'll take care of everything from the point you hire him. But before you throw more money at this, you should contact Paypal and present your case.
That sounds like an issue with the buyer rather than PayPal as the buyer has a right to cancel the sales but needs to return the product.
You can't. No lawyer is going to take on PayPal. Your only hope is to complain to your states consumer protection agency. They might have a chance.
Become a lawyer and give it a shot, since no current lawyer will take on your case...
You don't. Grow up.
