Ticketmaster and its parent Live Nation are battling back against a consumer class action lawsuit, arguing that its customers signed their litigation rights away.
Ticketmaster is used to being the bad guy. But now, the ticketing giant is in the unenviable position of being sued by its own customers — potentially millions of them. Earlier this week, a class action lawsuit against the company came to light, with allegations of intentional fraud and over-charging.
“Have you ever wondered why Ticketmaster has been unable to rid itself of the scalpers who purchase mass quantities of concert or sports tickets from its website and then resell them for much more minutes later?” the complaint opens. “The answer: Ticketmaster hasn’t wanted to rid itself of scalpers because, as it turns out, they have been working with them.”
“Indeed, on its own website, Ticketmaster refers to the activity of professional scalpers as ‘unfair competition’. But now it has been caught secretly permitting, facilitating and actively encouraging the sale of tickets by scalpers on the secondary market using its TradeDesk platform — all for a second cut on those sales.”
The class action, filed in the U.S. District Court for the Northern District of California and led by customer Allen Lee, was brought by barristers Steve Berman and Elaine Byzszewski of Hagens Berman (here’s the full filing). The lawsuits claims violations of the Cartwright Act, California Penal Code, and a raft of unfair and fraudulent business practices.
Sounds serious, though Ticketmaster is now trying to toss the entire action.
The company has now argued that customers like Lee have waived their rights to litigate against the company, thanks to the fine print of their user agreements. In its counter-filing, Ticketmaster noted that “the applicable Terms contained a provision by which Plaintiffs expressly agreed to submit their claims to binding arbitration, and waive any right to a jury trial or to participate in a class action.”
Of course, it’s unlikely that Lee or potentially millions of other customers read that section of the fine print. In fact, it’s highly likely they didn’t. But they did sign that agreement prior to purchasing tickets — or at least ‘e-clicked’ their rights away.
Technically, that could render this class action moot. But the courts will have to decide if Ticketmaster’s fine print represents a sneaky contract clause designed to trick its customers, or valid fine print that forms a veritable binding agreement.
Also worth asking: how far does such a fine print waiver go? After all, if Ticketmaster charged an extra $1,000 on every ticketing purchase, should its broad-reaching fine print protect it from obvious theft?
Perhaps it depends on how serious of a crime Ticketmaster committed with its backroom dealings. “Companies should treat consumers fairly,” the class action declares. “But a company fails at this when it accepts kickbacks for secretly facilitating a shortage of its product and then a sale by a third party at a higher price. This isn’t right. But Ticketmaster was just exposed for engaging in just such a scheme.”
That ‘exposure’ was an undercover investigation by CBC News and the Toronto Star, which involved a secretly-recorded explanation by a representative of Ticketmaster subsidiary, TradeDesk.
The gist was that TradeDesk, a secondary ticketing platform, allows scalpers to create endless accounts and bulk-buy tickets, then sell them at higher prices. Those markups are then shared back with Ticketmaster, which publicly deplores the existence of secondary scalper networks.
The public relations fiasco that followed has now prompted the class action, though regulators and legislators are also looking into this one. That could ultimately lead to serious and renewed interest among major U.S. regulatory agencies, including the Federal Trade Commission (FTC) and Department of Justice.