By Lauren Berg

Law360 (April 27, 2020, 7:13 PM EDT) -- After South by Southwest was canceled this year due to the spread of the deadly coronavirus, disgruntled ticket holders filed suit in Texas federal court Friday saying the festival's organizers won't refund would-be attendees' ticket money.

Instead of refunding people's tickets, SXSW LLC and SXSW Holdings Inc., the organizers of the Austin-based festival, are only offering to allow ticket holders to use their festival credentials to gain admission to one of the next three South by Southwest festivals, according to the class action complaint filed by Maria Bromley and Kleber Pauta.

The suit, which includes claims of breach of contract and unjust enrichment, is looking to get refunds and damages for anyone in the U.S. who bought tickets to this year's festival.

The event, which features parallel film, interactive media, live music and conferences, was set to take place in March, but due to the spread of the novel coronavirus that causes COVID-19, the city of Austin canceled the 2020 event, according to the suit.

While SXSW offered to let ticket holders use their tickets for admission to one of the festivals over the next three years, the named plaintiffs said they and other ticket holders didn't necessarily plan to attend future festivals. Instead, the ticket holders said they just want their money back.

Bromley, a resident of Massachusetts, said she bought a "Platinum" badge for SXSW for about $1,670, which included money for registration, as well as meals and merchandise. When she found out the festival was canceled, she called SXSW and sent an email asking for her money back, according to the suit.

But all she was offered was to defer her badge to use in 2021, 2022 or 2023, she said.

Pauta, a resident of Colorado, spent about $1,020 for his badge to the festival. He, too, was unable to secure a refund after emailing the organizers, according to the suit.

Attorneys for the plaintiffs told Law360 on Monday that SXSW was violating Texas law by not providing refunds, which they saw was especially harmful during the pandemic when many people are suffering financially.

"We intend to vigorously pursue refunds for all the ticket holders who deserve the return of their money for the now-canceled event," Joseph Sauder of Sauder Schelkopf LLC said.

In a statement to Law360, SXSW said it agreed with Austin's decision to cancel the festival, but said the pandemic and cancellation have caused a "tremendous loss" to the company and its staff.

"Due to the unique nature of SXSW's business, where we are reliant on one annual event, we incurred extensive amounts of nonrecoupable costs well in advance of March," a company spokesperson said. "These expenditures, and the loss of expected revenue, have resulted in a situation where we do not have the money to issue refunds."

"SXSW, like many small businesses across the country, is in a dire financial situation requiring that we rely on our contracts, which have a clearly stated no refunds policy," the spokesperson added. "Though we wish we were able to do more, we are doing our best to reconcile the situation and offered a deferral package option to purchasers of 2020 registrations."

SXSW isn't the only company staring down the barrel of a lawsuit over its refund policy following the outbreak of the coronavirus.

The company behind the Lightning in a Bottle Festival was hit with two putative class actions on April 14 after canceling the annual music event due to the pandemic but declining to refund the ticket fees.

Ticketmaster and Live Nation Entertainment Co. were hit on April 17 with a proposed class action over their refund policies for events postponed due to COVID-19, alleging they are making customers eat the costs of thousands of disrupted events by retroactively changing their refund policy.

Likewise, StubHub Inc. was sued on April 2 over allegations that it reneged on its guarantee to provide cash refunds as many seek to get their money back for the thousands of events canceled due to the virus.

And on April 20, a pair of New York baseball fans hit Major League Baseball, all its teams and online ticket sellers with a proposed class action in California federal court seeking refunds for fans across the country who purchased tickets to games that have been postponed indefinitely due to the coronavirus pandemic.

The ticket buyers are represented by Randy Howry, Sean Breen and James Hatchitt of Howry Breen & Herman LLP; Joseph G. Sauder, Lori G. Kier and Joseph B. Kenney of Sauder Schelkopf LLC; and Daniel O. Herrera, Kaitlin Naughton and Bryan L. Clobes of Cafferty Clobes Meriwether & Sprengel LLP.

Counsel information for the defendants was not immediately available.

The suit is Maria Bromley et al. v. SXSW LLC et al., case number 1:20-cv-00439, in the U.S. District Court for the Western District of Texas.

--Additional reporting by Craig Clough and Zachary Zagger. Editing by Bruce Goldman.

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