StubHub Wants MLB Ticket Refund Suit Sent To Arbitration

By Zachary Zagger
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Law360 (July 9, 2020, 8:03 PM EDT) -- StubHub on Wednesday said claims from Major League Baseball fans who want refunds for tickets purchased to games canceled because of the COVID-19 pandemic should be tossed or sent to arbitration under its terms of service agreement.

StubHub Inc. and its subsidiary Last Minute Transactions Inc. urged a California federal court to toss the claims because there clearly was no fraud nor a violation of California consumer protection law as the fans have claimed, given the uncertainty surrounding the MLB season after the pandemic forced the league to delay its start in March.

Regardless, the companies said any remaining claims are covered by the arbitration agreements that users agreed to when registering to use the StubHub website and that fans are attempting to avoid the "binding" arbitration agreements "by masquerading their potential claims in groundless allegations of conspiracy and fraud."

The move comes after MLB ticket seller Ticketmaster and its parent company Live Nation Entertainment Inc. similarly asked the court to have claims against it in the cases sent to arbitration earlier in July.

Baseball fans hit MLB, its teams and ticket sellers StubHub and Ticketmaster with a proposed class action in April seeking ticket refunds after MLB postponed the start of its season. The suit claimed the league was continuing to say games were "postponed" despite the growing likelihood that many or all of the games would not be replayed for weeks as a "pretext" to avoid paying refunds.

The fans further called out StubHub for changing its general "Fan Guarantee" refund policy for canceled events in mid-March without informing consumers and continued to promote the sale of MLB tickets for weeks later, even after MLB delayed the start of the season. StubHub did begin offering a 120% credit to be used toward future purchases, but only for games that were officially canceled.

StubHub argued Wednesday there was no conspiracy to defraud fans, nor did it violate the California Consumer Legal Remedies Act or the state's Unfair Competition Law as the fans alleged. Game tickets are not goods or services under the CLRA, and the company made no misrepresentations to consumers because MLB was not clear on whether games would be played, StubHub said.

"Indeed, plaintiffs do not, and could not allege that StubHub had any knowledge that the pandemic would impact MLB games when plaintiffs made their purchases because those purchases preceded any StubHub change in policy, any pandemic-related shutdowns in the United States, and any pandemic-related impact on sporting events," StubHub said.

MLB did not open the door for its teams to issue refunds, thereby concede that many games would not be replayed, until April 28. The league is now set to open a shortened season of 60 games, significantly less than the typical 162 game season, but even then it is not certain fans will be in stadiums.

StubHub is facing at least one other proposed class action from consumers over the change to its guaranteed ticket refund policy amid mass cancellations of live events because of the COVID-19 pandemic. The company has said it has been faced with tens of thousands of event cancellations and does not have new revenue coming in from future scheduled events to pay refunds. 

In November 2017, StubHub signed a five-year deal with MLB making it the "Official Fan to Fan Ticket Marketplace of MLB.com and the 30 Major League Clubs," according to an announcement from that time.

A spokesman for StubHub declined to comment to Law360 Thursday, citing a company policy not to comment on active litigation. Counsel for the fans did not immediately respond to a request for comment.

The fans are represented by David Azar, Marc Grossman, Peggy Wedgworth, Andrei Rado, Jennifer Czeisler, Blak Yagman and Michael Acciavatti of Milberg Phillips Grossman LLP.

StubHub and Last Minute Transactions is represented by William P. Donovan, Jr. of McDermott Will & Emery LLP

The case is Ajzenman et al. v. Office of the Commissioner of Baseball et al., case number 2:20-cv-03643, in the U.S. District Court for the Central District of California.

--Editing by Amy Rowe.

For a reprint of this article, please contact reprints@law360.com.

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