Ticketing Giants Beat Some Fans' Claims In MLB Refund Fight

By Hailey Konnath
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Law360 (September 15, 2020, 8:21 PM EDT) -- Ticketmaster, Live Nation and StubHub have escaped several claims brought by Major League Baseball fans claiming they're owed refunds for tickets purchased to games canceled amid the COVID-19 pandemic, a California federal judge ruled Monday.

In three orders, U.S. District Judge Dale S. Fischer said fans who purchased their tickets directly from MLB or MLB teams can't bring their claims against Ticketmaster LLC, its parent company Live Nation Entertainment Inc., StubHub Inc. and its subsidiary Last Minute Transactions Inc. Judge Fischer shipped the rest of the claims off to arbitration, ruling that fans who used the companies' websites entered into arbitration agreements.

Baseball fans hit MLB, its teams and the ticketing companies with the proposed class action in April. The fans are claiming the league continued to say games were "postponed" despite the growing likelihood that many or all of the games wouldn't be played for weeks, a move they argued was a "pretext" to avoid paying refunds.

Of the eight plaintiffs named in the suit, five of them purchased their tickets through the league or its teams. Those five argued they still had standing to sue the ticketing companies because they're claiming all of the defendants conspired to avoid paying the refunds.

But Judge Fischer on Monday found that the fans have failed to sufficiently allege any conspiracy existed among the league, teams and ticketing companies. Most of the fans' allegations are vague, and the allegations with more of a factual basis are irrelevant to the ticket merchants, he said.

"Nowhere do plaintiffs allege that Ticketmaster — an authorized reseller of MLB tickets — and StubHub — a fan-to-fan resale ticket merchant — had the power to affirmatively cancel baseball games," Judge Fischer said. "That was squarely in the hands of the MLB, commissioner and team defendants."

Judge Fischer added that if it is the fans' theory that all defendants formed a conspiracy "not to give refunds" rather than "not to cancel games in order to avoid refunds," they must allege it in their complaint.

At the same time, the judge gave the fans until Oct. 12 to amend their complaint. The three fans who purchased tickets directly from the companies must arbitrate those claims, she ruled.

Peggy Wedgworth, counsel for the fans, said in a statement Tuesday that Judge Fischer's decision was not on the merits of the case, "which we believe is very strong based on the misconduct alleged." Rather, it means fans will have to achieve justice out of the public eye, she said.

"We are disappointed with the ruling regarding arbitration and are discussing the best course forward with our clients," Wedgworth said.

The MLB started its shortened 60-game schedule, without in-person audiences, in late July.

In their April suit, the fans called out StubHub for changing its general "Fan Guarantee" refund policy for canceled events in mid-March without informing consumers and continuing 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, the fans say.

The ticketing companies urged the court to toss the claims or send to arbitration in July, arguing there was clearly no fraud nor a violation of California consumer protection law.

Notably, StubHub said that game tickets are not goods or services under the California Consumer Legal Remedies Act, and the company made no misrepresentations to consumers because MLB was not clear on whether games would be played, StubHub said.

And regardless, any remaining claims are covered by the arbitration agreements that users agreed to when they registered to use the ticketing websites, according to the companies.

In late July, MLB lodged its own motion to dismiss, arguing the fans' claims are moot because refunds or credits have already been issued. The suit is nothing more than hastily filed litigation aimed at capitalizing on the pandemic but is "riddled with defects," the league said.

StubHub has faced 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's grappling with tens of thousands of event cancellations and doesn't have new revenue coming in from future scheduled events to pay the 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.

Ticketmaster and Live Nation representatives and counsel for the other parties didn't immediately return requests for comment Tuesday.

The fans are represented by David Azar and Peggy Wedgworth of Milberg Phillips Grossman LLP and Alex R. Straus of Greg Goleman Law PC.

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

Ticketmaster and Live Nation are represented by Daniel M. Wall, Timothy L. O'Mara and Andrew M. Gass of Latham & Watkins LLP.

As recently as July, Major League Baseball was represented by R. Adam Lauridsen, John W. Keker, Benjamin D. Rothstein and Bailey W. Heaps of Keker Van Nest & Peters LLP.

The case is Matthew 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.

--Additional reporting by Zachary Zagger and Craig Clough. Editing by Orlando Lorenzo.

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

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