LOS ANGELES (CN) — Ticketmaster's bid to force unhappy customers to resolve their grievances through "mass arbitration" rather than litigate them in court received a skeptical reception by a federal judge who said the ticket seller's switch to a different arbitration scheme without clearly informing its customers "boggles the mind."
At a hearing Thursday in LA, U.S. District Judge George Wu didn't issue a decision on Ticketmaster's request to compel ticket buyers in a purported antitrust class action lawsuit to arbitrate their claims under the terms of use of the company's platform. Instead, he asked both sides to provide him with additional briefs to address his concerns.
The ticket buyers sued last year, claiming that Ticketmaster, which has a 70% market share for live events at major venues, and Live Nation — the concert promoter it merged with in 2010 — have achieved such dominance of the live music market that fans pay excessively high prices to see their favorite artists on stage.
The same judge had agreed with Ticketmaster in previous lawsuits, including a similar antitrust case brought by the same attorneys in the current lawsuit, and found the arbitration agreement was binding on consumers. The Ninth Circuit Court of Appeals in February upheld Wu's decision in the antitrust case, but the changes Ticketmaster made in 2021 to its arbitration agreement prompted a new antitrust complaint last year.
"You can't say I'm anti-arbitration," Wu said at the hearing. "But this case might be the straw that broke the camel's back."
It's the second time Wu asked attorneys for the plaintiffs and Ticketmaster to provide him with additional information about the changes in the arbitration agreement to decide on the company's request to enforce it. After a hearing in May, the minutes of which are under seal, the judge first asked for further clarification.
Lawyers for Ticketmaster and the ticket buyers declined to comment after the hearing as the motion is still pending.
According to Ticketmaster, New Era, unlike traditional arbitration service providers, can accommodate thousands of more or less similar consumer claims against one defendant because it uses so-called bellwether cases to decide the merits of some of the claims and then applies the results to similar claims. This, Ticketmaster says, is similar to how federal courts handle multi-district litigation, where large numbers of similar lawsuits are consolidated before one judge.
In support of its switch to New Era's mass arbitration protocol, Ticketmaster argues that traditional arbitration services such as JAMS don't have enough retired judges and other neutrals to handle the thousands of claims that have been brought in recent years by individuals such as Uber drivers forced to arbitrate their allegations against the company instead of pursuing them through class actions.
The plaintiffs, on the other hand, argue that Ticketmaster's new arbitration scheme is both procedurally — how the change was implemented — and substantially — how claims are decided —unconscionable and unenforceable.
Wu wasn't quick to agree with the plaintiffs' characterization of New Era's procedures as some "horror show," though he expressed some concerns about how mass arbitration would fit with the U.S. Supreme Court's findings that arbitration in the context of class action cases wasn't consistent with the goals of the Federal Arbitration Act.
The judge's main concern at the hearing was how Ticketmaster implemented a major change of its arbitration procedures without giving customers adequate notice.
"It's so cheap to do," Wu said.
The judge elaborated that a substantial change in the terms of use, like choice of arbitrator, required some real notice to consumers rather than a "pointless" notice that there had been a change to the users agreement without saying what the change was.
Under California law, the judge must use a sliding scale to determine whether an arbitration agreement is enforceable. The more procedurally unconscionable an agreement is, the less substantially unconscionable it needs to be for the judge to refuse to enforce it.
In this particular case, Wu indicated, the procedural problems with the changes to the arbitration agreement were so striking that the substantial problems needn't be that big.
If the judge denies Ticketmaster's request to compel arbitration in antitrust litigation, it would be welcome news for Taylor Swift fans who have a purported class action pending before Wu over the botched sale of tickets for the singer's Eras Tour.
The Ticketmaster website crashed in November when it was overwhelmed by 3.5 billion requests from both fans and bots posing as consumers, leaving thousands of "Swifties" who preregistered as verified fans unable to buy tickets after waiting in online queues for many hours.
Attorneys in the lawsuit over the Taylor Swift tickets were also before Wu Thursday morning to argue over the exchange of evidence and depositions. Ticketmaster will likely try to persuade the judge to send their case to arbitration, and the outcome of that request will depend on what Wu decides in the antitrust class action.
Follow @edpettersson
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