Sellers beware: growing number of ticketing fee class actions lawsuits

The New York Arts & Cultural Affairs Law

Starting in 2023, plaintiffs have filed a string of cases against New York entertainment venues and resellers of all kinds, each asserting claims under the New York Arts & Cultural Affairs Law (NYACAL). The complaints allege that the defendants failed to disclose fees for electronic tickets prior to consumers selecting the tickets for purchase. 

The NYACAL requires that fees be disclosed “prior to the ticket being selected for purchase” and that “[t]he price of the ticket shall not increase during the purchase process,” except for any reasonable fees associated with delivery of non-electronic tickets. Section 25.07(4) of the NYACAL applies to operators of a place of entertainment, licensees or other ticket resellers, and platforms that facilitate the sale or resale of tickets. The statute provides for a private right of action to “any person who has been injured by . . . a violation” of the law, and permits injunctive as well as monetary relief, including recovery of “actual damages or fifty dollars, whichever is greater.” Due to the strict liability nature of the statute and the high potential exposure, many defendants have reached class settlements of these actions, although one Eversheds Sutherland client won a motion to dismiss in a NYACAL case filed in New York state court.¹

The Nevada “Ticket Reseller” Law 

Nevada recently enacted its own “Ticket Reseller” law, Nevada Revised Statutes, § 598.397 et seq. (Nevada Law). The Nevada Law provides: “A reseller, a secondary ticket exchange or any affiliate of a reseller or secondary ticket exchange shall not resell a ticket, in person or remotely, without first disclosing to the purchaser the total amount that the purchaser will be charged for the ticket, including any fees which represent a portion of the total amount to be charged.” Nev. Rev. Stat. Ann. § 598.39795. 

Unlike the NYACAL, the Nevada Law applies only to ticket resale websites and not entertainment venues themselves. Plaintiffs in these cases have filed a number of complaints against ticket resellers based on allegations that the Nevada Law prohibits resellers from adding additional fees to a ticket sales transaction after an initial price is shown for the ticket on a company website. 

For example, recent class action complaints allege that the defendant companies did not “disclos[e]… the total amount… including… fees” at the beginning of the ticket purchaser’s online journey and instead disclosed the fees at the end of the transaction. The plaintiffs’ complaints characterize this as a “drip pricing” model, where sellers advertise one price and then reveal additional charges as the transaction progresses or at the final purchase screen. The Nevada Law creates a private right of action and provides for statutory damages of up to $5,000 per violation, significantly more than the NYACAL.

Illinois Ticketing Law 

One more ticketing law to look out for is the Illinois Ticket Sale and Resale Act (ITSRA). The ITSRA forbids “any person, persons, firm or corporation to sell tickets for baseball games, football games, hockey games, theatre entertainments, or any other amusement for a price more than the price printed upon the face of said ticket.” 815 Ill. Comp. Stat. Ann. 414/1.5(a). The statute provides for a private right of action and statutory damages of $100 per violation. 

The ITSRA has a number of exceptions, including for: (1) businesses that meet certain qualifications such as (among other things) regularly selling from a brick and mortar location registered with the Secretary of State; (2) internet websites engaged in the resale of tickets that (among other things) maintain certain disclosures and (3) charity auctions. 

Nonetheless, plaintiffs are already challenging the breadth of these exceptions. For example, a recent ITSRA class action complaint filed in California federal court² alleges that the defendant does not fall into any such exception because each exception requires the ticket broker, reseller, auctioneer, or Internet website operator to “adopt[] a procedure for the binding resolution of consumer complaints by an independent, disinterested third party.” 815 Ill. Comp. Stat. Ann. 414/1.5 (b)(1)(F)(iii). The plaintiff alleges that the alternative dispute resolution (ADR) firm used by the defendant is not a disinterested party but rather, as the Ninth Circuit noted, an organization whose “only source of revenue initially” was the defendant.³

Takeaways

In assessing compliance with these laws, venues and ticket resellers should examine when ticketing fees are presented to the customer on their online sales platforms. Websites that do not show taxes and fees until the end of a transaction could be easy targets for plaintiffs’ attorneys looking to file class actions under these statutes. 

Companies should also ensure that if an ADR organization is specified in their terms of sale, that organization is truly an independent party. Companies should also be aware that their choice of ADR provider can also be scrutinized by plaintiffs’ attorneys. This is a new kind of case that the plaintiffs’ attorneys are testing but, if successful, could mean a rise in litigation around ticket sellers’ choice of ADR organizations.

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