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Cancelled Ultra Music Festival sued over its refunds policy

By | Published on Thursday 28 May 2020

Ultra Miami

The company behind one of the first major US music events to cancel its 2020 edition as a result of the COVID-19 pandemic – the Miami edition of the Ultra Music Festival – is the latest American live music business to be sued over its refund policy in relation to a coronavirus-caused cancellation.

The music industry in the US and Europe was still uncertain quite what impact the spread of COVID-19 was going to have when it first emerged, in the first week of March, that the flagship edition of the dance music festival that sits at the end of Miami Music Week was about to be cancelled. Or, technically, postponed by one year to March 2021.

Since then ticketholders to the 2020 edition have been offered replacement tickets for either the 2021 or 2022 iterations of the festival. But at least two ticketholders want cash refunds, something the event’s organisers have not, as yet, offered. Hence the lawsuit filed with the courts in Florida this week.

Said lawsuit concedes that, technically – under the terms and conditions attached to the sale of tickets to the Ultra Music Festival – the event’s promoter isn’t obliged to offer any cash refunds. But that term, plaintiffs Samuel Hernandez and Richard Montoure argue, is unenforceable.

Legally speaking, whether or not a live event is obliged to offer cash refunds as a result of a cancellation or postponement depends very much on what local consumer rights laws say. In some places there is such an obligation, and a ticketholder may be able to seek a refund from their credit card company if a ticket agent or promoter doesn’t play ball.

Where that’s not the case, the question is what do the event’s terms and conditions say. And then – as in both this case and a similar one involving South By Southwest – whether or not we feel that those terms and conditions are enforceable under local contract laws.

Hernandez and Montoure’s lawsuit states that the Ultra festival’s terms include a provision that says the promoter “may, in its sole and absolute discretion, elect to either issue a full or partial refund to purchaser, not issue any refunds, or reschedule the event”.

The same provision goes on: “If [the ticket] issuer elects to issue a refund, the ticket purchaser of record shall be refunded an amount up to the face value of the ticket(s) only. If issuer elects to reschedule the event for a future date, you shall not be entitled to a refund”.

All of which seems to justify Ultra’s seeming resistance to the idea that it should provide refunds to people with tickets to its cancelled 2020 edition (the plaintiffs say that they can’t find a phone number for the festival organiser and their email queries regarding a refund have been ignored).

However, the lawsuit goes on: “Through the refund provision, Ultra purports to reserve to itself the right to retain any and all monies paid for tickets regardless of whether Ultra elects to put on the festival, essentially (and impermissibly) rendering its obligations under the [terms] illusory and the agreement itself an unenforceable unilateral option contract”.

It goes on: “Ultra also purports to reserve to itself the right to ‘modify, add, remove, supplement, amend, update or revise any of [the] terms and conditions, without advanced notification to’ the customer. Ultra failed to provide any limitations on its right to modify the contract with consumers, thereby rendering the [terms] illusory and void in their entirety”.

It remains to be seen how Ultra responds. As noted, the also cancelled South By Southwest has been similarly sued over its enforcement of terms that allow it to offer replacement tickets to a future event rather than a cash refund.

Responding to that lawsuit, a spokesperson for the Austin-based showcase festival insisted that the company was acting legally in accordance with the terms of its ticket sales. They also added that the huge financial pressure the festival company was under as a result of the COVID-19 caused cancellation meant it had no choice but to enforce the no cash refunds term.

In addition to festivals being directly sued, lawsuits have also been filed in the US over alleged changes to refund policies made by ticketing companies Ticketmaster and StubHub in the wake of the COVID-19 crisis.

For its part, Live Nation’s Ticketmaster insists that it is issuing refunds on cancelled and most postponed shows, although the latter is ultimately at the discretion of its client, ie each event’s promoter. StubHub, meanwhile, is offering vouchers instead of cash in some countries, leading to litigation in Canada as well as the US.