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Judge declines to force customer-led dispute over Ticketmaster’s market dominance to arbitration

By | Published on Monday 14 August 2023

As expected, a US judge last week declined to force a dispute between ticket-buyers and Ticketmaster to arbitration, despite the Live Nation-owned ticketing company having successfully enforced an arbitration clause in its terms of service in the past. It didn’t work this time because of the way Ticketmaster changed its chosen arbitrator.

This particular lawsuit accuses Live Nation and Ticketmaster of anti-competitive conduct, because of the market dominance the live giant commands in touring, venues and ticketing. When previously sued by its customers, on this and other issues, Ticketmaster has argued that – under its terms of service – those customers are obliged to take their grievances to arbitration rather than a court of law.

And that argument has generally worked, with counter-arguments presented by lawyers representing the customers that no one ever reads a website’s terms of service not generally convincing any judges that they should, therefore, ignore the arbitration obligation in Ticketmaster’s terms.

However, Ticketmaster then changed its chosen arbitrator from a company called JAMS to a company called New Era. It argues that the latter company is better equipped to deal with complaints where there are lots of concurrent complainants, which is common in the ticketing market.

But the plaintiffs in this lawsuit reckon that New Era is biased in favour of the ticketing firm, and that the processes employed by the company – which they are forced to navigate – are “non-traditional” and “Kafkaesque”.

In recent court hearings judge George H Wu indicated that he felt the way in which Ticketmaster went about changing its arbitrator of choice was inappropriate, given it was a significant change that wasn’t properly communicated to the customers affected by it.

And sufficiently so that he felt that, on this occasion, the plaintiffs shouldn’t be obliged to take their dispute to arbitration.

Confirming that viewpoint in his ruling last week he wrote: “[Plaintiffs] argument is that defendants’ imposition of such a significant change in the terms of use without giving any notice to customers [means] that the agreement is procedurally unconscionable”.

“The court would agree with that argument”, he added. “The fact that defendants’ customers received no notice of the significant change to the terms of use creates a situation of unfair surprise. And, because it would seem trivially easy to provide customers with such notice, defendants’ failure to do so suggests a degree of intentionality and/or oppression”.

With that in mind, Wu concluded: “The court denies the motion to compel arbitration”.

It will be interesting to see how this case now proceeds. Live Nation and Ticketmaster, of course, have always strongly denied any allegations of anti-competitive conduct, and they will fight back against this lawsuit in court if they have to.

However, with political interest in the live giant’s market dominance pretty high at the moment, the company could probably do without any arguments about anticompetitive conduct being discussed in public in court.