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South By Southwest sued over its no refunds policy

By | Published on Tuesday 28 April 2020

SXSW 2020

Showcase festival South By Southwest is the latest American company to be sued over its refund polices following the cancellation of its 2020 edition in response to COVID-19.

For many in the global music industry, it was the news that SXSW would not go ahead this year that made it really hit home that the COVID-19 pandemic was going to have a major impact on live entertainment worldwide.

Following the cancellation, the company that operates the Austin, Texas-based showcase festival and conference series announced that those who had a ticket for 2020 could now transfer it to 2021, or either of the two following editions of the event. However, cash refunds have not been offered to 2020 ticketholders.

Quite what happens in terms of refunds when events are cancelled or postponed depends on any one promoter’s terms and conditions, and also what local consumer rights laws say about such things.

Policies are sometimes different for cancellations and postponements. And, of course, as with SXSW, there is sometimes a blurring of the lines between a cancellation and a postponement. SXSW organisers could say that their March 2020 event has simply been postponed to March 2021. Others might argue that the 2020 edition was cancelled.

Either way, SXSW isn’t offering cash refunds and reckons that that is in line with the terms and conditions of its ticket sales. Which it almost certainly is. But in a new class action lawsuit filed with the courts in Austin, two SXSW ticketholders reckon that the event’s strict no refunds policy is unlawful and therefore unenforceable.

Those ticketholders are Maria Bromley and Kleber Pauta. Noting that they have been offered tickets to SXSW 2021, 2022 or 2023 rather than a cash refund, they say in their lawsuit: “Plaintiffs and the class do not necessarily plan to attend future festivals, however, and even SXSW has acknowledged that future festivals may not occur”.

They subsequently concede that the festival’s terms and conditions do not technically obligate SXSW to offer them a refund. “The [terms] also include a ‘refund and revocation policy'”, the lawsuit goes on, “that provides that ‘SXSW may, in its sole discretion and at any time determined by SXSW, cancel, revoke, or refuse [tickets purchased] through SXSW'”.

“The refund and revocation policy also states that SXSW ‘does not issue refunds under any circumstances’ and that ‘any and all payments made to SXSW are not refundable for any reason'”, they add. “Through the refund and revocation policy SXSW purports to reserve the right to retain any and all monies paid for credentials and passes regardless of whether SXSW elects to put on the festival”.

But that’s just not right, the lawsuit reckons. “If enforced … the refund and revocation policy would render the [terms and conditions] an unenforceable, illusory, unilateral option contract that allows SXSW to sell [tickets], cancel the festival for any or no reason whatsoever, and retain all customer payments while leaving plaintiffs and the class without a remedy. Accordingly, the SXSW refund and revocation policy is unlawful, unconscionable and unenforceable”.

Based on all that, the class action accuses the SXSW company of both breach of contract and unjust enrichment, and then seeks refunds and damages for any American who bought a ticket to the 2020 edition of the festival.

In a statement to Law360, a spokesperson for SXSW insisted that the company was acting legally and in line with its published terms and conditions. They also added that the firm was only relying on the no refunds term in this way because of the unprecedented circumstances that it and the wider live industry current finds itself in.

“Due to the unique nature of SXSW’s business, where we are reliant on one annual event, we incurred extensive amounts of non-recoupable costs well in advance of March”, the spokesperson said. “These expenditures, and the loss of expected revenue, have resulted in a situation where we do not have the money to issue refunds”.

“SXSW, like many small businesses across the country, is in a dire financial situation requiring that we rely on our contracts, which have a clearly stated no refunds policy. Though we wish we were able to do more, we are doing our best to reconcile the situation and offered a deferral package option to purchasers of 2020 registrations”.

The American lawsuits in relation to COVID-19 cancellations and postponements are starting to mount up, of course. Both StubHub and Ticketmaster have already been sued over allegations they changed their refund policies after the COVID-19 pandemic hit.