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South By Southwest sues its insurer over costs linked to 2020 cancellation class action

By | Published on Friday 8 October 2021

SXSW 2020

Organisers of the South By Southwest festival have urged a court in Texas to force its insurer to provide coverage in relation to the class action lawsuit that followed the cancellation of the 2020 edition of the showcasing and conference event.

SXSW was one of the first major music events to cancel as the COVID pandemic gained momentum in early 2020. Following the cancellation, ticket-buyers were told that they could defer their 2020 tickets to the 2021, 2022 or 2023 edition of the festival, but that cash refunds were not available.

What the law says about cash refunds for cancelled events varies from country to country and – in the US – state to state. The rules are also often different for postponed events as opposed to cancelled events, and where that’s the case, there can then be some debate about whether an annual event like SXSW has been cancelled or postponed.

Either way, most people took up the offer to defer their SXSW tickets to another year. But some did not and argued that cash refunds should be offered. A class action lawsuit was then filed against the event in April 2020 by disgruntled ticket-buyers seeking a refund.

According to Law360, a preliminary settlement has now been reached in that class action, which will see those who defer their tickets eligible for a $30 cash payment, while those who choose not to defer will be able to claim back in cash 40% of whatever they paid for their original ticket.

As the class action seemingly comes to a close, another dispute has begun between SXSW and its insurer Federal Insurance Co over the costs the festival incurred fighting the class action. The event argues that its insurance policy covers such costs, but the insurer says a professional services exclusion in SXSW’s policy means it is not obliged to pay up. For its part, SXSW says that the insurance firm is incorrectly interpreting that exclusion.

And so, now SXSW is suing the Federal Insurance Co. No word yet on whether Federal Insurance Co should be covering any legal costs incurred by SXSW while suing Federal Insurance Co.