Secondary Insurance Market Blog focuses on the secondary markets for insurance products, and the the laws (or lack thereof) relating to such markets.
Sometimes, in understanding the legalities, it can be a useful exercise to take a look at other types of secondary markets, and so at times, this blog has featured posts on secondary markets that involve things other than insurance.
One such non-insurance market is the market for entertainment tickets. In fact, this is one market that many people are familiar with, through “scalping” of tickets that sometimes results in a familiarity with laws concerning ticket re-sale.
Two lawsuits involving National Football League tickets recently led to judicial opinions mentioning the secondary market for NFL tickets. In those two cases, the NFL went 1-1, winning dismissal of one of those lawsuits.
The NFL won dismissal in Williams v. NFL, Case No. C14-1089 MJP, 2014 U.S. Dist. LEXIS 155488 (W.D. Wash. Oct. 31, 2014), where a plaintiff alleged “various constitutional and statutory violations arising out of the [Seattle] Seahawks’ restriction of primary-market ticket sales for the NFC Championship game between the Seahawks and the [San Francisco] 49ers to buyers with billing addresses in Washington and other nearby states and provinces.” The court found that the plaintiff had failed to state a claim for “economic discrimination”, violation of consumer protection statutes, antitrust violations, or unjust enrichment. The court noted that the plaintiff had acknowledged “that sales on the secondary market” for tickets “are not geographically restricted” but the plaintiff had alleged that the “secondary market offers tickets at inflated prices.” As for unjust enrichment, the court dismissed the plaintiff’s claim against defendant Ticketmaster, a company that the Plaintiff allege complied with the Seahawks geography restrictions in sales on the secondary market for tickets. Plaintiff had alleged that Ticketmaster was unjustly enriched by sales on the secondary market for amounts in excess of the face value. But plaintiff had not purchased a ticket on the secondary market, so the court dismissed this claim as well: “Since Plaintiff cannot allege he purchased a ticket on the secondary market (indeed, he alleges he was unable to attend the game), he never conferred a benefit upon” Ticketmaster and therefore the claim failed.
The plaintiff in Ibe v. NFL, Civil Action No. 3:11-CV-248-M, 2014 U.S. Dist. LEXIS 139102 (N.D. Tex. Sept. 30, 2014), brought claims for breach of contract and the court granted the NFL’s motion to dismiss as to some of the claims. The claims arose from allegations concerning tickets for Super Bowl XLV, held in February 2011 in Cowboys Stadium in Texas. The plaintiffs alleged that some ticket-holders had been turned away, or delayed, or moved to obstructed-view seats due to actions of the defendants.
The court in Ibe discussed the secondary market for tickets in relation to damages obtainable by an assignee from the assignor of the ticket. Said the court:
[A]ccording to the NFL . . . an assignee can recover only those damages potentially available to his assignor, who the NFL claims is the third party who bought from the NFL. [Some of the] . . . Plaintiffs respond that there was no assignment and, therefore, they should recover actual damages for breach of contract. The . . . Plaintiffs also argue that it was natural, probable, and foreseeable that some fans would buy pre sold tickets, paying many times the face value of the tickets. To support their argument, Plaintiffs cite NFL Commissioner Roger Goodell who, during the Super Bowl XLVII, acknowledged that tickets are being sold on the secondary market at multiples of the face value.
Under Texas law, actual damages may be recovered when loss is the natural, probably, and foreseeable consequence of a defendant’s conduct. Plaintiffs have produced some evidence that it was foreseeable to the NFL that ticket holders would incur costs above the face value of the tickets in attending the game. Therefore, it will be for the trier of fact to determine (a) whether secondary market purchases were foreseeable to the NFL and (b) what amount of loss was caused by the NFL’s breach. Therefore, because Plaintiffs have raised a genuine issue of material fact as to whether the amounts paid above face value were foreseeable by the NFL and, thus, recoverable as remedies for breach of contract, the Court denies the NFL’s Motion for Summary Judgment with respect to [some of] the . . . Plaintiffs.
The Ibe opinion is available here.
The Williams opinion is available here.