BY: Amy Liu, Junior Staffer

In November 2022, Ticketmaster faced major political and public scrutiny after its systems malfunctioned during ticket sales to Taylor Swift’s sixth concert tour, the Eras Tour. On November 15, 2022, when the sale went live, Ticketmaster’s platform crashed within the hour, which logged out users or froze them in queues. Ticketmaster described demands for tickets for Swift’s show as “historically unprecedented” and “astronomical,” with more than 3.5 million people registering for a pre-sale program and only around 1.5 million receiving a special access code to purchase a ticket.

Following Ticketmaster’s cancelation of the general public sale for the Eras tour, scalpers started reselling tickets on resale websites at up to thousands of dollars more than the original price. As a result, fans and consumer protection groups began alleging that Ticketmaster had adopted deceitful practices. In December 2022, a group of Taylor Swift fans sued Ticketmaster in the Los Angeles County Superior Court over anti-trust violations and deception, among other claims. In the same month, another fan filed a federal class action suit in the U.S. District Court for the Central District of California, accusing Ticketmaster and Live Nation of “intentionally and purposefully” violating anti-trust laws. On March 8, 2023, Ticketmaster and Live Nation moved to compel arbitration, arguing that this case is analogous to a previous case in which the District Court and Ninth Circuit referred the matter to arbitration.

The Federal Arbitration Act (FAA) favors the enforceability of arbitration agreements and empowers courts to direct parties to arbitration when a valid agreement is present. Courts will apply traditional contract laws to assess whether arbitration clauses are valid. California courts have long considered whether consumers have a meaningful choice and the reasonableness of the terms.

 Ticketmaster’s changes to its Terms of Use in July 2021 led to a key distinction arising between the present case and the courts’ traditional interpretation of arbitration clauses. Ticketmaster’s new terms of use sought to adopt a mass arbitration protocol by adopting a new arbitration service provider, New Era. The plaintiffs in this case contended that New Era’s mass arbitration procedures operate similarly to class action suits but lack the same due process requirements of traditional class actions. Specifically, they argue that these procedures fail to allow non-represented parties to make their case or opt-out. On the other hand, Ticketmaster argues that these procedures parallel multidistrict litigation, where an issue is resolved by one case and then applied to many others unless there is a specific need to deviate. It insists that New Era is better positioned to handle a large onslaught of concurrent complaints, which is common in the ticket sales industry.

“This case has cast light on the potential problems that may be caused by arbitration service providers and the risks that may be presented without additional procedural guardrails.”

Amy Liu, Junior Staffer

In August 2023, Judge George Wu declined to enforce the arbitration clause because the change of arbitrator of choice was not properly communicated to the consumers affected. Judge Wu emphasized that the lack of notice rendered the agreement procedurally unconscionable and created a situation of “unfair surprise.” He noted that given the ease with which Ticketmaster and Live Nation could have provided notice, Ticketmaster and Live Nation’s failure to do so “suggests a degree of intentionality and/or oppression.” Ticketmaster and Live Nation have appealed the decision, arguing that the court’s failure to send the case to arbitration is “inexplicable” given the parties’ “clear intent.” Their appeal was initially made to the Ninth Circuit last November, but the filing was made public in February 2024.

The cautionary tale Ticketmaster and Live Nation’s bid for a mass arbitration standard tells is one of the importance of meeting the ever-changing standards of fairness and transparency in arbitration procedures. In the evolving era of entertainment, media, and emerging technologies, these issues will become more pertinent as consumers slowly shift how they perceive their role in these industries. This case has cast light on the potential problems that may be caused by arbitration service providers and the risks that may be presented without additional procedural guardrails. Broadly, companies and service providers need to ensure that their arbitration procedures are toeing the line between efficiency and cost-saving measures and ensuring that their consumers can argue their positions in a fair manner.

Furthermore, given the mounting monopoly concerns surrounding ticket vendors and the increasing visibility of fan exacerbation at the price of resale tickets and ticketing practices, the entertainment industry is gradually adopting a public interest-esque angle to anti-trust regulations. Though courts often uphold traditional arbitration clauses, there may be increasing  backlash over arbitration clauses in the entertainment industry in the coming years.