Image: March 7, 2023, screen capture of Ticketmaster notices re Taylor Swift tickets.
Live music fans have been dealt another setback in their war on ticket prices. The Ninth Circuit U.S. Court of Appeals has upheld a mandatory arbitration provision between fans of pop icon Taylor Swift and Live Nation Entertainment and its subsidiary, Ticketmaster, LLC, dismissing their proposed class action. Swifties, as her fans are known, had filed suit against the concert giant for allegedly using its market power to charge supra-competitive fees for tickets to the artist’s concerts (Oberstein v. Live Nation Entertainment, Inc., 9th Cir., No. 21-56200, C.D. Calif., No. 2:20-cv-03888-GW-GJS).
The court affirmed the decision of the U.S. District Court for the Central District of California which granted Live Nation’s motion to enforce an arbitration provision and class action waiver contained in the terms of use posted on the ticketing website. The ticket purchasers appealed claiming the arbitration provision was invalid because the companies failed to identify themselves and the arbitration provision was unenforceable because it failed to provide adequate notice of the agreement under California and Massachusetts law (which the court found to be effectively similar).
The Federal Arbitration Act requires disputes to be arbitrated if a valid arbitration agreement exists. The act limits a court’s review to whether a valid agreement exists and, if so, whether the agreement encompasses the dispute at issue. In other words, the act precludes a court from ruling on substantive matters.
[Note: The Oberstein case is separate from a new suit we recently discussed – Sterioff v. Live Nation Entertainment and Ticketmaster (No. 2:22-cv-9230, C.D. Calif., Western Div.) – brought on behalf of 11.6 million Swift fans who were denied tickets to the performer’s 2023 “The Eras Tour.” Undaunted by the companies’ string of court victories, the fans sued them for violating antitrust laws. The Oberstein opinion was handed down on Feb. 13. Eleven days later, the companies moved to dismiss or stay the Sterioff case on the same grounds. No ruling yet.]
Failure to Identify
For a contract to be binding in California, the parties must be identifiable. The ticket purchasers argued that Live Nation and Ticketmaster failed to do so, but the Ninth Circuit summarily rejected this argument because the terms of use refer to the companies’ common trade names – “Live Nation” and “Ticketmaster” – 16 times. The ticket purchasers cited case law that the court distinguished. In the cases cited, the agreements were invalid because the defendant-companies consistently used generic and undefined terms and failed to include identifiable information. Live Nation and Ticketmaster, the Ninth Circuit concluded, adequately identified themselves.
The ticket buyers also claimed the fact that a subsidiary, Live Nation Worldwide, Inc., owned and operated the “livenation.com” domain supported a finding of inadequate identification. Once again, the court was unpersuaded. The court affirmed the district court’s finding that the terms of use adequately identified the companies as parties to the agreement.
Failure to Provide Adequate Notice
The ticket purchasers also claimed they were not adequately notified of the agreement. Under both California and Massachusetts law, actual or constructive notice of the agreement is required for contract formation, and the parties must “manifest mutual assent.” In other words, the parties’ conduct must indicate their informed desire to be bound by the agreement. This is another instance where technological advances have forced courts to apply traditional contract principles to new types of agreements formed online.
Clickwrap versus Browsewrap – On one end of the spectrum of online contracts are “clickwrap” agreements, those that present website users with contract terms on a pop-up screen with checkboxes used to signal agreement. At the other end of the spectrum are “browsewrap” agreements, where a website offers terms that are disclosed through a hyperlink. In a browsewrap agreement, a user agrees to the terms simply by continuing to use the website.
Clickwrap agreements represent “the clearest manifestations of assent.” Where they are not used, courts consider surrounding circumstances. Often, as with Live Nation, online agreements fall in between the extremes, so courts examine mutual assent under an “objective-reasonableness” standard, the court explained.
The ticket purchasers argued the Massachusetts Supreme Judicial Court’s Ajeman v. Yahoo! opinion announced the appropriate test to determine whether an online contract has been formed. The Ninth Circuit was unpersuaded once again, noting that decision was not controlling. Rather, the Ninth Circuit found Massachusetts and California apply substantially similar rules, rendering a detailed choice of law analysis unnecessary.
To determine mutual assent when online agreements fall between clickwrap and browsewrap, courts must ask two questions: Did the website provide reasonably conspicuous notice of the contract terms? Did the consumer take some action, such as clicking a button or checking a box, that unambiguously indicated their desire to be bound by such terms?
Reasonably Conspicuous Notice – To satisfy the conspicuous notice requirement, notice must be displayed in a font size and format that a reasonable Internet user would see. The conspicuousness and placement of the “terms of use” hyperlink, additional notices given to users of the terms of use, and the website’s general designed are all considered.
The Ninth Circuit found Live Nation and Ticketmaster provided adequate notice at three independent stages – creation of an account, signing into an account, and completing a purchase. Webpage visitors are presented with a confirmation button at each stage with the corresponding text, “you agree to our Terms of Use.” The “Terms of Use” hyperlink stands out from surrounding text, appearing in bright blue font.
Attempting to rebut the adequacy of the notice, the consumer class cited case law in which the terms of use were severely less conspicuous, which only strengthened the reasonableness and conspicuous nature of Live Nation and Ticketmaster’s terms of use. The court wrote the cases cited by the purchasers only supported the district court’s finding that the ticket websites contained features sufficient to provide reasonably conspicuous notice.
Taking Action – To satisfy the affirmative assent requirement, the user must take some action that unambiguously manifested their assent to the agreement. This requirement is straightforward as applied to the ticket purchasers, the court wrote. It is uncontested that Live Nation and Ticketmaster’s notices explicitly alert the user that by creating an account, signing in, or purchasing a ticket, then proceeding to the next page, the user agrees to the terms. The Ninth Circuit found such notices indisputably satisfied the action requirement.
Accordingly, the court determined the terms, including the arbitration provision, were valid and binding, a decision that the consumer class has come to know, in the words of Ms. Swift, “All Too Well.”
As a Matter of Law
In a final attempt to invalidate the agreement, the ticket buyers argued the lower court erred in deciding constructive notice was established as a matter of law. The plaintiffs claimed the court relied on incomplete excerpts of the webpage and failed to consider expert and deposition testimony.
The court rejected this argument saying the webpages were sufficient because they contained all the features courts consider when determining constructive notice. The expert and deposition testimony, assuming it was as damning as the plaintiffs claimed, could not mitigate the uncontested existence of the features themselves.
The merger between Live Nation and Ticketmaster was permitted in 2010. Due to concerns over anticompetitive practices, the deal was subjected to extensive Department of Justice review, concluding in a 10-year consent decree prohibiting the companies from retaliating against venues for using competing ticketing services. Due to various violations of the decree, the DOJ was forced to strengthen it in early 2020 and extended it for another 5-1/2 years. Live Nation and Ticketmaster have since faced public scrutiny, a multitude of suits, and increased prohibitions from the DOJ. Yet, despite significant pushback from artists themselves, including concert powerhouse Bruce Springsteen, the late, great Tom Petty, and Taylor Swift herself, the entertainment conglomerates have successfully fought off antitrust litigation.
[Note: The Ninth Circuit’s ruling on arbitration clauses differs from the court’s June 28, 2019, opinion – discussed on the MoginRubin Blog – in which it found that litigation seeking injunctive relief could continue. The federal judges cited McGill v. Citibank (N.A., 2 Cal. 5th 945, 216 Cal. Rptr. 3d 627, 393 P.3d 85 (Cal. 2017)), in which the California Supreme Court held that a contract, under which companies using these agreements claim consumers waive their rights to seek public injunctive relief in any forum, is unenforceable under California law. The Ninth Circuit agreed with the district court that the Federal Arbitration Act does not preempt California's McGill rule, which states that a party can bind itself to arbitrate claims for damages, but it cannot be bound to arbitrate injunctions, which may serve the public interest. The 2019 Ninth Circuit opinion was entered in Blair v. Rent-A-Center, Inc. (2019 U.S. App. LEXIS 19476), which it then applied to McArdle v. AT&T Mobility LLC (2019 U.S. App. LEXIS 19495) and Tillage v. Comcast Corp. (2019 U.S. App. LEXIS 19496).]
