Ticketmaster has secured a partial victory against a sports event producer, which sued the ticketing industry giant for fraud, conversion and negligence in connection with a soccer match, which failed to produce the gate that the producer had hoped for.
Specifically, the court granted Ticketmaster’s motion for judgment on the pleadings, only as it related to the fraud claim.
Club Escapade 2000, Inc., the plaintiff, produced a soccer match held at the University of Texas El Paso’s Sun Bowl Stadium on March 25, 2009. The match featured Mexico City rivals Cruz Azul and Club America. Ticketmaster, which had a contract with UTEP that gave it the exclusive right to sell and distribute tickets for events held at Sun Bowl Stadium, sold the tickets to the match.
Just before the match, the plaintiff was informed that 20,000 to 40,000 were making their way to the stadium. However, as the match began, Ticketmaster reported that it had sold only 13,151 tickets. That official number, alleged the plaintiff, was at odds with Ticketmaster’s estimate before the match. Suspicious because there were no refunds or exchanges, the plaintiff hired an expert in digital imaging who examined the video footage of the soccer match. The expert, claimed the plaintiff, estimated that attendance was likely as high as 24,311.
About two years later, the plaintiff sued, claiming the defendant “misrepresented the total ticket sales and wrongfully kept the extra profits rather than forwarding them to the plaintiff.” The defendant moved to dismiss, leading to the instant opinion.
Tackling the conversion claim first, the court wrote that the plaintiff “must show that (1) the plaintiff possessed or was entitled to the property, (2) the defendant exercised dominion or control over the property and excluded the plaintiff, (3) the plaintiff demanded the return, and (4) the defendant refused to return the property. Arthur W. Tifford, PA v. Tandem Energy Corp., 562 F.3d 699, 705 (5th Cir. 2009); Waisath v. Lack’s Stores Inc., 474 S.W.2d 444, 447 (Tex. 1971).” The court found that the plaintiff met these requirements, keeping the conversion claim alive.
Ticketmaster had better success on the fraud claim.
“A claim for fraud requires greater factual specificity than an ordinary claim,” wrote the court, citing Fed. R. Civ. P. 9(b). “The plaintiff must: (1) specify the allegedly fraudulent statements; (2) identify the speaker; (3) state when and where the statements were made; (4) and explain why the statements were fraudulent. Williams v. WMX Techs., Inc., 112 F.3d 175, 177-78 (5th. Cir. 1997).
“Here, the plaintiff’s claim for fraud fails because the plaintiff pleaded no facts that show reliance. The plaintiff alleges that the defendant made a false statement when it reported that the ticket sales were only 13,151. The plaintiff alleges it then relied on that inaccurate number and was injured by receiving inadequate compensation. However, the plaintiff fails to provide any facts that suggest the plaintiff detrimentally acted or refrained from acting based on the defendant’s numbers.”
Ticketmaster, however, lost in its bid to defeat the plaintiff’s negligence claim.
“To establish a claim for negligence under Texas law,” wrote the court, “the plaintiff must show (1) the defendant owed the plaintiff a duty; (2) the defendant breached that duty; (3) the breach proximately caused the plaintiff’s injuries; and (4) as a result, plaintiff suffered damages. Kroger Co. v. Elwood, 197 S.W.3d 793, 794 (Tex. 2006); Greater Houston Transp. Co. v. Phillips, 801 S.W.2d 523, 525 (Tex. 1990).”
Addressing the question of duty, the court was reluctant to identify a duty between the plaintiff and the defendant. “That said, the contract between the defendant and UTEP likely already imposes the duty on the defendant to accurately account for all tickets purchased. The contract likely imposes this duty for the benefit of UTEP because without that provision, the defendant in theory could underreport the sales and keep the extra profits. Therefore, the additional cost of having the law extend this duty for the benefit of the plaintiff appears to be minimal or non-existent because the duty is likely already imposed for UTEP’s benefit.
“Moreover, the very business model of having one company sell the tickets, another company promote the event, a third entity own the facility, along with a variety of other entities contributing to the event requires that the ticket seller have an obligation to accurately report the ticket sales. This must be true because the money from the sales of tickets flows to the ticket seller, yet the cost of the event and the risk is largely born by the promoter, the venue, the talent, and others. Without a duty to accurately account, the ticket seller could again in theory underreport, and keep the extra profits to the detriment of all the others who worked on the event.”
The defendant gained some traction when it argued that “the economic-loss rule should bar recovery. But … with just the limited facts available from the pleadings, the court cannot conduct that analysis.” Thus, the court denied the defendant’s motion to dismiss with respect to the negligence claim.
Club Escapade 2000, Inc., v. Ticketmaster, L.L.C.,; W.D. Tex.; EP-11-CV-166-KC, 2011 U.S. Dist. LEXIS 136956; 11/29/11.
Attorneys of Record: (for plaintiff) Jim Clements, LEAD ATTORNEY, PRO HAC VICE, Law Office of Jim Clements, Austin, TX. (for defendant) John Lomax Anderson, Marisa Y. Ybarra, Carlos Rincon, Rincon Law Group, P.C., El Paso, TX.
