On Monday, the Northern District of California issued a mixed ruling in the multidistrict litigation concerning StubHub Inc.’s refund policy for events affected by the COVID-19 pandemic. Judge Haywood S. Gilliam, Jr. considered whether the ticket seller’s arbitration agreement was valid and enforceable against subsets of the putative nationwide class.
Complaints reportedly streamed in after StubHub changed its refund policy in March 2020 in view of the pandemic, announcing that instead of a refund, it would issue a 120% credit when an event was cancelled. In their January 2021 consolidated amended complaint, the consumers alleged that StubHub “continues to advertise its FanProtect Guarantee, and has not clarified to users that StubHub no longer provides a money back guarantee.”
In February, StubHub moved to compel arbitration under the Federal Arbitration Agreement (FAA), arguing that all 50 ticket purchaser plaintiffs agreed to its user agreement and arbitration provision. The plaintiffs challenged their supposed assent to the agreement and its validity.
Judge Gilliam scrutinized StubHub’s website sign-in page and both it and the mobile application’s check-out screens to ascertain whether they provided “‘explicit textual notice that continued use will act as a manifestation of the user’s intent to be bound.’” As for both registered users and guests of StubHub’s website, the court found that StubHub clearly explained to them their sign-in or ticket purchase meant that they agreed to its terms.
As to mobile application users, representing 8 of the 50 plaintiffs, the court ruled that the plaintiffs had no constructive notice of the provision. Judge Gilliam explained that though it gave StubHub an opportunity to present screenshots or evidence for the sign-in and check-out processes on the mobile application, the defendant did not.
As to the plaintiffs’ procedural unconscionability argument, the ruling noted that StubHub’s user agreement applicable to 48 plaintiffs contained an opt-out provision, under which users could reject the arbitration provision and class waiver. Relying on Ninth Circuit precedent, the court held that an arbitration agreement is not adhesive if it presents the signatory with an opportunity to opt-out.
The court then overrode arguments that the arbitration agreement was overly complex for lay readers. “To the contrary, the arbitration provision explains in plain language what arbitration is and the general procedures that would apply to a dispute,” Judge Gilliam wrote.
The court also denied the motion as to the plaintiffs’ California consumer law causes of action pursuant to a state constitutional argument made under McGill v. Citibank N.A., rendering arbitration provisions “invalid and unenforceable if they purport to waive a plaintiff’s statutory right to seek public injunctive relief in any forum.”
Judge Gilliam rejected the defendants’ arguments and found that the plaintiffs “adequately established that their requested injunctive relief is designed to prevent future harm to members of the public and not just the specific named Plaintiffs or class members.”
As such, the California claims and the mobile application user plaintiffs will continue in the court system while the website user plaintiffs’ case is stayed pending arbitration. A case management conference is scheduled for December 7.
The plaintiffs are represented by Ahdoot & Wolfson PC and Wittels Mcinturff Palikovic, and StubHub by McDermott Will & Emery LLP.
