Trial News

In an important victory for consumers, the Ninth Circuit Court of Appeals unanimously affirmed a federal district court’s refusal to compel arbitration of antitrust claims related to the purchase of concert tickets through promoter Live Nation via Ticketmaster’s website. (Heckman v. Live Nation Entertainment, Inc., No. 23-55770 (9th Cir. Oct. 28, 2024).)

The plaintiff class comprises consumers who purchased tickets via Ticketmaster’s website for live events promoted by Live Nation, which merged with Ticketmaster in 2010. The online ticket purchase agreement provided that any claims arising out of the purchase would be subject to arbitration through an arbitrator employed by a newly created entity—New Era ADR—using expedited arbitration procedures. When the class filed Sherman Act claims against Live Nation, the defendant moved to compel arbitration under the agreement. A California federal district court denied the motion, holding that a clause in the agreement giving the arbitrator authority to determine the agreement’s validity was procedurally and substantively unconscionable under state law.

Affirming, the Ninth Circuit held that the arbitration agreement’s delegation clause—and the agreement itself—were unconscionable and unenforceable under California law. The court said that the agreement constituted a contract of adhesion that deprived consumers of a meaningful choice—because Ticketmaster is the exclusive ticket seller for almost all live concerts in large venues, they could either accept Ticketmaster’s terms or be entirely foreclosed from purchasing tickets on the primary market. Accordingly, the court held, the agreement was procedurally unconscionable.

Turning to substantive unconscionability, the court cited case law noting that this pertains to the fairness of the agreement’s actual terms and whether they are overly harsh or one-sided. The court agreed with the district court that the four features of New Era’s rules support a finding of substantive unconscionability here. Specifically, the arbitration rules called for applying precedent from bellwether decisions to other claimants; contained procedural limitations, such as lack of a right to discovery; provided a limited right of appeal; and contained unfair arbitrator selection provisions. These render the delegation clause substantively unconscionable to a substantial degree, the court said. The court agreed with the lower court that this permeates all aspects of the agreement because its central purpose was unlawful and contrary to the public interest.

The court also held that the Federal Arbitration Act (FAA) does not preempt applying California’s unconscionability law to the agreement’s terms and rules because doing so relies on generally accepted principles that neither disfavor arbitration nor interfere with FAA objectives.

Attorneys Matt Wessler and Jessie Garland of Gupta Wessler LLP co-authored the amicus brief that AAJ and Public Justice filed in the case. “The Ninth Circuit’s rejection of Live Nation’s attempt to force consumers into biased arbitration procedures is an important reminder that claimants have a right to a neutral decision maker regardless of whether their claim proceeds in court or arbitration,” they said. “Companies’ attempts to create arbitral forms that eschew the necessary guardrails to ensure claimants’ due-process rights will not be permitted.”