Ninth Circuit Hears Live Nation Ticketmaster Appeal on Its Rejected Mass Arbitration
The mandatory arbitration case of Heckman v. Live Nation Entertainment Inc., No. 23-55770 (9th Cir.), was argued Friday on whether Ticketmaster’s customers must take their complaints to arbitration instead of court. The case involves a class-action suit against concert promoter Live Nation and its subsidiary Ticketmaster. The group of four plaintiffs alleged that Live Nation and Ticketmaster have engaged in anti-competitive practices within the ticketing industry. The case isn’t a run-of-the-mill consumer protection issue--the plaintiffs filed antitrust claims.
Live Nation and Ticketmaster sought to enforce a rule requiring disputes to be resolved through arbitration instead of class-action suits. But Live Nation had changed its arbitration agreement to be administered by New Era ADR, an online company, instead of JAMS Inc., in the face of high numbers of pending claims. The plaintiffs challenged Ticketmaster’s New Era arbitration agreement. The California Central U. S. District Court ruled in favor of the plaintiffs, denying Live Nation’s motion to compel arbitration. Judge George Wu explained that the change of arbitration provider was not properly communicated to the customers affected by it and that the agreement was “procedurally unconscionable.” Heckman, et al. v. Live Nation Entertainment Inc., et al., 2:22-cv-00047-GW-GJS (Aug. 10, 2023) (available at https://bit.ly/3xeD2ir); see also Chris Cooke, "Judge declines to force customer-led dispute over Ticketmaster’s market dominance to arbitration," CMU (Aug. 14, 2023) (available at https://bit.ly/4eyV53I).
Live Nation appealed to the Ninth Circuit, which heard oral arguments last Friday.
Live Nation’s counsel, Roman Martinez, a Washington, D.C., partner in Latham & Watkins, started the company’s argument by reiterating that plaintiffs have always agreed to settle their disputes with Live Nation through arbitration. Live Nation explained that the plaintiffs in this case are now asking the court to nullify that agreement and force Live Nation into court.
Two reasons were outlined by Live Nation as to why the court should deny the plaintiffs’ request.
First, Live Nation maintained that the arbitration agreement was not unconscionable, and was enforceable under the Federal Arbitration Act. Second, Live Nation claimed that any problem with arbitration provider New Era is easily fixed by following the contractual agreement and sending the case to FairClaims Inc., or to a mutually agreed arbitrator. FairClaims’ original, traditional business was centered on an online dispute resolution platform for resolving through arbitration disputes valued at less than $25,000.
The plaintiffs' counsel, Warren Postman, managing partner at the Washington, D.C., office of Keller Postman, started the argument by reminding the court that New Era won a motion to compel arbitration before the same judge and counsel on an issue almost identical to the arbitrability issue before the Ninth Circuit that would have sent the cases to traditional arbitration at JAMS. The plaintiffs alleged that Live Nation saw “real tactical benefit” to gain from the New Era rules to the point that they were willing to risk facing a major anti-trust action.
The argument, Law360 noted, focused on the provisions of the New Era arbitration rules, echoing U.S. District Court Wu’s unconscionability concerns, with the Ninth Circuit panel skeptical of the ADR scheme. Craig Clough, “'Cockamamie' Live Nation Arbitration Rules Perplex 9th Circ.,” Law360 (June 14) (available at https://bit.ly/4epOZSZ). The article states that one of the judges questioned the provision allowing the arbitrator to decide questions of arbitrability, noting that “[r]uling against New Era could kill the company, putting the arbitrator out of a job. . . .”
For background on the case, see Lewis Kamb and Safia Samee Ali, "Ticketmaster’s ‘Kafkaesque’ arbitration process is rigged, lawyers say," NBC News (April 5) (available at https://bit.ly/4clKrLz).
The oral argument is available on video on the Ninth Circuit website here, and the audio can be found here.
* * *
The author, a law student at Brooklyn Law School, is a 2024 CPR Summer intern.
[END]