COVID-19 Litigation Against StubHub Split Between Arbitration and Courts

Due to the COVID-19 pandemic, the ticket marketplace StubHub changed its refund policy for cancelled events in March 2020. Rather than issuing a refund to a ticket buyer, StubHub decided to issue a 120 percent credit for tickets to a cancelled event. This diverged from the terms of the StubHub FanProtect Guarantee, which traditionally has contained a promise to provide “valid tickets to any event or your money back.”

A group of 56 plaintiffs sued StubHub at the start of 2021, arguing that StubHub had failed to make its users aware of the change to its policies and had continued to advertise the money back guarantee. StubHub asked the court to compel arbitration under the arbitration provision in its user agreement. The plaintiffs challenged the provision, arguing both that it was not valid and that they were not bound by it because they lacked adequate notice.

A federal judge in the Northern District of California ruled that the arbitration provision could be enforced with respect to certain claims by the 48 plaintiffs who had purchased tickets through the StubHub website. These users had an opportunity to opt out of the provision by sending a written opt-out notice to StubHub within 30 days of accepting the agreement. The judge also found that the arbitration provision was framed in plain language and clearly explained the substance and procedures of arbitration. After reviewing the website sign-in page and checkout screen, the judge found that StubHub provided both guests and registered users of the website with notice. StubHub adequately explained that signing in or purchasing tickets signified assent to the agreement.

On the other hand, the judge found that the eight plaintiffs who used the StubHub mobile app did not have adequate notice of the arbitration provision. The judge noted that StubHub failed to respond to requests to provide evidence regarding the sign-in and check-out processes on the app. Since notice was lacking, the provision could not be enforced against these plaintiffs. Their claims must continue through the court system, rather than shifting to arbitration.

The judge further rejected the StubHub motion to compel arbitration as it applied to consumer law claims under California law. Case law interpreting the California state constitution has provided that arbitration provisions may not be enforced if this would waive the statutory right of a plaintiff to seek public injunctive relief in any forum. The judge found that the StubHub users had shown that the injunctive relief that they sought would prevent future harm to the public in general, rather than just the named plaintiffs or the members of the class. Thus, the California consumer law claims also must continue to proceed through the courts.

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