Ticketmaster’s Attempt to Game Arbitration Services Fails-Heckman v. Live Nation

In an effort to curb mass arbitration, Ticketmaster sought to switch arbitration service providers to New Era ADR, including for past ticket purchases. New Era incorporated some defense-favorable provisions to its mass arbitration provision. The Ninth Circuit holds those provisions go too far and are procedurally and substantively unconscionable.

This opinion contains enough criticism to go around, especially with respect to New Era’s policies and practices. However, I’ll focus solely on the majority’s discussion of procedural unconscionability. The majority says:

Ticketmaster’s Terms state they may be changed without notice and changes apply retroactively. Ticketmaster changed the Terms on its website on July 2, 2021, requiring all website users to agree to arbitration under New Era’s Rules. Its website provides that a person merely browsing the website without purchasing a ticket agrees to Ticketmaster’s changed Terms. Binding consumers who merely browse a website to the terms specified in the website has been “consistently held . . . to be unenforceable, as individuals do not have inquiry notice.” [cites to Keebaugh, Nguyen, Douglas]

Ticketmaster’s Terms also permit unilateral modification of the Terms without prior notice. The Terms provide that Ticketmaster retains the power to “make changes to the Terms at any time” which would “be effective immediately when we post a revised version of the Terms on the Site.” Under California law, “oppression is even more onerous” when a “clause pegs both the scope and procedure of the arbitration to rules which might change.”

It’s not surprising the panel balks at Ticketmaster’s overreach. We’ve known for many years that: purported unilateral amendments without affirmative notice to consumers doesn’t fly; including a unilateral amendment provision in the TOS (even if it’s never used) puts the entire TOS in some legal jeopardy (see the uncited Blockbuster case); and “browsewraps” aren’t contracts at all. In addition to these long-standing aggressive formation practices by Ticketmaster, they went for the gusto picking an arbitration service provider that boosted its odds of wins in arbitration (a similar process ensnared HBO Max).

The court’s reaction is predictable if chilling. Rather than turning the analysis on formation issues, the court strikes down Ticketmaster’s efforts as unconscionable–and the weak formation practices exacerbate the unconscionability problem. In other words, this court’s response shows how corner-cutting formation practices can contribute to two separate points of failure (formation and unconscionability).

I note that Ticketmaster is a special defendant due to their decades-long efforts to stretch/hork online contract formation law. I still teach the 2007 Ticketmaster v. RMG decision in my Internet Law course, a terrible browsewrap decision. I confess to feeling some schadenfreude watching the 9th Circuit bounce Ticketmaster’s arguments here, considering how many times Ticketmaster has gotten an unwarranted free pass from standard contract formation requirements.

Case Citation: Heckman v. Live Nation Entertainment, Inc., No. 23-55770 (9th Cir. Oct. 28, 2024)

Some Prior Posts on Ticketmaster