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Nicole Marschean | Crucial ticket learnings for MLB’s 2021 season

Foley & Lardner LLP's Nicole Marschean explores the legal hurdles MLB teams must look at surrounding their ticketing strategies in preparation for the 2021 season

Nicole Marschean

For most, 2020 has felt like a plate appearance against Clayton Kershaw – generally off-balance, filled with uncertainty, and with any progress made still likely to result in an out. By contrast, 2021 offers professional sports leagues and teams another opportunity to get back in the box and adjust (like any major league hitter) to the issues they faced in 2020. With fans tentatively set to return to MLB stadiums in 2021, one lingering 2020 issue will be how to address ticketing for games postponed or cancelled due to Covid-19.

Until 2020, inclement weather accounted for the bulk of MLB regular season postponements. Rarely did such postponements result in cancellations, let alone litigation. Shortly after MLB suspended operations last March, however, several ticketholders filed a class action lawsuit in California federal court seeking ticket refunds and other relief for games that were postponed due to the pandemic.

In September and October, the court issued rulings on various preliminary motions that offer several meaningful takeaways for professional sports leagues and teams as they prepare for the return of fans to the stands.

Takeaway No. 1: Don’t give ticketholders an extra out

In the action, several defendants, including MLB’s San Francisco Giants, filed motions to compel arbitration pursuant to the terms of use contained in their respective ticketing agreements. (Arbitration is often preferred over court as a dispute resolution forum because it offers confidential and quicker case disposition before an industry knowledgeable arbitrator selected by the parties.) The court granted each motion except for the one filed by the Giants.

The court’s issue with the Giants’ arbitration agreement was one of notice, not substance. Specifically, the court concluded that the digital ticketing process did not sufficiently provide a direct path for the average consumer to become aware of the Giants’ arbitration provision. To illustrate this point, a ticket purchaser would need to complete the following seven steps in order to access and review the arbitration provision:

Step #1: The purchaser accesses the club website and locates the “Special Events” page. (SFGiants.com/specialevents).

Step #2: On that page, the purchaser clicks the “Buy Tickets” button and is directed to a third-party ticketing platform, which displays in a pop-up window on the screen.

Step #3: In the pop-up window, the purchaser is prompted to select seats and enter personal and payment information.

Step #4: After entering in this information, the purchaser must click a button labelled “CONFIRM.” Directly above this button, there is an acknowledgment statement: “By clicking ‘Confirm,’ you agree to the privacy policy and terms of use.”

Step #5: The above “terms of use” language includes a hyperlink, which, when clicked, takes the purchaser to the third-party platform’s terms of use, which in turn incorporates by reference the terms of use of the “third-party event provider”.

Step #6: The purchaser would then have to understand that the club was the “third-party event provider” and search for the club’s terms of use.

Step #7: To access the club’s terms of use, the purchaser would need to exit the third-party purchase platform, return to the club website, and scroll to the bottom of the page and select the link to the “terms of use” which is where the ticket purchaser would find the club’s arbitration provision.

In the court’s view, these seven steps were too many to put the average ticket purchaser on constructive notice of the Giants’ arbitration agreement. Absent such notice, the club could not enforce the arbitration agreement against the ticket purchaser.

While this was just one federal court looking at just one digital ticket purchasing platform, the lesson here is that consumer-facing agreements and terms should be stated in plain language and presented in a tightly constructed, easily navigable digital interface (i.e., avoid complex and potentially confusing layers of interlinking webpages and digital policies).

In 2021, important contractual language in these ticketing terms and agreements may go beyond arbitration clauses to include, for example, contingencies for cancellations and postponements related to COVID-19 protocols. Clear representation of these terms to the fans will serve to decrease the potential for future disputes.

Takeaway No. 2: When it comes to ticket refunds, even a heads-up play may not help you escape litigation

Certain defendants also asserted a “no harm, no foul” argument based on the fact that the plaintiff ticket purchaser received a refund and/or credit soon after MLB announced its plans for an abridged 2020 season with games to be played without fans in attendance.

Based on recent precedent from the United States Court of Appeals for the Ninth Circuit, the court concluded that even minimal interest on the money eventually refunded to the ticket purchaser was adequate relief to give a plaintiff standing to sue based on a delayed refund. Indeed, just four dollars of interest was deemed enough. In other words, an untimely refund alone might not be enough to keep a ticketholder from pursuing a potential claim.

To put this case’s holding in context, at this early stage of litigation, the court would not yet had the opportunity to see or consider evidence relating to why any ticket refund was delayed. (Here, the reason of delay being the MLB’s assessment of whether, how, and when the 2020 season could resume in compliance with COVID-19 protocols.) Put simply, the court viewed that delays in refunding could support a ticketholder’s ability to bring this lawsuit. The court’s ruling did not address whether the claim was ultimately actionable or even winnable.

While there is much left to be decided in this case, there is a takeaway from this early ruling: While refunds may serve customer service purposes, they may not provide absolute protection from a legal claim. With this in mind, the ruling provides impetus for clubs to use prophylactic contract language that, among other contingencies, provides clear notice to the consumer of the refund policy and potential situations that might delay a refund.

Takeaway No. 3: Enter the season with a game plan

Less than 120 days remain before Opening Day (scheduled for April 1, 2021). MLB and its clubs still face many significant unknowns in 2021 including, but not limited to, the start and format of Spring Training, and whether the designated hitter will return to the National League. However, one thing that is certain is that a primary goal will be to return baseball fans safely to stadiums. The sports industry is most definitely better prepared to make that happen.

This transition will undoubtedly require new approaches in the face of the continuing pandemic. For instance, MLB and its clubs may not be able (or want) to release all regular season tickets prior to the start of the season and might consider some additional approaches.

Here are some key ticket sales strategies in view of the pandemic and for the longer term, as follows:

  • Incorporate Covid-19-specific contingencies at the point of purchase that require purchaser acknowledgement and include these same contingencies on the purchased tickets and organization websites;
  • Simplify digital format for online ticket purchasing platforms;
  • Release tickets periodically;
  • Require only a deposit instead of the full purchase price for high-priced tickets; and
  • Provide resources to ticket purchasers to assist them in preparing to attend live events and navigating their options upon a cancellation or postponement of the event.

Whatever changes leagues and clubs make to ticket sales policies in relation to the pandemic, ticketing processes should not be overlooked when MLB and its clubs continue their careful planning for 2021 and beyond.

Nicole M. Marschean is an associate attorney in Foley & Lardner LLP’s Business Litigation & Dispute Resolution Practice and member of the firm’s Sports & Entertainment Group.

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