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COVID-19: Court Denies Motion for Class Certification in Ticket Refund Case

July 29, 2021

A federal district court in Florida denied a plaintiff’s motion for class certification in a putative class action asserting claims on behalf of ticket purchasers against Viagogo, a secondary ticket marketplace platform, for failing to provide refunds for canceled or postponed events. This is among the first decisions on motions for class certification in cases seeking reimbursement for events canceled due to COVID-19.

As discussed in our coverage of the surge of consumer class actions filed based on issues arising from the coronavirus (COVID-19) pandemic, a number of cases have been filed seeking reimbursement from entertainment venues, ticketing agencies, and other companies that failed to offer full or adequate refunds for COVID-19-related cancellations. In one such case, Judge James S. Moody, Jr. of the US District Court for the Middle District of Florida recently rejected certification of multiple classes of such consumers. The decision may be instructive for defendants across all sectors.

CASE BACKGROUND

On August 12, 2020, Lauren Shiflett filed a putative class action against Viagogo stemming from her purchase of tickets for a concert that was eventually canceled because of the pandemic. Although the band had announced on social media that the concert had been “cancelled,” Viagogo allegedly insisted that the show had been rescheduled and refused to issue a refund. Two days after the plaintiff filed her initial complaint, she received an email from Viagogo indicating that the concert had been canceled and stating that she would be issued a voucher for 125% of the ticket price within 72 hours, or, alternatively, that she could follow a link to request a full refund (the Survey Email). The plaintiff did not request a refund and, thus, received the voucher. She contends that Viagogo violated its terms and conditions by not timely providing a full refund and deceived customers by attempting to force them to accept vouchers as a substitute.

The plaintiff asserted claims for (1) breach of contract; (2) breach of implied contract; (3) violation of the Florida Deceptive and Unfair Trade Practice Act (FDUTPA); (4) conversion; and (5) unjust enrichment. The conversion claim was dismissed at the motion-to-dismiss stage.

ORDER DENYING MOTION FOR CLASS CERTIFICATION

The plaintiff requested certification of two nationwide classes consisting of (1) all individuals who purchased tickets on Viagogo and whose events were classified as “cancelled” by Viagogo but did not receive a refund within 30 days; and (2) all individuals who purchased tickets on Viagogo whose events did not occur within 90 days of the originally-scheduled date and that Viagogo did not classify as “cancelled.” The plaintiff also sought to certify a FDUTPA subclass of members of the two defined classes that resided in Florida. Excluded from the proposed classes were individuals who held tickets to a canceled event and thereafter “affirmatively indicated their preference to receive a voucher from Viagogo in lieu of a cash refund.”

On July 16, 2021, Judge Moody denied the plaintiff’s motion for class certification in its entirety, holding that the plaintiff failed to satisfy the requirements of both Rule 23(a) and Rule 23(b)(3).

In its Rule 23(a) analysis, the court found that the plaintiff failed to establish commonality and typicality because the plaintiff’s class definitions included many buyers who suffered no injury. Approximately 60%–70% of purchasers who received a Survey Email clicked the link to request a refund instead of a voucher, while approximately 30%–40% did not. The court rejected the plaintiff’s assumption that all buyers who accepted a voucher would have preferred a refund, persuaded by the defendant’s expert testimony that a voucher in the amount of 125% of the original purchase price may provide economic benefits that exceed a refund. According to the court, the record supported this view because some buyers had already used their vouchers. The court reasoned that individual inquiries would be required to determine if each proposed class member who accepted the voucher actually would have preferred a refund. It was “entirely speculative,” the court stated, to assume that other buyers would have preferred a refund, like the plaintiff. Moreover, some putative class members could have resold or gifted their tickets.

In its Rule 23(b)(3) analysis, the court held that predominance, superiority, and manageability were not satisfied. The court focused on the individualized questions related to damages, specifically questioning how a buyer who prefers a voucher rather than a refund, or how a buyer who prefers keeping a ticket for a postponed event in case it is rescheduled, could demonstrate recoverable damages. These individualized questions defeated both predominance and superiority.

Notably, based on the recent Eleventh Circuit ruling in Cherry v. Dometic Corp., 986 F. 3d 1296, 1302 (11th Cir. 2021), the court considered ascertainability as part of the manageability balancing test. The court concluded that the classes were not ascertainable, in part, because the class definitions would require an assessment of whether a purchaser “affirmatively indicated” her preference to receive a voucher, and the definitions did not explain what it means to express such an affirmation. The proposed class definitions also were based on arbitrary criteria untethered to any contractual or legal obligation, such as the failure to receive a refund within 30 days of cancellation and the failure to cancel an event for a 90-day period. For those reasons, the court held that the proposed classes were unmanageable.

KEY TAKEAWAYS

There are several key takeaways from this decision for entities that are considering their options with regard to reimbursing consumers for COVID-19-related cancellations or who are defending putative class action cases alleging claims in connection with those cancellations. For example:

  • Companies that provide vouchers for canceled events should consider offering customers the option of receiving a cash refund to ward off potential class claims. Even when a customer must take affirmative action to receive a cash refund, courts may infer that customers’ failure to do so represents an election to receive a voucher.
  • In defending against claims and class certification, defendants should consider attempting to develop a record regarding consumers’ preference for vouchers, including redemption rates and evidence of intent to use the voucher. This may include consumer surveys or having experts work with internal data.
  • In cases in which consumers were offered other choices of remedies for events canceled due to the pandemic, claims and class certification may be susceptible to attack based on class members’ unique preferences and individualized habits.

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CONTACTS

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Philadelphia
Franco A. Corrado
Ezra D. Church

Chicago
Scott T. Schutte

San Francisco
Molly Lane Moriarty
Christina Chen

New York
Bernard J. Garbutt III
Grant R. MacQueen

Boston
Charles L. Solomont
Jack Concannon

Miami
Brian M. Ercole
Matthew M. Papkin

London
Louise Skinner