Consumer law - buy before you sue: standing to sue for ticket scalping requires purchase - Herman v. Admit One Ticket Agency LLC.

• Author: Hall, Marcus

Consumer Law--Buy Before You Sue: Standing to Sue for Ticket Scalping Requires Purchase--Herman v. Admit One Ticket Agency LLC, 912 N.E.2d 450 (Mass. 2009)

In Massachusetts, the legislature has long considered the act of reselling tickets for profit, or "ticket scalping," as harmful to the public and thus has kept the practice heavily regulated. (1) Accordingly, it is illegal for a ticket reseller to charge consumers a price in excess of two dollars above face value, unless the additional cost can be wholly attributable to service charges. (2) In Herman v. Admit One Ticket Agency LLC, (3) the Massachusetts Supreme Judicial Court (SJC) considered whether a potential buyer who received a quote for a ticket priced significantly above face value, has standing to sue the ticket reseller for violating the Anti-Scalping Statute, although no purchase took place. (4) The SJC concluded that a prospective buyer lacks standing, as he would be unable to show that he was ready, willing, and able to buy a ticket at a lawful price unless he had actually purchased a ticket. (5)

Admit One Ticket Agency LLC (Admit One) is a licensed business engaged in the resale of tickets to, inter alia, Red Sox baseball games. (6) Its business model consists of purchasing a large number of season tickets before the season begins, then reselling those tickets individually throughout the season at prices dictated by market demand. (7) Operating primarily online, Admit One's total revenue for 2005 was $1.78 million, fifteen percent of which was profit. (8)

On May 22, 2005, Colman Herman went to Admit One's business location and requested price quotes for loge section seats for the upcoming Red Sox games against the New York Yankees and the Baltimore Orioles. (9) While each ticket had a face value of approximately eighty-five dollars, Admit One offered to sell Herman tickets to the Yankees game for $500 per ticket, and tickets to the Orioles game for $165 per ticket. (10) Refusing to purchase tickets to either game at the prices quoted, Herman left the store and later sent a demand letter to Admit One's principal, claiming that the offered prices violated the Anti-Scalping Statute. (11) Admit One's counsel responded by denying the offer was a violation and contended that even if it was Herman lacked standing to seek any redress from Admit One, because he did not purchase any tickets. (12)

Herman brought suit against Admit One alleging that it engaged in unfair business practices under the Consumer Protection Act by violating the Anti-Scalping Statute when it offered to sell him tickets far in excess of their face value. (13) In a jury-waived trial, the Massachusetts District Court ruled in favor of Herman, noting that the legislative intent was to grant consumers the right to purchase tickets at a legally defined price. (14) On appeal, the Massachusetts Appellate Division of the District Court reversed, placing a heavy emphasis on the plain meaning of the statutory language. (15) Although the SJC recognized that offering tickets at prices inconsistent with the Anti-Scalping Statute is unfair and potentially actionable under the Consumer Protection Act, it held, pragmatically, that a plaintiff must purchase a ticket to obtain standing. (16)

"Ticket scalping" is the common name for the practice of reselling tickets to events at a price dictated by the marketplace, normally above the original advertised price or face value of a ticket. (17) The secondary ticket market of today is a multi-billion dollar industry operating in a fragmented legal landscape torn between the values of free-market capitalism and consumer protection. (18) Although judicial reactions to the practice of reselling tickets vary greatly in different parts of the country, scalping is currently against the law in Massachusetts. (19)

The legislature's stated purpose in controlling the sale of tickets to theaters or places of entertainment is to "safeguard[] the public against fraud extortion, exorbitant rates, and like abuses." (20) On the basis of this public policy, courts have been reluctant to grant exceptions to the ban on ticket scalping. (21) Nonetheless, a statutory amendment has provided an exception to the application of the monetary cap on resale initially imposed by the Anti-Scalping Statute, whereby ticket resellers may add certain service charges to the price of a ticket without violating the statute. (22) Despite the ban on ticket scalping, Massachusetts still has a thriving business market for the resale of tickets. (23)

In addition to the Anti-Scalping Statute, a plaintiff has two potential causes of action against an alleged ticket scalper under the Massachusetts Consumer Act. (24) In order to obtain standing under the Act, the SJC has held that a consumer must establish a causal connection between a deceptive act and the consumer's injury. (25) Although not applied in the context of ticket scalping, the notion of a sufficient "injury" to bring a claim under the Consumer Protection Act has expanded over time. (26)

In Herman v. Admit One Ticket Agency LLC, the SJC determined that a consumer must purchase a ticket in order to obtain standing to sue a reseller for an alleged violation of the Anti-Scalping Statute. (27)

Although the SJC conceded that offering to sell tickets at prices inconsistent with the Anti-Scalping Statute violates the legislative intent of preventing unfair acts or practices, the court held that a plaintiff would be unable to base a consumer protection claim on a perceived violation of the Anti-Scalping Statute unless he first purchased a ticket. (28) The court reasoned that the exceptions within the Anti-Scalping Statute, which permit ticket resellers to impose certain fees beyond the two-dollar resale cap, made it practically impossible for a consumer to prove himself ready, willing, and able to purchase a lawfully priced ticket. (29) Because of a potential consumer's inability to ascertain what constitutes a lawful price, and "to keep a proper perspective on the merits of the case," the SJC concluded that proof of standing under the Anti-Scalping Statute requires that a plaintiff establish a rebuttable presumption of a violation, which he cannot do unless he purchased a ticket. (30)

Even though the SJC correctly held that the practice of offering tickets at unlawful prices is inconsistent with current anti-scalping legislation, its decision to make standing dependent on a completed purchase is an illogical departure from traditional standing requirements and results in an outcome...