Last Friday, U.S. District Judge Haywood Gilliam declined to dismiss and compel to arbitration claims brought by StubHub mobile app customers, who demand refunds for games canceled or rescheduled because of COVID-19. The lawsuit, which the plaintiffs seek to be certified as a class action and is before an Oakland federal court, involves allegations that StubHub wrongfully altered its refund policies.
As the plaintiffs tell it, StubHub began to renege on a longstanding “FanProtect Guarantee” of full refunds after the pandemic led to widespread cancellations. The company is accused of modifying its policy to provide, in lieu of refunds, coupons for future StubHub purchases—an alleged practice the plaintiffs denounce as “bait and switch.” StubHub denies any wrongdoing and insists ticket-related legal claims must be sent to arbitration, which, unlike litigation, is conducted outside of public viewing.
Last November, Gilliam compelled arbitration for claims brought by customers of StubHub’s website. After clicking “checkout” on the website, the customer then receives a popup notifying them that by “purchasing or signing in,” the customer “agrees to our user agreement.” The user agreement is hyperlinked, and it contains an arbitration provision for disputes connected to tickets. The judge reasoned that website customers were provided “constructive notice,” meaning an opportunity to become aware of the arbitration provision.
It was a different story for mobile app customers, who insist they were denied notice of the user agreement at checkout. StubHub provided evidence that these customers were registered users, and that registration mandates acceptance of the user agreement. But Gilliam noted the users registered at different times between 2003 and 2020, when there were different versions of the user agreement. He added that it’s unclear whether they registered through the app or website, and what specific notice each received. For those reasons, last November he declined to compel arbitration.
StubHub then renewed its motion to compel arbitration for app customers and seek dismissal. For a second time, Judge Gilliam distinguished website customers from mobile app customers and refused to dismiss claims brought by the latter.
Among the reasons outlined by Gilliam, he found that StubHub “failed to provide any authority” for its argument that customers who sign into their online account after buying tickets should know that signing in subjects their earlier purchase to the user agreement. The judge also objected to the impact of signing in on future purchases. “StubHub,” the judge wrote, “fails to explain” why signing in months before a purchase would furnish customers with “notice that they were bound by the User Agreement for all future purchases.” He emphasized that at “the time they signed into their accounts on the website, they were not purchasing tickets.”
StubHub also argues that some of the plaintiffs didn’t suffer an injury the law is designed to remedy. One customer, the company noted, bought a ticket to an NFL game when the user agreement stated that StubHub could refund money or supply a credit in the amount of 120% of the original purchase price. StubHub elected to give the customer a credit, which StubHub contends remedied the customer.
Gilliam, however, stressed there is factual debate about whether this customer saw the user agreement. Even if he had, the judge reasoned, the customer might still have been harmed. The customer contends that StubHub changed the terms of the “FanProtect Guarantee,” which he argues was advertised as providing a money-back refund. The judge deemed the claim can’t be dismissed at this point.
The case could remain in litigation for a while. In December, Gilliam is scheduled to hold a hearing on whether the case should be certified as a class action on behalf of Americans who purchased tickets on StubHub to events that were canceled due to the pandemic. In the meantime, the parties could reach an out-of-court settlement.