EDWARD M. CHEN, District Judge.
Plaintiff Joseph Fabozzi filed suit against Stubhub, Inc. ("Stubhub"), and The Phillies, L.P. (the "Phillies"), alleging violations of Pennsylvania's ticket statute, 4 P.S. § 201 et seq., and California's Unfair Competition Law ("UCL), Cal. Bus. & Prof. Code § 17200 et seq. Pending before the Court are Defendants' motion to dismiss and Plaintiff's motion for leave to amend. After considering the parties' submissions and oral argument, and for the reasons set forth below, the Court
This case concerns the primary and secondary market for tickets to major league baseball games at the Phillies' Citizens Bank Park ("CBP"). First Amended Complaint ("FAC"), ¶ 1. The Phillies operate CBP and sell tickets to games at CBP directly through their exclusive primary ticket agent, Ticketmaster. Id. ¶¶ 9, 13. These tickets are printed with the established price and the "maximum premium" — "which shall not exceed twenty-five percent (25%) of the price of the ticket or the sum of five dollars ($5.00), whichever shall be more" — on the face of the ticket, as required by Pennsylvania's ticket statute. Id. ¶¶ 10-13; see 4 P.S. § 211. Some tickets to Phillies games are also sold and issued on the secondary market through Stubhub, "an online marketplace for the resale of sporting events (including Phillies' games at CBP), concert, and theater tickets." Id. ¶¶ 8, 14. "Unlike the tickets to Phillies' games at CBP issued by Ticketmaster, tickets to Phillies' games at CBP issued by StubHub are printed without the established price or the maximum premium on the ticket." Id. ¶ 14 (emphasis in original). The Phillies have authorized Stubhub to be its exclusive secondary ticket reseller,
Plaintiff Fabozzi, a New Jersey resident, sought tickets to a Philadelphia Phillies baseball game in May 2011. FAC ¶¶ 5, 44. He went to the Phillies website, on which he followed a hyperlink to Stubhub.com. Id. ¶ 45. At that time, Plaintiff was unaware that Stubhub operated in the secondary, rather than the primary, ticket market. Id. ¶ 46. Through Stubhub, Plaintiff purchased two tickets from an unknown seller to the Hall of Fame Club, Section 212, Row 1 and paid $75 for each ticket, plus a service fee of $15 and an eDelivery service fee of $5.20; thus, his total payment was $170.20. Id. ¶¶ 47-48. Plaintiff received electronic tickets issued by Stubhub, which did not contain the established price or the maximum premium. Id. ¶ 49. Stubhub's website also "did not conspicuously display the price list for the tickets purchased by Plaintiff and did not provide Plaintiff with a hyperlink to such a price list." Id. ¶ 50.
Plaintiff alleges that by failing to disclose the established price and maximum premium on Stubhub's reissued tickets, Defendants inflate demand for Phillies tickets and force consumers to pay higher ticket prices. Id. ¶ 71. Plaintiff alleges that "he would not have purchased such Tickets, or would not have done so at the price he paid, had he known the established price when he purchased the Tickets." Id. ¶ 52.
Plaintiff filed suit on behalf of a purported class of people who have purchased tickets to Phillies games at CBP through Stubhub, alleging that Defendants have violated Pennsylvania state law. First, Plaintiff alleges that Defendants violate 4 P.S. § 211, which provides:
The statute defines "owners" as "[a]ny person who owns, operates or controls a place of amusement or who promotes or produces an amusement, or any person who promotes or produces an amusement with the written contractual consent of the owner or operator of an amusement." § 201(6). Second, Plaintiff alleges that Stubhub violates 4 P.S. § 202(a) by failing to obtain a reseller's license. Third, Plaintiff alleges Stubhub violates 4 P.S. § 210(c), which "requires a licensee to conspicuously display a price list showing the established price and the price being charged by such licensee for every type of ticket which he is reselling." Id. ¶ 66. In addition to these direct causes of action, Plaintiff asserts a cause of action for unlawful and deceptive conduct under the California unfair competition law ("UCL").
Defendants filed a motion to dismiss the FAC for failure to state a claim. Docket No. 23. In response, Plaintiff filed a motion for leave to file his proposed Second Amended Complaint ("PSAC") combined with his opposition to the motion to dismiss. Docket No. 32. Both motions are currently pending.
Under Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss based on the failure to state a claim upon which relief may be granted. See Fed. R. Civ. P. 12(b)(6). A motion to dismiss based on Rule 12(b)(6) challenges the legal sufficiency of the claims alleged. See Parks Sch. of Bus. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). In considering such a motion, a court must take all allegations of material fact as true and construe them in the light most favorable to the nonmoving party, although "conclusory allegations of law and unwarranted inferences are insufficient to avoid a Rule 12(b)(6) dismissal." Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). While "a complaint need not contain detailed factual allegations . . . it must plead `enough facts to state a claim to relief that is plausible on its face.'" Id. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007). "The plausibility standard is not akin to a `probability requirement,' but it asks for more than sheer possibility that a defendant acted unlawfully." Id.
Furthermore, Plaintiff's claims under the UCL alleging deceptive or fraudulent conduct are subject to Rule 9(b)'s particularity requirement, which requires a plaintiff to identify the "who, what, when, and how" with sufficient specificity as to "give defendants notice of the particular misconduct so that they can defend against the charge and not just deny that they have done anything wrong." Vess v. Ciba-Geigy Corp., 317 F.3d 1097, 1105-06 (9th Cir.2003) (citations omitted).
Federal Rule of Civil Procedure 15 governs amendments to pleadings; it provides in relevant part that a "court should freely give leave [to] amend when justice so requires." Fed. R. Civ. P. 15(a). In general, "[f]ive factors are taken into account to assess the propriety of a motion for leave to amend: bad faith, undue delay, prejudice to the opposing party, futility of amendment, and whether the plaintiff has previously amended the complaint." Johnson v. Buckley, 356 F.3d 1067, 1077 (9th Cir. 2004). An amendment is futile if a proposed claim could not withstand a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). See Nordyke v. King, 644 F.3d 776, 788 n.12 (9th Cir. 2011) ("A proposed amended complaint is futile if it would be immediately `subject to dismissal.'") (quoting Steckman v. Hart Brewing, Inc., 143 F.3d 1293, 1298 (9th Cir. 1998) ("Although there is a general rule that parties are allowed to amend their pleadings, it does not extend to cases in which any amendment would be an exercise in futility, or where the amended complaint would also be subject to dismissal.") (internal citations omitted). "`Futility alone can justify the denial of a motion to amend.'" Johnson, 356 F.3d at 1077.
Defendants first argue that the Pennsylvania ticket statute does not provide for a private right of action. Indeed, the statute provides only for criminal penalties and revocation of licenses by the licensor. See 4 P.S. § 213(a)-(c). Plaintiff appears to concede as much, as he does not respond to this argument in his opposition and his PSAC removes the direct cause of action under Pennsylvania state law. Accordingly, the FAC's direct cause of action under the Pennsylvania ticket statute is
However, because Plaintiff also asserts a derivative UCL claim based on the statute,
Defendants next argue that the Pennsylvania ticket statute does not apply to internet resale transactions such as those that take place on Stubhub. They point to § 202(c) of the statute, which provides that "[t]he provisions of this act shall neither restrict nor otherwise apply to, nor make illegal, the resale, offering at resale or purchase of a ticket to any amusement or place of amusement through an Internet website nor serve as the means through which resales and purchases can be made." 4 P.S. § 202(c) (emphasis added). By its plain language, the statute thus exempts from the act (which includes 4 P.S. §§ 211, 202(a), and 210(c)), ticket resales through websites such as Stubhub from its requirements. Only internet resales are at issue in this case, as Plaintiff's FAC alleges that the Phillies complied with § 211 in the primary ticket sale market (i.e., the ticket issue by the Phillies contain the required pricing information). See FAC ¶ 13.
The exemption of § 202(c) does contain one caveat, but it does not help Plaintiff. Section 202(c) provides that a reseller who uses a website to sell his or her tickets need not be licensed as a reseller so long as the website operator meets certain enumerated requirements, such as a physical presence in the state or certificate of authority from the state, and a refund guarantee for consumers.
Furthermore, whether or not the licensing exception to the § 202(c) exemption applies to either Defendants is irrelevant to § 211's pricing requirements; § 211 does not depend on licensing status.
Plaintiff's FAC also alleges that Stubhub violates §§ 202(a)
Plaintiffs' opposition does not address any of Stubhub's contentions regarding licensing, nor does he dispute Stubhub's evidence submitted to demonstrate its compliance with § 202(c)'s requirements for website operators — requirements which excuse it from licensing. See Hochstadt Decl., Docket No. 24 (submitting information from the Stubhub website at Exhibits E-G regarding its office in Pennsylvania, its FanProtect Guarantee policy which appears to conform to the requirements in § 202(c)(2), and its certificate of authority from the Pennsylvania Department of State). Indeed, Plaintiff's PSAC drops all reference to these sections of the statute and omits any claim based on Stubhub's or third-party resellers' lack of a license. Plaintiff therefore appears to concede that he has failed to state a claim under these sections.
Finally, Plaintiff's FAC had included allegations that StubHub acted unlawfully by failing to disclose the identities of third-party sellers who sell tickets through its site. FAC ¶ 72. However, Plaintiff's proposed SAC drops this claim and as Defendants point out, the statute contains no requirement for such disclosure.
Because Plaintiff has alleged no violation of the Pennsylvania ticket statute, his claim under the UCL's unlawful prong necessarily fails. "Where a plaintiff cannot state a claim under the "borrowed" law, []he cannot state a UCL claim either." Dorado v. Shea Homes Ltd. Partnership, No. 1:11-cv-01027 OWW SKO, 2011 WL 3875626, at *19 (E.D. Cal. Aug. 31, 2011) (quoting Smith v. State Farm Mutual Automobile Ins. Co., 93 Cal.App.4th 700, 718 (2001)). Accordingly, the Court
In addition to his claim under the unlawful prong of the UCL, Plaintiff's FAC raises a "fraudulent" UCL claim. See FAC ¶ 80 ("The Defendants' acts and practices described above are likely to mislead a reasonable consumer acting reasonably under the circumstances."). "In order to state a cause of action under the fraud prong of the UCL a plaintiff need not show that he or others were actually deceived or confused by the conduct or business practice in question. Instead, it is only necessary to show that members of the public are likely to be deceived." Schnall v. Hertz Corp., 78 Cal.App.4th 1144, 1167 (2000) (internal citations and quotation marks omitted); see also In re Tobacco II Cases, 46 Cal.4th 298, 312 (2009) (stating same). "[T]his prong of the UCL is governed by the reasonable consumer test: a plaintiff may demonstrate a violation by show[ing] that [reasonable] members of the public are likely to be deceived." Rubio v. Capital One Bank, 613 F.3d 1195, 1204 (9th Cir. 2010).
Defendants argue that Plaintiff has failed to state a claim under the fraudulent prong for the following reasons: (1) Defendants were under no duty to disclose the ticket pricing information Plaintiff alleges they omitted from tickets sold through Stubhub; (2) Even assuming a duty to disclose, Stubhub's numerous disclosures on its website adequately provide consumers with the information Plaintiff alleges was concealed; and (3) Plaintiff's claims of deception are not plausible.
Plaintiff's opposition and PSAC appears to concede that he states no claim under the fraudulent prong. He does not address Defendants' arguments in his opposition; rather, he argues only that he has stated a claim under the unlawful and unfair prongs. In addition, his PSAC omits any reference to the fraudulent prong and no longer describes Defendants' conduct in terms of the likelihood of deceiving consumers. Rather, the PSAC asserts only unlawful and unfair claims. PSAC ¶¶ 52-67. Accordingly, Plaintiff appears to have waived such a claim.
Moreover, even if not waived, Plaintiff's UCL fraud claim lacks merit. First, as discussed above, the Pennsylvania statute upon which Plaintiff's allegations are based expressly exempts Defendants from the disclosure requirements Plaintiff alleges they violated. See 4 P.S. § 202(c). "[A] failure to disclose a fact one has no affirmative duty to disclose is [not] `likely to deceive' anyone within the meaning of the UCL." Berryman v. Merit Property Management, Inc., 152 Cal.App.4th 1544, 1557 (2007) (internal citations and quotation marks omitted); Buller v. Sutter Health, 160 Cal.App.4th 981, 987 (2008) (same); see also Weinstein v. eBay, Inc., No. 10 Civ. 8310(JFK), ___ F. Supp. 2d ____, 2011 WL 2555861, at *6 (S.D.N.Y. June 27, 2011) (dismissing deceptive practices claim under New York law based on identical fact pattern because Defendants had no duty to disclose the omitted ticket pricing information). Beyond the disclosure duty alleged under Pennsylvania law, Plaintiff has alleged no other basis for a duty to disclose ticket pricing information. Thus, Plaintiff has failed to state a claim under the fraudulent prong of the UCL.
Second, even assuming a duty to disclose, Stubhub has submitted numerous screenshots of its website demonstrating that it effectively discloses the information Plaintiff alleges it conceals. For example, at the bottom of each page, it discloses that "[t]icket prices are set by sellers and may differ from face value." See, e.g., Hochstadt Decl., Ex. H.1. Stubhub also requires buyers to acknowledge that they "may be ordering tickets above face value" before they place their order. Id. Ex. I.1; see also id. Ex. J (Buyer Q&A disclosing that tickets sold on Stubhub are "most likely" above face value, and informing consumers that they should check "an event's ticket prices with the venue before placing an order" if they are concerned about the price they will pay for tickets). The Phillies disclosed the relevant price information for Plaintiff's exact tickets, informing customers that such tickets are available only on a season ticket basis for $4,930 per seat. Id. Ex. C. Given these and other disclosures on Defendants' websites, Plaintiff's claim that reasonable consumers would be deceived and forced into paying higher prices than they otherwise would is not plausible. A reasonable consumer would understand, given the information plainly disclosed on Stubhub's website, that he was buying tickets from a third-party reseller and that, due to supply and demand, he may pay a higher price for his tickets than the seller paid to acquire them. As the court in Weinstein, 2011 WL 2555861 at *7 observed, "In order for StubHub's failure to print the face value on a reissued ticket to be deceptive, a buyer would have to believe that a reseller in possession of a limited resource (which is likely not available directly from the vendor) does not charge a premium for her goods. This line of reasoning attributes to consumers a level of stupidity that the Court cannot countenance and that is not actionable under [New York's consumer protection law]." (Internal citations and quotation marks omitted.) See also McCann v. Lucky Money, Inc., 129 Cal.App.4th 1382, 1395 (2005) ("Defendants are engaged in business for a profit. Their failure to disclose their own costs or profit margins is not, on its face, unfair."). That someone would attempt to make a profit on selling their tickets is not deceptive; it is standard business practice. Moreover, Plaintiff agreed to pay the purchase price he actually paid, so there was no deception in the price he was required to pay.
Accordingly, the Court
Although Plaintiff's FAC did not raise a claim under the unfair prong of the UCL, his PSAC does raise such a claim. PSAC ¶¶ 61-67. For conduct to be unfair under the UCL, "(1) [t]he consumer injury must be substantial; (2) the injury must not be outweighed by any countervailing benefits to consumers or competition; and (3) it must be an injury that consumers themselves could not reasonably have avoided." Kilgore v. KeyBank, 712 F.Supp.2d 939, 951 (N.D. Cal. 2010) (citing Camacho v. Auto. Club of S. Cal., 142 Cal.App.4th 1394, 1403 (2006)).
Plaintiff alleges that Defendants' business practices are unfair under the UCL because their failure to disclose the established price and maximum premium on tickets reissued by Stubhub creates "artificial demand" for re-sold tickets and "force[s] [consumers] to pay higher ticket prices to Phillies' games." PSAC ¶¶ 64-65. Defendants argue that Plaintiff has failed to state a claim under the unfair prong because: (1) Plaintiff fails to allege an injury; and (2) even assuming injury, it could have been reasonably avoided.
As for the first argument, Plaintiff fails to explain how the lack of disclosure of the original established price "forced" him to pay a higher price for his tickets upon resale. Since third-party sellers were free to charge more than face value for the tickets, disclosure of their profit margin does not appear to affect anyone's conduct. Although Plaintiff argues that Defendants' conduct creates "false demand" for the tickets, Opp. at 8, it is not clear how the demand for tickets is false merely because the requested price is higher than the face value and the seller does not disclose her profit. That a seller of goods may make a certain profit margin does not, on its own, indicate any false demand for the goods at that sale price. See Weinstein, 2011 WL 2555861 at *8 ("If sellers using StubHub's website successfully charge prices above face value, they can do so because of the law of supply and demand, not because StubHub allegedly withholds price information from consumers."). So long as purchasers of tickets are getting exactly what they paid for — genuine tickets — at a price they are willing to pay, it is hard to understand how such a transaction could be deemed unfair.
Moreover, as Defendants point out, the allegedly unfair conduct was Stubhub's failure to print pricing information on its reissued tickets; yet Plaintiff did not receive such reissued tickets until after he had agreed to and paid the purchase price. Reply at 8. Thus, it is difficult to see how omitting information from tickets could have caused the harm Plaintiff alleges. See In re Firearm Cases, 126 Cal.App.4th 959, 981 (2005) ("[A] UCL violation may [not] be established without a link between a defendant's business practice and the alleged harm."). Plaintiff bought the tickets before seeing them. Whether they contained the established price did not matter as Plaintiff had already made the purchase.
Furthermore, Stubhub's repeated disclosures informing consumers that they may be paying more than face value for their tickets further undermine Plaintiff's theory of harm. Defendants also point out that Plaintiff's actual purchase price did not exceed the maximum premium of his tickets on a per-ticket basis.
Therefore, it is difficult to see how disclosure of the established and maximum price would have had any effect on Plaintiff's conduct. Accordingly, Plaintiff has probably failed to plausibly allege injury as a result of Defendant's allegedly unfair conduct.
As to the second argument, Plaintiff fails to explain how the alleged harm could not have been reasonably avoided. Indeed, because of Stubhub's disclosures that consumers may pay above face value for tickets purchased through its site, any consumer who wanted to avoid paying more than face value could simply have looked at the established prices on the venue's website, as Stubhub recommends they do. See Harmon v. Hilton Group, No. C-11-03677 JCS, 2011 WL 5914004, at *10 (N.D. Cal. Nov. 28, 2011) ("[A]ny supposed `harm' could easily have been avoided by a reasonable consumer in light of the disclosures discussed above alerting hotel guests of the opportunity to receive a discount if the newspaper were declined.").
Accordingly, the Court
Finally, the Phillies argue that even assuming Plaintiff has stated a claim under some prong of the UCL, the UCL does not extend to the Phillies because it does not protect out-of-state plaintiffs from acts by out-of-state defendants. See Mot. at 19-20; Reply at 6-7. Cf. Sullivan v. Oracle Corp., 51 Cal.4th 1191 (2011) (finding that UCL did not apply where the decision to misclassify workers under the Fair Labor Standards Act took place in California, but the policy was implemented out-of-state and the employees were non-residents). In the instant case, Plaintiff does not dispute that both he and the Phillies are out-of-state parties, that the ticket sale at issue took place out of state, and that the third-party reseller was located out of state. Instead, he argues that the UCL applies to the Phillies because they entered into a contract with Stubhub and "agreed to allow Stubhub to reissue tickets to Phillies games without the established price or maximum premium from Stubhub's principal place of business located in California." Opp. at 11.
Plaintiff's invocation of the UCL against the Phillies appears tenuous in light of Sullivan. However, because Plaintiff has failed to state a claim under the UCL as against either Defendant, the Court need not resolve this question. Even assuming arguendo that the UCL applies to the Phillies, Plaintiff has failed to state a claim.
Plaintiff requests leave to file an SAC, explaining that he used his amendment as of right to file the FAC and correct a misspelling of his name, but did not make any substantive changes to his claims between the original complaint and the FAC. However, as discussed above, Plaintiff's proposed changes in his PSAC also fail to state a claim against Defendants. Accordingly, the Court
For the foregoing reasons, the Court
This Order disposes of Docket Nos. 23 and 32.
§ 202(c).
