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Duffy v. Ticketreserve

July 6, 2010

ANDREW DUFFY, GEORGE ADAMS, GREGG HARDER, CHRISTOPHER JACKMAN, JASON LEE, JOSE ORDAZ, VINCENT RUGGIERO, AND SOHAIL SHAH, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS
v.
THE TICKETRESERVE, INC., D/B/A INC., FIRSTDIBZ.COM, AN ILLINOIS CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Judge Rebecca R. Pallmeyer

MEMORANDUM OPINION AND ORDER

Defendant The Ticket Reserve, Inc., doing business as FirstDIBZ.com, operates an "online marketplace," in which internet users can buy, sell, and trade options to purchase tickets to sporting events, paying Defendant a fee for each transaction. Plaintiffs are customers of the online marketplace who allege that they were defrauded by other users in several exchanges in which they attempted to secure tickets to the 2009 SuperBowl. On behalf of themselves and those similarly situated, Plaintiffs assert various fraud and breach of contract claims against Defendant, who allegedly promised that the website was safe and secure. Defendant moves to dismiss all claims, asserting that they are barred by various provisions of the contract that Plaintiffs signed when they began using the website. For the reasons explained below, Defendant's motion to dismiss is granted in part and denied in part.

BACKGROUND

A. The Ticket Futures Market

For purposes of this motion, the court presumes that the allegations of Plaintiff's Amended Class-Action Complaint are true. Defendant The Ticket Reserve, Inc. ("TTR" or "FirstDIBZ") is a corporation organized under the laws of Illinois with its principal place of business in Illinois. TTR operates FirstDIBZ.com, a website marketplace in which consumers may reserve advance purchasing options for tickets to sporting events, concerts, and other occasions. (Compl. ¶ 14.) As the court understands it, the website essentially operates as a futures market for tickets; consumers may buy, sell, and trade purchasing options (dubbed "DIBZ" by the website) for future events on a speculative basis. According to the website's User Agreement, "a 'DIBZ' is an instrument which: (i) gives the holder the right to purchase a product or ticket to a known or possible DIBZ event, the occurrence of which may be known or is contingent upon one or more factors and (ii) obligates the holder to purchase the product or ticket if the event is scheduled to occur." (Id. at ¶ 18; Ex. A to Compl. at 1.) As an example, a confident fan of the Chicago Cubs could visit the website and purchase a "DIBZ" for Game 1 of the 2011 World Series at Wrigley Field. In the event that the Cubs overcome their decades-long World Series drought,*fn1 the happy fan would then be guaranteed the right to purchase the ticket for Game 1 at face value. (Compl. at ¶ 17.) Should the Cubs disappoint, the DIBZ-holder would receive nothing and would lose the money she paid for the DIBZ. (Id. at ¶ 16.)

The website offers two marketplaces in which customers may purchase DIBZ and, as the user agreement explains, TTR's "roles vary in each." (Id. at ¶ 19; Ex. A to Compl. at 2.) The first marketplace, referred to as the "FirstDIBZ-supplied" or the direct marketplace, allows purchasers to buy DIBZ directly from TTR. (Id.) For DIBZ purchased in the direct marketplace, "[TTR] stands responsible for the authenticity of Listings registered on FirstDIBZ." (Ex. A to Compl. at 2.) The second marketplace, referred to as the "uDIBZ" or the "consumer-supplied" marketplace, gives DIBZ-holders the option of buying, trading, or selling their DIBZ in exchanges with other website users. In the consumer-supplied marketplace, "FirstDIBZ acts as an exchange only in allowing users who want to buy Listings to find Listings from registered users who want to sell Listings." (Id.) Presumably, as the likelihood of a particular occurrence becomes more or less probable, the resale value of the DIBZ for that event would increase or decrease. Thus, if the Cubs advanced to the National League Championship Series in 2011, a DIBZ-holder who purchased her Cubs World Series DIBZ at the start of the season would be able to resell it to another Cubs fan for a substantial profit. In this way, the website serves as a market not only for fans who genuinely wish to attend sporting events but also for speculators seeking to make money based on predictions about the outcomes of sporting events.*fn2 The website generates its revenue both by selling DIBZ directly and by charging users a transaction fee for DIBZ sold or traded between users.

Before they engage in any transaction on the FirstDIBZ.com website, all customers are required to register by submitting their credit card information and agreeing to the FirstDIBZ.com User Agreement. (Compl. ¶ 21.) The User Agreement, as explained in more detail below, is a contract between TTR and every individual user of the website. (Id. at ¶ 22.) Each registered user is also provided with an "online wallet" account, in which funds representing the profits garnered by reselling DIBZ are stored. (Id. at ¶ 23-24.) Upon request, TTR permits customers to withdraw funds from their online wallet accounts in the form of a check payment. (Id. at ¶ 25.)

B. Plaintiffs' Contract and Fraud Claims

Plaintiffs are registered users of FirstDIBZ.com who, in January 2009, purchased and/or resold DIBZ for the 2009 SuperBowl in the consumer-supplied marketplace. (Compl. ¶ ¶ 1, 36-39, 45-49, 55-59, 62-67, 71-75, 83-86, 89-91, 97-100.)*fn3 The DIBZ transacted by Plaintiffs ultimately proved to be fraudulent--that is, the DIBZ that Plaintiffs purchased were sold by persons who did not actually own any options to purchase tickets for the 2009 SuperBowl and had no ability to obtain the promised tickets.*fn4 On behalf of themselves and those similarly situated, Plaintiffs now assert claims of breach of contract, breach of express and implied warranty, common law fraud, unjust enrichment, and violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1) against TTR.

Plaintiffs blame TTR for "allow[ing] fraudulent sellers to conduct transactions in the uDIBZ marketplace" by "fail[ing] to employ reasonable and available procedures and safeguards" to protect consumers from fraud. (Id. at ¶ 29-31.) TTR failed to adopt these (unidentified) reasonable protections, Plaintiffs allege, despite a previous incident in the fall of 2008 "when hundreds of fraudulent DIBZ for the Chicago Cubs and Chicago White Sox to advance to the World Series were sold on the uDIBZ marketplace." (Id. at ¶ 30.) According to Plaintiffs, TTR's failure to properly secure its website resulted in "hundreds and possibly thousands of fraudulent Super Bowl tickets to be sold on its online marketplace." (Id. at ¶ 34.) Because of the fraud, Plaintiffs were assertedly unable to retain the value for which they resold the DIBZ or to attend the SuperBowl. They estimate that the face value of actual SuperBowl tickets ranged from $800 to $1200 per ticket, with market values that were approximately two to three times face value for each ticket. (Id. at ¶ 33.)*fn5

When TTR ultimately learned that Plaintiffs had unwittingly purchased and resold fraudulent DIBZ for SuperBowl tickets, it notified Plaintiffs that all transactions involving the false DIBZ would be voided; TTR assured Plaintiffs they would be refunded the purchase price they had paid but advised Plaintiffs that they would be required to refund any proceeds derived from reselling the false DIBZ to other users. (Id. at ¶ ¶ 39, 49, 68.) On January 16, 2009, TTR further informed Plaintiffs that a "reparation plan" would be put into effect "in the hopes of making amends for the harms suffered." (Id. at ¶ ¶ 40. 50.) In reliance on TTR's promise to "mak[e] amends," Plaintiffs assert, they did not attempt to purchase replacement DIBZ for the SuperBowl (why Plaintiffs assumed the "reparation plan" would include replacement DIBZ is unexplained). On January 20, 2009--after the Arizona Cardinals and Pittsburgh Steelers had advanced to the SuperBowl--TTR announced that Plaintiffs "would not be offered a replacement DIBZ, [they] would lose [their] profit form the sale of [their] DIBZ, and [they] would not be given the option of purchasing Super Bowl tickets for face-value." (Id. at ¶ ¶ 42, 52.)

The complaint also alleges that TTR subsequently took possession of the money in Plaintiffs' online wallet accounts and has since refused repeated requests to release the funds. In support, Plaintiffs attach an e-mail, dated February 26, 2009 and signed by "The FirstDIBZ Team," which states that "as a result of the fraudulent activities... we have been unable to honor all withdrawals in a timely manner." (Ex. F. to Compl.) The e-mail goes on to explain that, in order to fund the withdrawals, TTR planned to "enter a recapitalization period" to "generate enough revenue to process our payment obligations to you." (Id.) "Since January 2009," Plaintiffs assert, "Defendant has wrongfully withheld hundreds of thousands of dollars from Plaintiffs and the proposed class members by not satisfying any requests for withdrawals of money from their 'online wallets.'" (Id. at ¶ 108.) Plaintiffs seek to assert class-action claims on behalf of all TTR customers who "(1) Were never refunded the price that they paid for the fraudulent DIBZ; (2) Were not provided the option to purchase a ticket to an event at face value or given the fair market value for a ticket to that event; (3) Were not able to retain profit earned from the resale of their DIBZ on the uDIBZ marketplace; and/or (4) Were not given the difference in price for a replacement DIBZ as of the date that Defendant revoked their DIBZ." (Id. at ¶ 109.)*fn6

C. The FirstDIBZ User Agreement

Plaintiffs' contractual claims arise out of the FirstDIBZ.com website User Agreement. (Id. at ¶ 22; Ex. A to Compl.) The agreement, binding on any user who has "comple[ed] the registration process and click[ed] the 'I AGREE' button," includes disclaimers and warranties as well as "additional terms and conditions that apply to you as a User."

In an "Introduction" section, the Agreement explains that the "products and the rights to attend events represented by tickets, DIBZ and other instruments are granted by the league, team, event sponsor, or any other parties responsible for underwriting and staging such event or providing such products." It states, further that " FirstDIBZ facilitates the purchase and sale of those products or rights but does not act as a principal to either the buyer or seller." The Introduction assures users that "our payment protocol protects a seller from buyer default," but warns that TTR is not responsible for cancellation or postponement of events, for "unauthorized use of a credit card, or credit card fraud," for the safety of fans who attend events using DIBZ, or "for other matters outside our control."

The Agreement goes on to describe the two marketplaces TTR operates, and TTR's role in each. With respect to the "FirstDIBZ-Supplied Marketplace," TTR stands responsible for the authenticity of Listings registered on FirstDIBZ. However, delivery of Listings is the sole responsibility of the underlying supplier. Where delivery of a Listing is refused, prevented, hindered, delayed or otherwise made impractical beyond FirstDlBZ's reasonable control and such occurrence cannot be overcome by reasonable diligence and without unusual expense, FirstDIBZ shall be excused from delivery and have the right, but not the obligation, to compensate the DIBZ holder at the close of the market with a payment equal to 125% of the average trading price of the last ten trades immediately prior to market closing for that DIBZ marketplace. Notwithstanding the foregoing, in no event shall FirstDlBZ refund a user less than what they paid for the DIBZ should delivery of the tickets not occur.

For the "Consumer-Supplied Marketplace," FirstDIBZ's role is more limited:

FirstDlBZ acts as an exchange only in allowing registered users who want to buy Listings to find listings from registered users who want to sell Listings. Those Sellers who list their items directly in our marketplace assume responsibility for all aspects of their Listings, including but not limited to, product descriptions, identification of quantities, pricing of goods and the fulfillment of confirmed orders. Where delivery of a Listing is refused, prevented, hindered, delayed or otherwise made impractical beyond FirstDIBZ's reasonable control and such occurrence cannot be overcome by reasonable diligence and without unusual expense, FirstDIBZ shall have the right, but not the obligation, to compensate the Buyer at the close of the market with a payment equal to 125% of the final trading price for that DIBZ marketplace. Moreover, FirstDIBZ has the right to charge Sellers' credit card the Termination Fee as such term is defined within the Seller Agreement.

The Agreement explains, further, that if the user has "a dispute with one or more parties or registered users," the user releases FirstDIBZ and its affiliates "from claims, demands and damages (actual and consequential) of every kind and nature, known and unknown, suspected and unsuspected, disclosed and undisclosed, arising out of or in any way connected with such dispute." The user further waives additional protections that could otherwise be available under California law. In capital letters, the Agreement announces that it is not ...


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