Online Ticket Resellers Get Significant 47 USC 230 Win–Milgram v. Orbitz

By Eric Goldman

Milgram v. Orbitz Worldwide, LLC, ESX-C-142-09 (N.J. Super. Ct. Aug. 26, 2010)

Introduction

It’s been a relatively quiet year for 47 USC 230, in a good way. We’ve had a few minor aberrational rulings (Subway v. Quiznos, Cornelius v. DeLuca, Scott P v. Craigslist) but, for the most part, the immunity has been working exactly as we’d expect.

Given the quiet year, this could be the most interesting 47 USC 230 decision of 2010 so far. Orbitz and TicketNetwork (part of CheapTickets) get a decisive 230 win against the New Jersey attorney general for reselling third party tickets. In addition to reaching the right result, the opinion is thoughtfully drafted and well-structured. It would make a great teaching case. It’s worth reading.

Facts

This lawsuit relates to a private label site operated by CheapTickets (TicketNetwork) and branded by Orbitz. (Is it this site?). Orbitz specified the branding and design elements of the private label site. Orbitz also had the power to request content be removed from the site; to insert text and links for specific ticketed events; and to set prices of the offered tickets.

TicketNetwork hosted and operated the private label site as well as its own site. It sent confirming emails to buyers, processed the credit cards, and handled customer support inquiries. Perhaps most importantly, TicketNetwork handled the relations with third party ticket brokers who submitted offers to the site. It pre-approved brokers and attempted to factually verify the event information in submitted offers. TicketNetwork also provided consumers with various performance guarantees, including that the tickets would be valid and would arrive on time.

The specific offers giving rise to this lawsuit relate to Bruce Springsteen’s Fall 2009 concert tour, which made a multi-date stop at the now-demolished Giants’ stadium in East Rutherford, NJ. I imagine this event had significant local interest; the Boss is a native son of NJ, and his music has (for decades) addressed issues that relate to NJ. The NJ AG alleged that the sites offered 900 concert tickets 6 days before the official on-sale date; some of those tickets were not actually in the seller’s possession/control before being offered for sale; and a few of the tickets listed seat numbers that didn’t actually exist. The investigator purchased two tickets and confirmed that the seller pre-sold them before he/she had the tickets in hand; although band insiders and other dignitaries may have legitimately gotten ticket commitments before the on-sale date.

Legal Analysis

The state AG sued TicketNetwork and Orbitz for violations of NJ’s Consumer Fraud Act and Advertising Regulations. Orbitz and TicketNetwork defended on 47 USC 230 and other grounds.

The court does a textbook 3 pronged 230 analysis:

1) Orbitz and TicketNetwork were providers of interactive computer services.

2) The claim treats them as publishers/speakers. The NJ AG argued 230 does not apply because of the defendants’ “commercial” conduct–including charging service/administrative fees to ticket sellers. The court does not cite many of the cases upholding a publisher’s 230 eligibility for advertising (I last aggregated 230-and-advertising cases in this post), but citing the Jurin ruling, the court nevertheless makes it clear that web publishers aren’t liable for third party advertisements. The court says:

The fact that the defendants charge “service” or “administrative” fees is irrelevant to the CDA analysis. Plaintiffs seek to enjoin defendants from “advertising and selling concert tickets to consumers without actually having those tickets in their possession or control.” This conduct, however, conduct [sic] fits squarely within the CDA’s purview.

3) Orbitz and TicketNetwork don’t qualify as “information content providers.” Citing Donato v. Moldow (an NJ case from 2005 binding on the court here) and the Carafano case, the court rejects the NJ AG’s efforts to treat Orbitz and TicketNetwork as ICPs because they helped create/develop the content at issue. The court correctly says the potentially liability-creating content at issue (the offer of misleading/inaccurate tickets) came from third parties, and Orbitz/TicketNetwork did not make “a material, substantive contribution to the ticket listings” sufficient to change its third party character.

The court distinguishes Roommates.com by reading its holding narrowly. The court says “the linchpin of the Ninth Circuit’s decision was the fact that Roommates.com was actively participating in creating the objectionable content, i.e., by providing the illegal questions and by requiring users to answer them.” In contrast, here the defendants “do not supply the content to which plaintiffs object — the inaccurate or misleading ticket listings….Defendants do not ask ticket sellers to provide any information for any unlawful purpose, nor have they designed its [sic] Internet marketplace to violate any federal or state laws.” Yet another case where the court ultimately cites Roommates.com in siding with the defense.

The court also distinguishes a pretty similar case, NPS v. StubHub. The StubHub case arose in a very different context–the New England Patriots were trying to get control over secondary ticket resales–but both lawsuits involve a website allegedly violating the law by reselling tickets. This court first questions the StubHub court’s factual predicates and then rejects the case as “in contradiction with the spirit of Donato, and [thus it] cannot be relied upon by the court.”

The court’s conclusion is worth highlighting:

Defendants’ services help to create and maintain a vibrant, competitive, market for consumers looking to purchase travel and entertainment related products and services online. As a result, defendants’ services are consistent with the Congress’s intent to encourage commerce over the Internet and ensure interactive computer services are not held responsible for how third parties use their services. Accordingly, defendants’ motions for summary judgment are granted as plaintiffs’ state law claims are barred by the CDA as a matter of law.

A subtle but unmistakable rebuke to the state consumer watchdogs that they barked up the wrong tree.

Implications

There are a number of interesting implications of this ruling:

* Rare defeat for a consumer protection agency. Many consumer protection agencies (both state and federal) are in partial denial that 47 USC 230 might apply to their enforcement actions. This ruling reminds them that 230 is a powerful restriction on their enforcement territory.

Further, consumer protection agencies usually win if they get into court. Judges are very sympathetic to consumer protection issues when the government raises them. Here, the clear-thinking judge recognized that NJ’s enforcement action was not necessarily in the consumers’ best interests.

* NPS v. Stubhub rejected. We’ve had a very small number of post-Roommates.com plaintiff wins where Roommates.com was cited favorably for the plaintiff. The NPS v. StubHub case is one of them. Here, the court rejects that precedent, potentially limiting the case’s incursion into 230’s immunity.

* 230 protects e-commerce sites. Curiously, the court doesn’t mention FTC v. Accusearch, one of the other plaintiff wins post-Roommates.com, which had some factual resemblances. In the Accusearch case, the defendant resold pretexted phone records. Unlike Orbitz/TicketNetwork, Accusearch actually fulfilled the purchase. However, I’ve seen some discussion that the Accusearch case signals that e-commerce sites will get limited protection under 230. Here, TicketNetwork processed the payments and provided sales guarantees, yet the listings were still third party content. This case reinforces that e-commerce marketplaces still get 230 for third party commercial activity, even if the marketplace provides services to the vendors.

* Legal battles over online tickets aren’t going away. Online tickets have become a major subfield of cyberlaw. Consider some of the following posts we’ve made over the past 3 years:

– Online Sports Ticketing Exchange Wins Dismissal Under Website User Agreement — Duffy v. The Ticketreserve, Inc. (July 2010)

– NPS LLC v. StubHub, Inc. (April 2009)

– StubHub Wins 230 Dismissal in Anti-Scalping Case (Sept. 2008) [note: this one also involved Springsteen’s tour]

– StubHub Denied 230 in Hannah Montana Ticket Scalping Case–Hill v. StubHub (July 2008)

– Ticketmaster Wins Big Injunction in Hannah Montana Case, But Did the Public Interest Get Screwed?–Ticketmaster v. RMG (Oct. 2007)

We’ve also mentioned the various state legislation governing online ticket sales (mostly along the lines of squelching line-jumpers).

Perhaps 2010 being a down year for concerts will help take some of the legal edge off the battle for tickets. Otherwise, I expect more litigation over the online resale of hot tickets until we see one of two structural changes in the ticket sales market: (1) ticket buyers can’t transfer their tickets easily because they are just a database code attached to the initial buyer, or (2) tickets are sold via auction. Personally, I hope we see more of #2 rather than the continued litigation madness.

Conference Reminder

It’s still 6 months away, but we’ve opened registration for our 47 USC 230 blowout party on March 4. I anticipate a possible sell-out situation, so get your tickets while there are still plenty. We aren’t auctioning the tickets off, and I’m not sure if our anti-gaming devices will be strong enough to suppress robo-buyers if they sweep through.