Bad Basketball at High Prices? Timberwolves Season Ticket Holders Seek to Enjoin the Team’s “Draconian” Resale Policies

by Patterson Belknap Webb & Tyler LLP

Minnesota Timberwolves season ticket holders unhappy with the team’s 20-45 record and hoping to resell their tickets have filed a putative class-action lawsuit over the team’s “draconian” ticketing policy.  Starting this season, the Timberwolves became the first professional team to completely eliminate paper tickets and move to a fully digital ticketing system.  This system, called Flash Seats, allows the team to impose unilateral restrictions on the sale and transfer of tickets.  As the team’s poor season drags on, the complaint alleges, it has imposed minimum resale price floors of between 75 to 90 percent of the tickets’ face value.  Flash Seats also charges a fee for every resale or transfer transaction, and the team receives a percentage of that fee.  Finding that secondary-market purchasers are unwilling to pay close-to-full price, plus fees, to watch a team with no hope of making the playoffs, season-ticket holders GLS Companies and James Mattson filed suit.

In addition to claims alleging breach of contract and violations of Minnesota’s consumer protection laws, the plaintiffs allege that the new policies violate the monopolization provisions of the Minnesota Antitrust Act, which is interpreted consistently with the federal antitrust laws.  Minn. Twins Pshp. v. State by Hatch, 592 N.W.2d 847, 851 (Minn. 1999).  They allege that the Timberwolves have monopolized the limited market in secondary sales of Timberwolves home game tickets.  The defendants are likely to argue that the plaintiffs have drawn the bounds of the relevant market too narrowly by excluding primary ticket sales, other teams, other sports, and even other forms of entertainment entirely.  Though the plaintiffs are stuck with their tickets for the season, prospective buyers are not so limited.  And courts may be on the lookout for plaintiffs attempting to “gerrymander [their] way to an antitrust victory” by defining the market too narrowly.  It’s My Party, Inc. v. Live Nation, Inc., 811 F.3d 676 (4th Cir. 2016).

The case may also present the first opportunity for courts to address minimum resale prices for sports tickets squarely, an issue coming to the fore as more teams adopt digital ticketing, as we noted in a previous post.  This litigation presents an even clearer question than some of the practices discussed in the New York Attorney General’s report.  Rather than just “pushing” fans to official resale platforms through, for example, delayed delivery of PDF versions of resold tickets, the Timberwolves’ Flash Seats system is the only option for reselling tickets.  Moreover, the Timberwolves are the sole defendant and the complaint raises only monopolization claims, not conspiracy claims.  The team is likely to argue that it has the right to “make sure that our tickets are not completely undervalued by the market,” as the team’s president Chris Wright stated in a discussion of the minimum prices.  After the Leegin decision, the team will be free to make these and other rule-of-reason arguments in support of its minimum resale prices.  It may also argue that its policy is simply a unilateral refusal to deal with any other company that would not maintain the minimum resale prices, in accordance with the Colgate doctrine.  In any event, the team’s in-court defense will need to outperform its on-the-court defense.

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Patterson Belknap Webb & Tyler LLP

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