California Federal Court Partially Dismisses Ticket-Refund Case Brought Against Major League Baseball Based On COVID-19 Postponements

King & Spalding

On October 6, 2020, the Central District of California issued two orders in litigation stemming from COVID-19 ticket refunds. The first order dismissed claims against Major League Baseball (“MLB”) and certain out-of-state MLB teams for lack of personal jurisdiction and claims against certain other teams for lack of standing. The second order granted the Oakland A’s' motion to compel arbitration and the San Francisco Giants’ motion to dismiss for failure to state a claim.

  • In April 2020, eight individuals brought a putative class action against MLB and each of its 30 member teams, claiming they were entitled to refunds for tickets purchased for games that were postponed due to the COVID-19 pandemic. The plaintiffs asserted claims for violation of California’s consumer protection laws, conspiracy, and unjust enrichment. The defendants moved to dismiss.
  • In response to the motion, the court divided the plaintiffs into three groups: (1) those who purchased tickets to games scheduled to be hosted by the San Francisco Giants or the Oakland A’s' (the “Bay Area Teams”); (2) plaintiffs who purchased tickets for games to be played at teams’ stadiums outside of California (the “Out-of-State Clubs”); and (3) plaintiffs who purchased tickets for games to be played in California involving teams other than the Bay Area Teams (the “Remaining Defendants”). It then issued two orders.
  • The court’s first order addressed the Out-of-State Clubs and the Remaining Defendants.
    • The court held that it lacked personal jurisdiction over the Out-of-State Clubs and MLB, relying primarily on Senne v. Kansas City Royals Baseball Corp., 105 F. Supp. 3d 981 (N.D. Cal. 2015), in which the Northern District of California held that it could not exercise personal jurisdiction over an out-of-state baseball club based solely on the fact that some of the club’s scouts recruited and scouted players in California. Applying Senne, the court asked “but for the Out-of-State Clubs playing games in California, would Plaintiffs’ claims have arisen”? The court then held that because “none of the Out-of-State Club games that Plaintiffs bought tickets for was scheduled to be played in California, Plaintiffs’ injury would have arisen even if none of the Out-of-State Clubs had games scheduled in California for the entire season.” Thus, their claims did not “arise out of” forum-related contacts.
    • The court also held that the plaintiffs lacked standing to sue the Remaining Defendants because the plaintiffs did not purchase any tickets from them. The plaintiffs argued that their claims were “fairly traceable” to all defendants—even those they did not purchase tickets from—because defendants were engaged in a conspiracy: namely, a majority vote of teams was required to take any action related to the scheduling of games. Relying on Twombly, the court held that plaintiffs pled nothing more than parallel conduct that was “consistent with conspiracy but equally consistent with lawful conduct.” Without a viable conspiracy theory, plaintiffs could not satisfy the traceability requirement for Article III standing.
  • In the second order, the court addressed the claims against the Bay Area Teams, which had moved separately to dismiss or, in the alternative, to compel arbitration. The court granted the Oakland A’s’ motion to compel arbitration and stayed the plaintiff’s claims. The court denied the San Francisco Giants’ motion to compel arbitration because the plaintiff was not on constructive notice of the arbitration provision due to the convoluted series of steps he would have needed to take to view the terms and conditions when he purchased the tickets through a third-party ticket vendor. In support, the court relied primarily on the Ninth Circuit’s opinion in Wilson v. Huuuge, Inc., 944 F.3d 1212 (9th Cir. 2019), concerning conspicuousness requirements for online arbitration agreements, which was the lead feature in our January 2020 issue.
  • The court then granted the San Francisco Giants’ motion to dismiss for failure to state a claim. It held that the plaintiffs failed to state a claim under California’s CLRA because they failed to allege the date they purchased the tickets, explaining that in order to state a plausible claim for relief, the plaintiffs would need to allege that they purchased tickets on or after March 12, when the games were first postponed. Otherwise, they could not plausibly allege that they relied on the MLB commissioner’s March 12 announcement that games would merely be postponed, not canceled. The court also dismissed the plaintiffs’ claim under the unfairness prong of California’s UCL because they failed to allege that their claim was tethered to a specific policy. The court granted leave to amend the California consumer protection claims.
  • The case is Ajzenman v. Office of the Commissioner of Baseball d/b/a Major League Baseball, No. 2:20-cv-03643 (C.D. Cal.). Read the Central District of California’s orders here and here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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