Beginning in late 2023, plaintiffs have filed dozens of putative class action lawsuits against companies that sell tickets to entertainment venues and events in New York. These suits arise from allegations that companies are imposing “surprise” service fees in connection with tickets sold via venue websites. Recent amendments to New York Arts and Cultural Affairs Law (ACAL) § 25.07 require ticket sellers to disclose the total cost of each ticket, including all applicable fees, before the ticket is selected for purchase. Ticket sellers that do not comply with ACAL § 25.07 run the risk of class litigation under the statute, which provides for attorneys’ fees and statutory damages.
The Ticketing Requirements of ACAL § 25.07
Originally enacted in 1991, ACAL § 25.07 imposes various restrictions on ticket prices. For three decades, the statute was largely ignored by plaintiffs’ firms. On August 29, 2022, New York amended subsection four, which provides requirements regarding disclosure of the total ticket cost. Roughly a year later, plaintiff’s law firms began filing dozens of class actions alleging violations of ACAL § 25.07(4) against New York ticket sellers.
Who does it cover?
ACAL § 25.07(4)’s restrictions apply to “operators” of “place[s] of entertainment” and their agents. An “operator” is “any person who owns, operates, or controls a place of entertainment or who promotes or produces an entertainment.”1 Included in the definition of “place of entertainment” is “any privately or publicly owned and operated entertainment facility such as a theatre, stadium, arena, racetrack, museum, amusement park, or other place where performances, concerts, exhibits, athletic games or contests are held for which an entry fee is charged.”2 In addition, ACAL § 25.07(4) applies to “any licensee or other ticket reseller, or platform that facilitates the sale or resale of tickets.”
What does it prohibit?
ACAL § 25.07(4) requires ticket sellers to make two important disclosures in their ticket listings “prior to the ticket being selected for purchase.” First, ticket sellers must disclose the total cost of the ticket, inclusive of all ancillary fees that must be paid in order to purchase the ticket. Second, the ticket sellers must disclose what portion of this total cost represents “a service charge, or any other fee or surcharge to the purchaser.” Disclosures of ancillary fees must be 1) clear and conspicuous, 2) not false or misleading, and 3) not presented more prominently or in the same or larger size as the total price.
Relatedly, ACAL § 25.07(4) expressly prohibits ticket sellers from increasing the purchase price during the purchase process. The only exception is that ticket sellers may charge “reasonable fees for the delivery of non-electronic tickets,” provided such fees are disclosed before the seller accepts payment.
What damages are available?
ACAL § 25.33 provides a private right of action to any person who has been injured by an ACAL violation, including a violation of ACAL § 25.07(4). Under ACAL § 25.33, a plaintiff may “recover his or her actual damages or fifty dollars, whichever is greater” and reasonable attorneys’ fees. Plaintiffs may also seek injunctive relief.
Significant Questions
Because ACAL § 25.07(4) was amended just over a year ago, courts have yet to weigh in on two key areas of uncertainty under the law. These and other issues are subject to a number of pending motions to dismiss in New York federal and state courts.
When is a ticket “selected for purchase?”
ACAL § 25.07(4) requires ticket sellers to make disclosures “prior to the ticket being selected for purchase.” The New York Department of State’s Division of Licensing Services issued guidance suggesting these requirements are triggered as soon as potential purchaser visits a ticket selling platform and views the listings of tickets. Ticket sellers have argued that the tickets are not “selected for purchase” until the number of desired tickets has been selected and the customer proceeds to “checkout.” How court resolve such disputes could significantly affect the scope of potential liability.
What is the plaintiff’s injury?
Both federal law and New York state law require that a plaintiff have suffered an injury in fact to have standing to bring a lawsuit. In many instances, it is unclear how a plaintiff has been injured, if at all, by a violation of ACAL § 25.07(4). Some plaintiffs have suggested that delayed disclosure renders the whole ticketing fee illegal, but this argument is undermined by other parts of the statute. And it is not obvious that a momentary delay in fee disclosure hinders plaintiffs from comparison shopping in a concrete way.
Is federal or state court more favorable?
Currently, plaintiffs are filing ACAL § 25.07 class actions in both federal and state court. Each court has potential benefits and drawbacks. While both state and federal courts require plaintiffs to show standing to sue, federal courts have a more rigorous standing inquiry. On the other hand, New York civil procedure rules bar some types of damages that a plaintiff can seek in a state court class action. Most notably, a plaintiff cannot recover ACAL’s statutory damages of $50 per violation on a class-wide basis in New York state court. Instead, class damages are limited to actual damages which seem difficult to quantify or even identify in the context of an alleged ACAL violation.
Conclusion
Numerous other questions remain to be decided, including whether the statute applies to ticket purchasers who are not New York residents. Nonetheless, ACAL § 25.07(4) is clear that ticket sellers must disclose all ticketing fees before the ticket is selected for purchase. New York ticket sellers who are not yet in compliance should ensure their purchase process complies with ACAL § 25.07(4) to avoid being caught up in this spate of “gotcha” litigation.
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1 ACAL § 25.03(5).
2 Id. § 25.03(6).
