Saul Ewing Arnstein & Lehr LLP

It has been several months since consumers began filing lawsuits against various companies for failing to issue refunds or changing their refund policies after the COVID-19 pandemic began. 

However, issuing a refund may not be the end of these claims.  In fact, the U.S. District Court for the Central District of California recently held that a plaintiff’s request for pre-judgment interest saves the claim from mootness even when the defendant issued a refund for the ticket purchase.  Ajzenman v. Office of Commissioner of Baseball d/b/a Major League Baseball, No. 2:20-cv-03643 (C.D. Cal. Oct. 6, 2020). 

This lawsuit was brought by a group of individuals “who purchased MLB tickets either directly from teams or from ticket merchants” on behalf of themselves and two putative classes following the decision to postpone the 2020 MLB season due to COVID-19.  The court was persuaded by the plaintiffs’ argument “that even where a refund is accepted, where interest is not included in the offered refund, the refund cannot moot the underlying claims, because those Plaintiffs and consumers have not ‘actually receive[d] all of the relief he or [she] could receive on the claim through further litigation.”  In rendering its decision, the court relied on the holding of Van v. LLR, Inc., 962 F.3d 1160, 1162 (9th Cir. 2020), which “held that a plaintiff’s injury of under four dollars in interest was sufficient to support standing to bring a claim” because “plaintiff did not receive interest to account for her lost use of the money.”  The Ajzenman court stated that “[i]f prejudgment interest on money that was allegedly wrongfully taken or withheld is an injury that can support a claim for recovery, it can also save a claim from mootness.”

The court further held that the plaintiffs failed to allege claims under California’s Consumer Legal Remedies Act (“CLRA”) and California’s Unfair Competition Law (“UCL”).  They failed to state a claim under the CLRA because there were no allegations that the plaintiffs relied on the defendants’ alleged misrepresentation when they purchased their tickets.  The court noted that the plaintiffs would have to allege the date on which they purchased their tickets in order to determine if reliance on the misrepresentation was possible.  Because the plaintiffs did not sufficiently plead the CLRA claim and they did not identify any violation of a legislative policy, the UCL claims also failed.

Moreover, the court compelled the arbitration of some claims, but not other claims.  The question was whether the plaintiff had actual or constructive notice of the arbitration provision.  Arbitration was required where the plaintiff did not dispute entering into an agreement to arbitrate the issues at hand.  However, arbitration was not required in circumstances where the plaintiff, to find the arbitration provision, had to review “two sets of terms, both not hyperlinked but instead buried at the bottom of each page, had to navigate to different websites in order to find the terms, and had to complete a multi-step process of clicking non-obvious links.”  In other words, courts enforce arbitration clauses that are conspicuous and contained within the same webpage. 

In short, it may not be as simple as issuing refunds to consumers to prevent their claims from being recoverable.  If the consumers can assert a colorable claim for pre-judgment interest, then the claims may survive a motion to dismiss.  Further, to ensure arbitration of all claims, companies need to visibly place an arbitration clause on the webpage so that it is noticeable by a consumer when placing a purchase.