Former Ticketmaster customers who had signed onto a class-action lawsuit against Ticketmaster will have to wait a little while longer to receive their compensation, as a Los Angeles Superior Court judge has rejected a proposed settlement agreement between Ticketmaster and the class-action plaintiffs’ attorneys.
The lawsuit alleges that Ticketmaster’s use of excessive processing and shipping fees served to create a windfall for the company, and the expenses of procession and shipping were, in fact, significantly lower than the prices charged. According to the facts plead by the plaintiffs, from the years 1999-2011, Ticketmaster took in roughly $590 million in charged shipping and processing fees, with only $165 million used to off-set actual costs. Ticketmaster, the suit argues, profited to the tune of $425 million over the twelve year period.
The terms of the proposed settlement would have allowed the more than 50 million class members to receive coupons from Ticketmaster in the amount of $1.50 to offset the overcharges in processing fees, while a smaller subclass of plaintiffs would receive $5.00 vouchers for overcharges in shipping fees. Along with the coupons, Ticketmaster had also agreed to cover the plaintiffs’ attorneys’ fees. Under the proposed terms, Ticketmaster would be responsible for paying nearly $16.5 million to the plaintiffs’ team of attorneys— a number that has raised some eyebrows among class participants.
When the terms of the proposed settlement were initial announced in July of 2012, the large amount of attorneys’ fees caught the eye of many, including the US Chamber of Commerce. Comparing the relatively low amount each coupon will be redeemed for to the $16.5 million in attorneys’ fees, the Chamber of Commerce cried foul.
According to Variety, the lawsuit was filed prior to the enactment of the “Class Action Fairness Act,” which allows federal courts to use greater discretion in the awarding of attorneys’ fees and payouts to class members. Matthew Webb, senior VP of Legal Reform Policy for the Chamber, told Variety that courts traditionally do not look at the full picture of what settlements truly give to those affected. Rather, “They look at the fiction of what attorneys are putting together,” said Webb.
In this instance, the Los Angeles judge agreed with the Chamber Commerce in rejecting the proposed settlement agreement. Judge Kenneth Freeman wrote that “In the court’s opinion, this settlement represents a windfall for Ticketmaster and does not represent ‘real value’ for class members.” The proposed $1.50 vouchers were found to not accurately represent what each class member lost through their dealings with Ticketmaster.
In addition, the plaintiffs attempted to reach all of the estimated 50.7 million class members via their e-mail addresses and found nearly 20 percent of the addresses to no longer be active. Judge Freeman found the large number of undelivered e-mails to be “of significant concern to the court.”
With the settlement proposal rejected by the court, both sides must now go back to the negotiating table to see if a viable deal can be worked out. The next scheduled court date is a status conference set for October 15, 2012, at which the judge will hear if any progress has been made.