A multi-million dollar settlement to a class action lawsuit over delivery fees that Ticketmaster reached late last year has been rejected by a California judge, setting the stage for a trial this fall.
Los Angeles Superior Court Judge Kenneth R. Freeman turned down the settlement reportedly because it was not big enough. Ticketmaster’s parent company Live Nation had set aside $22.3 million to pay for settlement costs and legal fees in the case, a move that resulted in the company having to lower its earnings figures for 2010.
Under the settlement, Ticketmaster planned to give aggrieved fans either a small cash payment or discount on future ticket purchases, according to the Los Angeles Times, but Judge Freeman found that the remedy “offered virtually no benefit to the class member.”
The rejection is a big blow to Ticketmaster, which is in the midst of a separate but similar class action lawsuit over fees and must now prepare for an October 5 trial that it did not anticipate. In addition, there is also the possibly that the company might have to pay more money if it loses the case.
A spokesperson for Ticketmaster and Live Nation did not return a message seeking comment.
In the rejected settlement class action, Ticketmaster was sued over its delivery fees, which totaled $14.50 to $25, because fans were allegedly misled into believing the fees were passed on to UPS or other carriers and were not revenue drivers for the ticketing company. Had the plaintiffs known that the fees were not passed on, they claimed they would have either not bought the tickets or decided on a different delivery method, such as the U.S. mail which did not carry a fee.
Ticketmaster has long stoked fans’ ire over the various fees it charges, some of which can end up costing 40 percent or more of the face value of the ticket. Most of these fees are negotiated with — and paid entirely to — venues, teams or promoters, and others are split between Ticketmaster and the other entity.
Delivery fees are often tacked on top of the sale at the end of the transaction. In a move to help hide the fees and assuage fan anger, Ticketmaster has become utilizing an “all-in” pricing scheme for some tickets, which offers fans a single price for a seat.
In a filing with the Securities and Exchange Commission disclosing the former settlement and the financial ramifications, Live Nation did not admit to any wrongdoing and wrote:
Ticketmaster and its parent, Live Nation Entertainment, Inc., have not acknowledged any violations of law or liability in connection with the matter, but have agreed to the settlement in order to eliminate the uncertainties and expense of further protracted litigation. Pursuant to the terms of the settlement, among other things, Ticketmaster will pay the fees of the claims administrator as well as the plaintiffs’ attorneys’ fees and certain costs that are approved by the Court and subject to a set maximum, and class members who meet certain conditions will be entitled to receive from Ticketmaster a cash payment and/or discounts off one or more future ticket purchases.
In addition to the rejected settlement, the case is part of another legal proceeding over a payment dispute between Ticketmaster and its insurance company, Illinois Union Insurance.
Ticketmaster is suing Illinois Union for about $4 million in legal fees Ticketmaster believes the insurer should cover as part of its $10 insurance policy. Illinois Union reportedly denied the claim in part because it believes the class action lawsuit is based on profit Ticketmaster should not be receiving.