COURT FILE NO.: 09-CV-371983CP

DATE: December 5, 2013

ONTARIO
SUPERIOR COURT OF JUSTICE

BETWEEN:

HENRYK KRAJEWSKI, NORMAN BRANDSMA and JEFFREY DUNBRACK

Plaintiffs

– and –

TNOW ENTERTAINMENT GROUP, INC., TICKETMASTER ENTERTAINMENT, INC., TICKETMASTER CANADA LTD. and PREMIUM INVENTORY, INC.

Defendants

Ward K. Branch and Luciana Brasil for the Plaintiffs
Stuart Svonkin for the Defendants

Proceeding under the Class Proceedings Act, 1992

HEARD: December 2, 2013

PERELL, J.

REASONS FOR DECISION

A. INTRODUCTION AND OVERVIEW

[1] Across Canada at retail outlets and through websites, Ticketmaster Canada Ltd. or Ticketmaster Canada LP sold tickets to entertainment events. In a proposed class action under the Class Proceedings Act, 1992. S.O. 1992, c. 6, for unjust enrichment and civil conspiracy, the Plaintiffs Norman Brandsma and Jeffrey Dunbrack allege that Ticketmaster breached s. 2(a) of the Ticket Speculation Act, which prohibits the sale of a ticket “at a higher price than that at which it was first issued.” (The Ticket Speculation Act is set out as Schedule “A” to these Reasons for Decision.). Section 2(a) of the Act states:

2. Every person who,

(a) being the holder of a ticket, sells or disposes of the ticket at a higher price than that at which it was first issued, or endeavours or offers so to do; …

is guilty of an offence and on conviction is liable to a fine of not more than $5,000.

[2] Any breach is denied by Ticketmaster, which brings a motion for summary judgment to have Messrs. Brandsma’s and Dunbrack’s action dismissed. Ticketmaster submits that s. 2(a) of the Ticket Speculation Act is designed to stop the scalping of tickets in the secondary market and does not apply to Messrs. Brandsma’s and Dunbrack’s purchases that were made in the primary market. In the alternative, if s. 2(a) of the Ticket Speculation Act applies to both the primary and the secondary market, Ticketmaster argues that it has not breached s. 2(a) of the Act. The precise argument is that there was not a sale “at a higher price than that at which [the ticket] was first issued.” Ticketmaster also submits that, in any event, Mr. Brandsma, who purchased tickets in Alberta for Alberta entertainment events, cannot advance a claim based on Ontario legislation.

[3] In my opinion, in the case at bar there are no genuine issues requiring a trial. For the reasons that follow, I disagree with Ticketmaster’s argument that Mr. Brandsma cannot rely on the Ticket Speculation Act, and I disagree with its argument that s. 2(a) of the Ticket Speculation Act applies only to secondary market sales. However, I agree with Ticketmaster’s argument that it did not breach s. 2(a) of the Ticket Speculation Act. I, therefore, grant Ticketmaster’s summary judgment motion.

B. EVIDENTIARY BACKGROUND

[4] Ticketmaster supported its motion for summary judgment with an affidavit from Tom Worrall, who is the Chairman of Ticketmaster Canada LP. He has been the senior business executive responsible for Ticketmaster’s operations since 1997. Mr. Worrall was extensively cross-examined on his affidavit. He answered every question asked of him; no questions were refused.

[5] The Plaintiffs resisted the summary judgment motion and relied on the affidavits of Mr. Brandsma and Mr. Dunbrack, both of whom were cross-examined.

[6] There is very little if any dispute about the facts associated with the major issue on this motion, which concerns the interpretation of s. 2(a) of the Ticket Speculation Act.

C. FACTUAL BACKGROUND

1. Ticketmaster’s Relationship with Those Offering Live Entertainment Events

[7] Across Canada, impresarios, artists, athletes, promoters, sports leagues, sports teams, the owners of stadiums, arenas, and concert halls organize and present concerts, sporting events, theatrical and musical performances, and live entertainment events to the public.

[8] For the purposes of this motion for summary judgment, it is accepted that pursuant to written agreements, Ticketmaster acts as a sales agent for event organizers presenting live entertainment events. Ticketmaster has over 700 different clients for whom it acts as a sales agent. These clients outsource in whole or in part the sale of their tickets for their live entertainment events.

[9] Ticketmaster Canada enters into discrete, individually-negotiated agreements with each of its clients. Under the agreements, the client agrees to make tickets for one or more events exclusively available for sale by Ticketmaster. The business terms and conditions differ from agreement to agreement.

[10] The tickets are not purchased by Ticketmaster, and it only acts as sales agent for the clients. The property in the tickets does not pass to Ticketmaster. The risk of tickets not being sold does not pass to Ticketmaster.

[11] Generally, clients do not make available all of the tickets for a particular event. Some tickets are reserved for radio station promotions, fan clubs, industry representatives, for credit card and other corporate promotional sales, and for friends and family of the performers.

[12] The amount paid by a purchaser for a ticket sold by Ticketmaster exclusive of any applicable fee(s) is not determined by Ticketmaster. As will appear from the discussion below, this is a particularly important point. It is a major part of the theory of the Plaintiffs’ case that entertainment tickets have a “base price” which they also describe in their Statement of Claim as the “original price inclusive of taxes.” This so-called base price is set by somebody other than Ticketmaster. Mr. Worrall’s evidence on his cross-examination was as follows:

Q.65 The base price of the ticket, of ticket X, is not going to change regardless of how the ticket is purchased; correct?

A. No.

Q.66 You mean I’m correct?

A. You are correct.

Q. 67. The setting up of the base price of the ticket, that is done in a process that does not involve Ticketmaster; right?

A. Correct, we typically do not - - that’s not our business. Our business is acting as an agent on behalf of the client to sell their tickets. The base price is germane to their business, in making profits, producing events.

[13] Apart from the so-called base price, the type and amount of fees (as described below) to be charged to ticket purchasers and the extent to which fees are shared between Ticketmaster and the client are negotiated terms of the agreement between Ticketmaster and each client. In some agreements, Ticketmaster charges the client a fixed amount for each ticket sold and the client unilaterally determines what fees are charged to purchasers and the amount of any such fees.

[14] Ticketmaster Canada has competitors, including TicketKing, Tickets.com, AudienceView, Tessitura, New Era Tickets, Ticket Atlantic, Select Your Tickets, Capital Tickets, and a large number of theatre companies, venues, and institutions that sell their own tickets. Its competitors generally charge fees similar to those described below.

2. The Distribution of Event Tickets

[15] When Ticketmaster has an agreement to make tickets for an event available, it creates an data base on its computer, a sort of electronic warehouse of unprinted tickets, Then, Ticketmaster offers tickets for sale to the public through an internet website (www.ticketmaster.ca or www.ticketmaster.com) and through retail outlets, both of which have access to the warehouse of tickets on Ticketmaster’s server computer.

[16] A person who purchases a ticket at a retail outlet is provided with the printed ticket at the time of purchase. A person who purchases a ticket on the Ticketmaster website to obtain the ticket may: (a) pick up the ticket at the box office; (b) pick up the ticket at a Ticketmaster retail outlet; (c) have the ticket sent by regular mail or by courier; or (d) have the ticket delivered electronically for printing on the purchaser’s computer.

[17] Tickets offered for sale through the website and at retail outlets are not printed in advance. They are printed upon the sale of the ticket. The Ticketmaster computer keeps track of which tickets are available for purchase.

[18] Before purchase, a purchaser may see a breakdown of the ticket price, which will include the so-called base price plus other charges. For some events, the purchaser of a ticket is charged a single amount that includes any and all fees, and no other or additional amounts are charged for service, delivery, printing, or facilities.

[19] When a person buys a ticket offered for sale by Ticketmaster, it will be the first time that the ticket has been sold. It is for this reason that Ticketmaster submits that the sales are in the primary market. As noted above, it is further its submission that the Ticket Speculation Act applies only to the secondary market sales of event tickets, but as I will explain below, I disagree with this particular submission.

[20] The Terms of Use for the Ticketmaster Website contains a choice of law and choice of venue clause, which states:

If you have a dispute and your dispute involves an event (or a ticket for an event) that is located in Canada, then the dispute will be governed by the laws of the Province of Ontario without regard to its conflict of laws provisions and you consent to personal jurisdiction, and agree to bring all actions, exclusively in courts located in Toronto, Ontario.

3. The Pricing of Tickets for Sale

[21] When a ticket is sold through the website, in addition to the so called base price, a purchaser may be charged one or more of the following types of fees: (1) a per-ticket facilities charge; (2) a per-ticket convenience charge; (3) an order processing fee; (4) a print-at-home fee; and (5) a delivery charge.

[22] When a ticket is sold at a retail outlet, in addition to the so-called base price, a purchaser may be charged one or more of the following types of fees: (1) a per-ticket facilities charge; and (2) a per-ticket convenience charge.

[23] For website and retail store sales, the facility charge is a fee charged by the client in respect of costs associated with the facility; for example, costs associated with renovations, upkeep, and maintenance of the theatre, arena, or concert hall. Ticketmaster never takes a share of the facility charge.

[24] For website and retail store sales, the convenience charge, which is sometimes referred to as a “service fee” or an “agency fee,” is a fee charged in respect of the the cost of providing tickets including, for example, the cost of creating and maintaining the ticketing system. The convenience charge sometimes also includes a credit card fee where the purchaser’s credit card company charges Ticketmaster a fee for processing a credit card transaction. The amount of any convenience charge that Ticketmaster may charge is negotiated between Ticketmaster and its client and the amounts collected in respect of such charges are usually shared between Ticketmaster and the client.

[25] For website sales, the order processing fee is a fee charged with respect to the processing and delivery of ticket orders made online. The amount of any order processing fee is negotiated by Ticketmaster and the client and the amounts collected in respect of such fees are usually shared between Ticketmaster and the client.

[26] For website sales, the print-at-home fee is sometimes charged when a purchaser chooses the print-at-home delivery option. The amount of this fee is negotiated by Ticketmaster and the client and the amounts collected in respect of such fees may be shared between Ticketmaster and the client.

[27] For website sales, the delivery charge is a charge when the tickets are delivered by a courier. The amount of any delivery charge is determined by Ticketmaster. This charge is not shared with the client.

[28] The price of tickets is inclusive of applicable sales tax. Ticketmaster’s clients and Ticketmaster are responsible for calculating and remitting the taxes collected to the tax authorities of the province in which the event is located.

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