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Law360 (April 3, 2020, 9:02 PM EDT) -- Online ticket reselling giant StubHub Inc. was hit with a class action in Wisconsin federal court alleging it is reneging on its guarantee to provide cash refunds as many are seeking to get their money back for the thousands of events canceled due to the COVID-19 pandemic.
The suit filed Thursday by Wisconsin resident Matthew McMillan said StubHub is "retroactively" backing out of its "longstanding 'FanProtect' guarantee ... in response to apparent liabilities it would incur stemming from the COVID-19 pandemic." The company is refusing to give consumers who purchased tickets cash refunds, instead merely promising vouchers for future ticket purchases, the suit alleged.
StubHub, a platform to buy and resell tickets to sports and other live entertainment events, has been hit hard by the mass cancellation of events due to the COVID-19 pandemic. The company has said more than 23,000 events have been canceled in the U.S. alone.
But McMillan's suit alleges that the company brought its financial crisis on itself through its own policy of paying ticket sellers before the event has occurred, despite the "entirely foreseeable scenario that world occurrences would cause the simultaneous cancellation of numerous public events."
"Instead of instituting responsible financial transaction policies, defendants made it their practice to pay ticket sellers before the event had occurred, exposing themselves to the possibility that they would be left holding the bag (or have to ignore their own guarantee and cheat their customers) if an event was canceled and they could not promptly collect from sellers," the suit said.
The San Francisco-headquartered StubHub said last month it was giving consumers the option to take a voucher valued at 120% of the purchase price that can be used in the next 12 months.
But the company changed course later that month announcing that the voucher was the new standard policy. StubHub president Sukhinder Singh Cassidy on March 30 noted that 70% of consumers had taken the voucher option.
Still, McMillan and many consumers want their money back and are entitled to it under the company's prior money-back guarantee, especially as many are facing financial hardship due to the pandemic, according to his suit.
"Remarkably, Ms. Cassidy had the temerity to explain that the theft of customers' money, which would be replaced only with unwanted coupons for unspecified events that may never happen given the uncertain state of the next 12 months, was being done for their 'convenience,'" the suit said.
The suit names StubHub, which was recently acquired from eBay by global ticket reseller Viagogo for $4 billion in cash, and its alleged subsidiary Last Minute Transaction Inc. with claims for breach of contract and violations of California false advertising laws.
"We understand fans are disappointed and concerned by these large-scale event cancellations," the company said in its March 30 statement.
A spokesman for StubHub told Law360 in an email Friday that they "will provide a refund to buyers living in jurisdictions where a refund is required (or for live events in those locations) if the buyer communicates to us that they prefer that option."
"Dumping promised refunds for expiring coupons during the time of greatest financial suffering in recent history is cruel and wrong, especially because people have no idea if they'll even be able to use the coupons. We don't know what the next 12 months are going to look like," said McMillan's attorney Nicholas Coulson of Little & Dubin PC.
"Through this action, we hope to provide people some small bit of relief during this uncertain time," he added.
McMillan is represented by Steven D. Liddle and Nicholas A. Coulson of Little & Dubin PC.
Counsel information for StubHub was not immediately available.
The case is McMillan v. Stubhub Inc. et al, case number 3:20-cv-00319, in the U.S. District Court for the Western District of Wisconsin.
--Editing by Jay Jackson Jr.
UPDATE: This story has been updated with a comment from StubHub.
For a reprint of this article, please contact reprints@law360.com.
