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Andrea Weinstein v. Ebay

June 27, 2011

ANDREA WEINSTEIN, PLAINTIFF,
v.
EBAY, INC., STUBHUB, INC., NEW
YORK YANKEES PARTNERSHIP, AND JOHN DOE, DEFENDANTS.



The opinion of the court was delivered by: John F. Keenan, United States District Judge

Opinion and Order

Before the Court is Defendants eBay, Inc., StubHub, Inc., and the New York Yankees Partnership's motion to dismiss the Amended Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons that follow, the motion is granted.

I.Background

Defendant eBay operates an internet auction website. On January 10, 2007, eBay announced in a press release that it planned to acquire Defendant StubHub. (Am. Compl. ¶ 25). StubHub is an online marketplace for the resale of sporting event, concert, and theater tickets. StubHub itself does not own the tickets that are resold on its website. Instead, StubHub operates in what is known as the secondary ticket market, a market for third parties - ranging from ticket brokers to casual sellers who have extra tickets - to resell tickets they have purchased directly from a vendor. (Id. ¶¶ 20, 24). Unlike eBay, sellers on StubHub are anonymous. (Id.). StubHub does not function as an auction; instead, ticket sellers set their own prices for prospective buyers to accept or reject. The Amended Complaint alleges on information and belief that in 2007, StubHub, the Yankees, and Major League Baseball entered into an agreement making StubHub the exclusive resale marketplace for tickets to many Major League Baseball games, including Yankees games. (Id. ¶ 11).

The Yankees offer customers two options for purchasing baseball tickets on the internet. Customers can buy tickets directly from the Yankees online box office; with direct sales, customers can forego paper tickets in favor of electronic tickets issued by Ticketmaster Entertainment, the Yankees' exclusive primary ticket agent. (Id. ¶¶ 10, 12). The Yankees website also has a link to StubHub. (Id. ¶ 29). If, for example, a customer could not find the seats she wanted for sale directly from the Yankees online box office, she could go to StubHub and try to purchase them from another fan. Like Ticketmaster, StubHub can issue electronic tickets that the customer prints out and brings to the event venue. (Id. ¶ 12). Electronic tickets issued through StubHub do not reflect the face value (also known as the "established price") of the ticket. (Id. ¶ 38).

Plaintiff Andrea Weinstein alleges that on June 14, 2010, she went to the Yankees website looking for tickets to the July 25, 2010 Royals/Yankees game at Yankee Stadium. (Id. ¶ 28). Plaintiff attempted to purchase tickets directly from the Yankees, but was unsuccessful; she claims that the Yankees website redirected her to StubHub. (Id. ¶ 29). Plaintiff ultimately purchased six tickets in the Grandstand Outfield, Section 426, Row 5 from a seller (the John Doe Defendant) on StubHub. (Id. ¶ 30). She paid $33 per ticket, plus a $19.80 service fee and a $4.95 fee to receive the tickets electronically. (Id.). The electronic tickets did not reflect their face value, which Plaintiff alleges to be $20. (Id. ¶¶ 32-33, 60; Ex. A).

Plaintiff has amended her complaint once as of right. The gravamen of the Amended Complaint is that: (1) StubHub's online marketplace evades certain New York state licensing requirements governing ticket resellers; and (2) StubHub's failure to disclose a seller's identity and the face value of resold tickets is a deceptive practice in violation of New York law. Plaintiff proposes to represent a class composed of "[a]ll persons, exclusive of the Defendants and their employees, who purchased tickets to a New York Yankees game on StubHub.com from November 3, 2007 through such time in the future when the effects of Defendants' [alleged licensing violation] have ceased," (Id. ¶ 39), as well as a subclass of those purchasers who received their Yankees tickets electronically through StubHub. (Id. ¶ 40).

II.Discussion

On a Rule 12(b)(6) motion to dismiss, the court must test the "legal sufficiency of the complaint, taking its factual allegations to be true and drawing all reasonable inferences in the plaintiff's favor." Harrisv.Mills, 572 F.3d 66, 71 (2d Cir. 2009). Plaintiff mistakenly cites the Conley v. Gibson "no set of facts" standard in opposition to Defendants' motion to dismiss. However, the Supreme Court has made clear that "only a complaint that states a plausible claim for relief survives a motion to dismiss." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 (2009). "Determining whether a complaint states a plausible claim for relief [is] . . . a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id.

A.Standing to Sue Defendant eBay

Article III standing requires that a plaintiff: (1) suffer an injury-in-fact; (2) establish a causal connection between the injury and the conduct of the defendant; and (3) demonstrate the likelihood that the injury will be redressed by the requested relief. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). Neither Plaintiff nor any member of the proposed class purchased tickets through an eBay auction. The only factual allegation in the Amended Complaint involving eBay is that it acquired StubHub in 2007 in order to compete in the secondary ticket market. Thus, the sole basis for Plaintiff's standing to sue eBay is its parent/subsidiary relationship with StubHub.

It is well accepted that a parent corporation is not liable for the actions of its subsidiary absent facts sufficient to pierce the corporate veil. See, e.g., Billy v. Consol. Mach. Tool Corp., 412 N.E.2d 934, 941 (N.Y. 1980) ("It is true that, on occasion, the courts will disregard the separate legal personality of the corporation and assign liability to its owners . . . . But, such liability can never be predicated solely upon the fact of a parent corporation's ownership of a controlling interest in the shares of its subsidiary."). Under New York law, piercing the corporate veil requires a showing that: "(1) the owners exercised complete domination of the corporation in respect to the transaction attacked; and (2) that such domination was used to commit a fraud or wrong against the plaintiff which resulted in plaintiff's injury." Morris v. N.Y. State Dep't of Taxation & Fin., 623 N.E.2d 1157, 1160-61 (N.Y. 1993). As conceded at oral argument on this motion, Plaintiff has not pleaded facts to establish either of Morris's requirements. Factors tending to show domination, such as overlapping management, comingled assets, inadequate capitalization, and failure to conduct arms length transactions, are entirely absent from the Amended Complaint. See Wm. Passalacqua Builders, Inc. v. Resnick Developers South, Inc., 933 F.2d 131, 139 (2d Cir. 1991). Nor is there any allegation that eBay acquired or otherwise used StubHub to injure Plaintiff. Plaintiff has not stated a claim for piercing the corporate veil and thus has not established standing to sue StubHub's parent company. Nevertheless, the court will consider the viability of Plaintiff's claims against Defendant eBay in an abundance of caution.

B.New York Arts and Cultural Affairs Law Claim

Three sections of New York's Arts and Cultural Affairs Law ("ACAL") form the basis of Plaintiff's first claim. The ACAL grants a private right of action to any person injured by a violation of any of the three sections ...


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