Elster v. Vivid Seats, Inc.

Background

Steve Elster brought the case in state court on behalf of himself and a proposed class of people who purchased tickets through Vivid Seats for events that were postponed or rescheduled during the pandemic. According to the opinion, Vivid Seats refunded tickets for events that were canceled outright but told purchasers that they would not receive refunds for events that were postponed or rescheduled. Elster sought relief under Section 22507 of the California Business and Professions Code.

Vivid Seats removed the case to federal court under the Class Action Fairness Act (CAFA). The motion to remand presented the question whether the case satisfied CAFA’s requirement that more than $5 million be in controversy.

Court’s Analysis

The court interpreted Section 22507 as requiring a reversal of the ticket transaction: the buyer would receive the ticket price back, and the ticket seller would receive the tickets. The statute could not be read to let a buyer keep the tickets while also receiving a full refund.

The court therefore held that the maximum recovery was the net value of the reversed transactions. The amount in controversy had to be calculated by subtracting the value of the tickets that buyers would return from the amounts they paid.

Vivid Seats submitted evidence that the gross value of the tickets was approximately $18 million. The court said that evidence could support a gross recovery above $5 million if at least 28% of class members chose refunds. But the court also had to reduce that amount by the value of the returned tickets. Vivid Seats supplied no estimate or other evidence from which the court could determine that value. The court concluded that determining the true amount in controversy on the existing record would be speculative.

The court rejected Vivid Seats’ argument that the value of returned tickets could not be considered because the complaint did not expressly mention returning them. The court said the statute itself required their return. It also rejected Vivid Seats’ argument that it was only an intermediary and would not receive returned tickets, explaining that the amount in controversy had to be measured under the complaint’s theory that Vivid Seats was the ticket seller.

Disposition

The court held that Section 22507 limited the amount at stake to the net value of the refunds after accounting for returned tickets. Because the record did not establish that CAFA’s amount-in-controversy requirement was satisfied, the court granted the motion to remand and remanded the case to the Superior Court of Contra Costa County.