In re Fyre Festival Litigation

Background

In a December 1, 2020 order, the court ordered a hearing under Rule 55(b)(2) to determine whether a default judgment against Billy McFarland was appropriate on the plaintiffs’ common-law fraud and fraud-like state-law claims. The court denied the balance of the motion for default judgment and denied certification of a proposed class consisting of people who purchased Fyre Festival tickets or made related travel arrangements.

The plaintiffs moved for reconsideration of both denials. In the alternative, they sought leave to amend the Second Consolidated Amended Complaint. Their reconsideration motion was filed three days after the deadline, but the court considered its merits.

Default judgment

The plaintiffs argued that Daniel Jung’s default-judgment motion had been made for the entire proposed class and that the court improperly considered deficiencies in the complaint after McFarland’s default. The court rejected both arguments. Although Jung was the sole identified movant, the court had treated the motion as made on behalf of all named plaintiffs. The court also explained that a default admits well-pleaded factual allegations but does not require acceptance of claims that fail to allege an actionable wrong or satisfy pleading standards.

The court concluded that considering the merits of the underlying claims was permissible when deciding whether to enter a default judgment. It had identified claims in the complaint that were not actionable, but it had also ordered a hearing concerning the common-law fraud and fraud-like state-law claims. The plaintiffs did not show clear error or manifest injustice. The court therefore denied reconsideration of its denial of default judgment as to the specified claims.

Class certification

The plaintiffs argued that Jung was a United States citizen and an adequate class representative and that the proposed class satisfied the requirements of typicality and predominance under Federal Rule of Civil Procedure 23. The court did not decide whether Jung was adequate because it found that the proposed class failed on typicality and predominance.

The complaint described marketing through multiple social-media accounts, celebrity accounts, videos, websites, and other materials. Different class members allegedly bought tickets at different times and relied on different statements from different people and sources. The complaint did not specify which statements each plaintiff heard, saw, or relied on, whether those statements were fraudulent rather than promotional exaggeration, or whether they could be attributed to McFarland.

The court held that these were individualized questions about liability, including reasonable reliance, rather than merely differences in damages. Because the plaintiffs had not shown that common questions predominated or that Jung’s claims were typical of the proposed class, the court denied reconsideration of the denial of class certification.

Leave to amend

The plaintiffs also sought to amend the operative complaint based on alleged new information from a televised interview with McFarland. The court noted that the amendment deadline in its scheduling order had expired and that the plaintiffs had already amended their complaint twice. Under Rules 15 and 16, amendment after the deadline required good cause, including diligence.

The court found no good cause. The plaintiffs offered only a conclusory assertion that the pleading defects could be fixed and did not attach a proposed amended complaint. The interview material concerned McFarland’s alleged lies to investors and did not specifically identify a fraudulent statement directed to ticket buyers. The court therefore denied the motion to amend the Second Consolidated Amended Complaint.

Disposition and jurisdiction

The court’s conclusion states that the plaintiffs’ motion for reconsideration or to amend the Second Consolidated Amended Complaint is DENIED. The court also rejected the suggestion that denying class certification eliminated subject-matter jurisdiction under the Class Action Fairness Act, explaining that jurisdictional facts are assessed when the case is removed and that the complaint appeared to plead class claims sufficient to invoke that jurisdiction.

The court ordered the named plaintiffs to submit a revised witness and exhibit list within 21 days for the hearing on the default issue and directed the Clerk to terminate the listed motions.