Batson v. Live Nation Entm't, Inc.

• Decision Date: 25 March 2014
• Docket Number: No. 13–1560.,13–1560.
• Citation: 746 F.3d 827
• Parties: James BATSON, Plaintiff–Appellant, v. LIVE NATION ENTERTAINMENT, INC., et al., Defendants–Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

746 F.3d 827

James BATSON, Plaintiff–Appellant,

v.LIVE NATION ENTERTAINMENT, INC., et al., Defendants–Appellees.

No. 13–1560.

United States Court of Appeals, Seventh Circuit.

Argued Nov. 14, 2013.

Decided March 25, 2014.

Limitation Recognized

S.H.A. 815 ILCS 505/2

Mark T. Lavery, Attorney, Lavery Law Firm, Des Plaines, IL, Christopher V. Langone, Attorney, The Langone Law Firm, Ithaca, NY, for Plaintiff–Appellant.

Sean M. Berkowitz, Attorney, Latham & Watkins LLP, Chicago, IL, Sadik Harry Huseny, Attorney, Daniel Murray Wall, Attorney, Latham & Watkins LLP, San Francisco, CA, for Defendants–Appellees.

Before WOOD, Chief Judge, and CUDAHY and ROVNER, Circuit Judges.

WOOD, Chief Judge.

James Batson walked up to Live Nation's box office at the Charter One Pavilion in Chicago and purchased a non-refundable ticket to see O.A.R., a popular American rock band. Ticket in hand, he realized that the ticket price included a $9 parking fee for a spot he did not want. Believing that the bundled $9 fee was fundamentally unfair, he sued on behalf of himself and a proposed class.

I

Batson's original complaint alleged claims under federal antitrust and California unfair competition law. When Live Nation moved to dismiss that action, Batson responded with an amended complaint, which the district court accepted. The amended complaint dropped the federal antitrust and California unfair competition theories. Relying on the jurisdiction supplied by the Class Action Fairness Act, 28 U.S.C. § 1332(d)(1), Batson substituted a single claim that Live Nation had committed an unfair practice in violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act or Act), 815 ILCS 505/2. (Batson is a citizen of New York; each of the defendant corporations is incorporated in Delaware and has its principal place of business in California.) The amended complaint criticizes the 2010 merger between Live Nation and Ticketmaster (a transaction that was not blocked by the Department of Justice), but its primary target is Live Nation's tying of a parking charge to each concert ticket. Batson insists that the mandatory parking fee is unfair under the Consumer Fraud Act because it forces consumers to purchase the parking or forego the concert. Live Nation again moved to dismiss, arguing this time that Batson failed to state a claim under the Consumer Fraud Act under the standards set out by the Supreme Court of Illinois in Robinson v. Toyota Motor Credit Corp., 201 Ill.2d 403, 266 Ill.Dec. 879, 775 N.E.2d 951 (2002). The district court agreed and dismissed, and Batson now appeals. We affirm.

II

The facts underlying Batson's complaint are straightforward. On July 10, 2010, Batson purchased a ticket for a concert by O.A.R. from Live Nation's box office at the Charter One Pavilion in Chicago. After the transaction was complete, Batson spotted on the face of the ticket a notation that a $9 parking fee was included in the price. Indeed, it is undisputed that every single ticket sold for that concert reflected the same information: of the total price, $9 was designated as a parking fee, whether or not the buyer needed to park a car. Batson had no car to park; he had walked from downtown Chicago to the concert venue and had bought the ticket immediately before the concert. As far as we know, Batson attended the concert, but the sting of the mandatory parking fee stayed with him, leading to this lawsuit.

III

We review a district court's decision granting a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6)de novo. Stayart v. Yahoo! Inc., 623 F.3d 436, 438 (7th Cir.2010).

Illinois's Consumer Fraud Act is intended to protect consumers from unfair methods of competition and other unfair and deceptive business practices. See Robinson, 775 N.E.2d at 960. It is liberally construed to effectuate its purpose. Id. Batson chose to proceed under an unfairness analysis, as he was entitled to do: “A plaintiff may allege that conduct is unfair under [the Act] without alleging that the conduct is deceptive.” Siegel v. Shell Oil Co., 612 F.3d 932, 935 (7th Cir.2010) (citing Saunders v. Mich. Ave. Nat'l Bank, 278 Ill.App.3d 307, 214 Ill.Dec. 1036, 662 N.E.2d 602 (1996)).

In determining whether particular conduct is unfair, the Act dictates that “consideration shall be given to the interpretations of the Federal Trade Commission (FTC) and the federal courts relating to Section 5(a) of the Federal Trade Commission Act.” 815 ILCS 505/2; see Robinson, 775 N.E.2d at 960. The most important of those interpretations are the “Sperry factors,” which the FTC has published and the Supreme Court has cited with approval. Id. See Federal Trade Comm'n v. Sperry & Hutchinson Co., 405 U.S. 233, 92 S.Ct. 898, 31 L.Ed.2d 170 (1972). Illinois recognizes the Sperry test, and so we too will use it as our point of departure.

The Sperry factors ask whether the practice (1) offends public policy; (2) is immoral, unethical, oppressive, or unscrupulous; or (3) causes substantial injury to consumers. Sperry, 405 U.S. at 244 n. 5, 92 S.Ct. 898. See also Robinson, 775 N.E.2d at 961. The Illinois Supreme Court has confirmed that “all three of the criteria in Sperry do not need to be satisfied to support a finding of unfairness.” Robinson, 775 N.E.2d at 961; see People ex rel. Fahner v. Walsh, 122 Ill.App.3d 481, 484, 77 Ill.Dec. 691, 461 N.E.2d 78 (1984); Boyd v. U.S. Bank, N.A., 787 F.Supp.2d 747, 751 (N.D.Ill.2011) (citing additional Illinois state cases). Instead, citing Cheshire Mort. Serv., Inc. v. Montes, 223 Conn. 80, 612 A.2d 1130 (1992) with approval, the Illinois high court has held that “[a] practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three.” Robinson, 775 N.E.2d at 961 (citing Cheshire, 223 Conn. at 106, 612 A.2d 1130). Batson's claim must therefore satisfy at least one of these criteria, which we now consider.

1. Offense to Public Policy

Batson contends that Live Nation's practice of including the price of parking in the cost of the concert ticket violates a public policy against tying, a public policy in favor of musical diversity, and one in favor of the use of alternatives to cars as methods of transportation ( e.g., walking or cycling) to get to concerts. We look at each in turn.

Tying. Batson's first argument presumes that there is a general public policy against tying, which Live Nation is violating. He insists that he is not alleging that the arrangement violates either federal or state antitrust law. See Sherman Act § 1, 15 U.S.C. § 1; Clayton Act § 3, 15 U.S.C. § 14; 740 ILCS 10/1 et seq. He argues that a tie-in need not violate antitrust laws in order to offend a broader public policy against tying arrangements, at least for purposes of the Act. Live Nation counters that a tying arrangement cannot violate public policy for purposes of the Consumer Fraud Act if it does not violate federal antitrust laws. In the alternative, Live Nation asserts that Batson's tying argument fails because antitrust-based claims may not be brought at all under the Act, according to Laughlin v. Evanston Hosp., 133 Ill.2d 374, 140 Ill.Dec. 861, 550 N.E.2d 986 (1990).

Live Nation overreads Laughlin, in our view. The court there was concerned about the possibility that the Consumer Fraud Act might morph into an additional enforcement mechanism for all antitrust violations, on the theory that all such violations reflect unfair practices. It thus wrote that “[t]here is no indication that the legislature intended that the Consumer Fraud Act be an additional antitrust enforcement mechanism. The language of the Act shows that its reach was to be limited to conduct that defrauds or deceives consumers or others.” Id. at 993. The Illinois Appellate Court followed this rule when it refused to permit a Consumer Fraud Act claim to proceed in a case filed against an alleged potash cartel. See Gaebler v. N.M. Potash Corp., 285 Ill.App.3d 542, 221 Ill.Dec. 707, 676 N.E.2d 228, 230 (1996). See also Zekman v. Direct Am. Marketers, Inc., 182 Ill.2d 359, 231 Ill.Dec. 80, 695 N.E.2d 853, 859 (1998). It remains possible, however, that an unfair practice might be covered by both the antitrust law and the Consumer Fraud Act, and so we proceed on the basis of that assumption.

That brings us to the next question: whether, for purposes of the Consumer Fraud Act, a tying arrangement can offend a public policy against tying arrangements if it does not violate antitrust law. In this connection, it is worth recalling the developments in the antitrust law governing tying. At one time tying arrangements were thought to be so pernicious that they should be condemned as per se illegal, see, e.g., N. Pac. Ry. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 2 L.Ed.2d 545 (1958), citing Int'l Salt Co. v. United States, 332 U.S. 392, 68 S.Ct. 12, 92 L.Ed. 20 (1947). Today, the Supreme Court takes a much more benign view of tying, recognizing that it may be procompetitive or competitively neutral, and thus that it should be illegal only if there is “sufficient power in the tying product market to restrain competition in the market for the tied product....” Ill. Tool Works Inc. v. Indep. Ink, Inc., 547 U.S. 28, 36, 126 S.Ct. 1281, 164 L.Ed.2d 26 (2006). In light of that shift, we reject the idea that there is any undifferentiated policy against tying reflected in federal law, and to the extent that Illinois law follows suit, in its law.

Antitrust law has backed away from flat condemnation of tying arrangements because they are not always abusive, and when they are not, they are a legitimate method of competition. Nothing in the Consumer Fraud Act is designed to prohibit hard, but fair, competition. We can find no justification in Illinois law or policy for a rule that would ban a tying arrangement under the Consumer Fraud Act, even if that tying arrangement were found not to be anticompetitive for antitrust...