In re Fyre Festival Litig.

• Citation: 399 F.Supp.3d 203
• Decision Date: 10 July 2019
• Docket Number: 17-cv-3296 (PKC)
• Parties: IN RE: FYRE FESTIVAL LITIGATION
• Court: U.S. District Court — Southern District of New York

399 F.Supp.3d 203

IN RE: FYRE FESTIVAL LITIGATION

17-cv-3296 (PKC)

United States District Court, S.D. New York.

Signed July 10, 2019

OPINION AND ORDER

CASTEL, U.S.D.J.

The Fyre Festival was promoted as a luxury music event to take place in the Bahamas on two consecutive weekends in April 2017. The event was cancelled on the morning of the first day, leaving some guests stranded without transportation or suitable accommodations. This Opinion and Order does not address whether Fyre Media, Inc. ("Fyre Media") breached its contractual commitments to guests or whether it perpetrated a fraud on anyone. The issue on the pending motions is whether plaintiffs have stated claims for relief against two individuals affiliated with Fyre Media and the Fyre Festival, defendants Jeffrey Atkins, known as Ja-Rule, and Grant Margolin.

Plaintiffs Daniel Jung, Lauren Mainero, Matthew Herlihy, Anthony Lauriello, Ritu Jutla, Hallie Wilson, and Zenovia Pittas

bring this diversity action alleging theories of fraud, negligent misrepresentation, negligence, breach of contract, unjust enrichment, and related claims, as well as state statutory claims under the laws of New York, N.Y. Gen. Bus. Law § 349, California, Cal. Bus. & Prof. Code §§ 17200 et seq., 17500 et seq., Cal. Civil Code § 1750 et seq., Colorado, Col. Rev. Stat. § 6-1-102(6) et seq., and Illinois, Ill. Comp. Stat. §§ 505 et seq., 510/2 et seq. They seek to pursue their claims on behalf of a class of similarly situated persons.

Defendants Margolin and Atkins now separately move to dismiss all claims asserted against them in the Second Consolidated Amended Complaint ("SCAC") pursuant to Rule 12(b)(6), Fed. R. Civ. P. For reasons to be explained, the motions will be granted.

BACKGROUND

The following facts are taken from the plaintiffs' SCAC and exhibits attached to the SCAC and are construed in the light most favorable to the plaintiffs. Sung Cho v. City of New York, 910 F.3d 639, 642 n.1 (2d Cir. 2018).

A. The Parties

Plaintiffs are ticket buyers or attendees of the Fyre Festival who are domiciled in California, Colorado, New York, Illinois, and the United Kingdom. (SCAC ¶¶21–28.) They seek to represent a world-wide class of ticketholders and attendees. (Id. ¶116.)¹

Plaintiffs allege that Atkins was founder, owner, director and a corporate officer of Fyre Media, directed the policies of Fyre Media, and was responsible for overall business strategy. (Id. ¶¶33, 35, 58.) Because of his status as a social media influencer with hundreds of thousands of followers, they allege that the public viewed representations about the Fyre Festival as representations coming directly from Atkins. (Id. ¶¶59, 61.)

They allege that Margolin was chief marketing officer for the Fyre Festival and an employee and officer of Fyre Media who organized, marketed, promoted and advertised the festival. (Id. ¶34.) William McFarland, a non-moving defendant, was founder, owner, director, and CEO of Fyre Media, the other non-moving defendant. (Id. ¶30.)

B. Defendants Advertise the Fyre Festival

Defendants began promoting the Fyre Festival in December 2016 as a luxury musical festival to take place on a private island in the Bahamas and feature "top notch" food, lodging, and entertainment. (Id. ¶¶1, 46–47.) Defendants touted the event as featuring, among other things, musical performances by well-known bands, boating, jet-skiing, morning yoga, guided meditation, massages, "sound healing," "chill-out sessions," a Bahamanian parade, a pig roast, "[f]amous models on yachts," a stopover on a private island "to meet [ ] pet sharks," "incredible beaches," private sandbars, and scuba diving. (Id. ¶¶51, 67.) Defendants gained social media attention for the event by having influential personalities post an orange tile to their social media accounts to announce the Fyre Festival. (Id. ¶¶49–50.) They partnered with Kendall Jenner, an online influencer, to promote the Festival. (Id. ¶¶48, 52.) Her social media post announcing the event featured models walking along a white sand beach. (Id. ¶52.) Defendants further promoted the event with photographs of models and information describing luxury amenities in the FAQ portion of the Festival's website and in promotional videos on YouTube. (Id. ¶¶55–57.)

Atkins promoted the event on his Instagram account. He posted a photograph of women in bikinis with the caption "Fyre Festival looks set to be the biggest FOMO-inducing event of 2017"² and a line below that read: "The Debrief: Think Coachella x1000³ and You're Still Not Even Close." (Id. ¶62.)⁴ On or about April 10, 2017, Atkins personally guaranteed a three-million-dollar loan for funding of the Festival from EHL Funding LLC. (Id. ¶92.) Thereafter, he encouraged consumers to load more money on cashless wristbands and "more vigorously" marketed the event. (Id. ¶93.) On the eve of the Festival, he posted on his Twitter account "The stage is set!!! In less than 24 hours, the first annual Fyre Festival begins. #festivallife." (Id. ¶64.)

C. Defendants' Knowledge of Their Allegedly False Advertisements

Plaintiffs make the following allegations with respect to all defendants' knowledge:

• Defendants "had been aware for months that their festival was dangerously under-equipped" because they knew there was no electricity, housing, or sanitation. (Id. ¶¶79–80.) Instead, the promised amenities "were being replaced by tents," "porta potties," and the island "was covered in dirt." (Id. ¶81).

• Celebrity chefs had notified defendants they would not attend. (Id. ¶82.) Specifically, defendants asked Starr Catering Group six weeks prior to the start of the festival to provide food for the festival but in early April 2017 defendants "terminated their contract with Starr." (Id. ¶83.)⁵

• "Bands had notified the Defendants" they would not be appearing. (Id. ¶84.) Defendants "urged artists to not attend due to the dangerous and uninhabitable conditions that were present at the event venue." (Id. ¶86.)⁶

• Defendants "knowingly and falsely represented to attendees that A-list artists and models were in fact coming to perform," but "[n]one of the models who promoted the event" attended it. (Id. ¶85.)

• Marketers "repeatedly" told defendants that the event "would not be up to the standard they had advertised." In March 2017, the marketing team told defendants to roll attendees' tickets over to the following year. Defendants "rejected or ignored the warning" and "the marketing team or McFarland, Atkins or Margolin stated, ‘Let's just do it and be legends, man.’ " (Id. ¶89.)

Plaintiffs further allege that Atkins had knowledge of the falsity of his statements because he was part of a site visit in March 2017 (along with Margolin) where "most of his time was spent on a yacht near the supposed Festival site." (Id. ¶87.) On the boat, Atkins and Margolin toasted "To living like movie stars, partying like rock stars, and f******* like porn stars," despite alleged knowledge that the Festival "would not be up to par." (Id. ¶90.) Plaintiffs allege that Atkins knew at the time of his April 27, 2017 Twitter post that it was a false statement because performers had been told by defendants, including Atkins, not to attend or had cancelled their attendance. (Id.) They also allege that Atkins knew "months before" the Festival that there was no infrastructure for the site and that it was unsuitable and unsafe for the event because he was "directly involved in working with the Bahamanian government to obtain a site for the Fyre Festival." (Id. ¶66.) Finally, Atkins deleted several posts about the Festival after its cancellation (id. ¶65), posted on his Twitter account twice apologizing for the event's cancellation (id. ¶¶97–98), and made a statement stating that the promotion of Fyre Festival was "False advertising, maybe." (Id. ¶100.)

As for Margolin's knowledge, plaintiffs allege that

it has been reported that [he] was particularly eager to keep pushing ticket sales, while knowing that the Festival could not proceed as represented and having visited the site, and that he stated at meetings that he was a marketing genius and a prodigy, that the concerns about the Festival did not matter, and that they should continue to sell tickets.

(Id. ¶8.)

D. The Festival Is Cancelled

Plaintiffs' experience at the Fyre Festival was not as-advertised. The event offered disaster-relief tents as sleeping accommodations (id. ¶70), unsecured lockers to store belongings (id. ¶71), and bread and slices of cheese with salad instead of the luxury dining experience advertised (id. ¶72.) None of the promoted musical acts performed. (Id. ¶107.) According to the SCAC, when the sun set, "[a]ttendees were screaming and crying out of fear." (Id. ¶105.) The event was cancelled the morning of its first day leaving attendees stranded and scrambling to make travel arrangements back to the United States. (Id. ¶¶75, 94, 113.)

E. Plaintiffs' Alleged Damages

Plaintiffs purchased tickets for the event at prices ranging from $400 to $1,000. (Id. ¶¶103–14.) The event was promoted as cashless, and plaintiffs collectively uploaded thousands of dollars to a Fyre-related site linked to their electronic wristbands, known as "FyreBands;" the intention was that the wristband would then be used for payment in lieu of cash. (Id. ¶¶104–10.) They had additional costs associated with transportation to and accommodation in Miami, from where planes hired by the Festival were supposed to shuttle attendees to the Bahamas. (Id. ¶¶10, 11, 103–14.) At the event, plaintiffs were sunburned from not having access to luggage containing sunscreen. (Id. ¶105.) Some had their passports stolen. (Id. ¶¶105, 111.) Some were confined to an airport waiting room in the Bahamas with no food or water. (Id. ¶113.) Some allege pain and suffering from the traumatic experience and damages from monitoring for identity theft. (Id. ¶¶105, 126, 134, 269.)

DISCUSSION

I. Legal Standard

To survive a motion to dismiss under Rule 12(b)(6), Fed. R. Civ. P., "a complaint...