Ticketmaster L.L.C. v. Prestige Entm't W., Inc.

• Decision Date: 29 May 2018
• Docket Number: Case No. 2:17–cv–07232–ODW–JC
• Citation: 315 F.Supp.3d 1147
• Court: U.S. District Court — Central District of California
• Parties: TICKETMASTER L.L.C., a Virginia limited liability company, Plaintiff, v. PRESTIGE ENTERTAINMENT WEST, INC., a California corporation, Renaissance Ventures LLC, a Connecticut limited liability company, Nicholas Lombardi, Steven K. Lichtman, and Does 1 through 10, inclusive, Defendants.

315 F.Supp.3d 1147

TICKETMASTER L.L.C., a Virginia limited liability company, Plaintiff,

v.PRESTIGE ENTERTAINMENT WEST, INC., a California corporation, Renaissance Ventures LLC, a Connecticut limited liability company, Nicholas Lombardi, Steven K. Lichtman, and Does 1 through 10, inclusive, Defendants.

Case No. 2:17–cv–07232–ODW–JC

United States District Court, C.D. California.

Signed May 29, 2018

Alexandra Hill, Donald R. Brown, Mark Steven Lee, Robert H. Platt, Manatt Phelps and Phillips LLP, Los Angeles, CA, for Plaintiff.

Benjamin K. Semel, Pryor Cashman LLP, New York, NY, Thomas H. Vidal, Benjamin S. Akley, Pryor Cashman LLP, Los Angeles, CA, for Defendant.

ORDER DENYING DEFENDANTS' MOTION TO DISMISS PLAINTIFF'S FIRST AMENDED COMPLAINT [37]

OTIS D. WRIGHT, II, UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

Ticketmaster L.L.C. ("Ticketmaster") brings this suit against Prestige Entertainment West, Inc., Renaissance Ventures LLC, Nicholas Lombardi, and Steven K. Lichtman¹ (collectively, "Defendants"), alleging thirteen causes of action based on Defendants' use of automated programs generally known as bots, which navigate Ticketmaster's website and mobile app in order to purchase large quantities of tickets for resale at a profit. (See generally Compl., ECF No. 1.) Defendants moved to dismiss the Complaint, and the Court granted the motion in part with leave to amend. (ECF Nos. 24, 32.) Ticketmaster filed its First Amended Complaint on February 21, 2018. (First Am. Compl. ("FAC"), ECF No. 36.) Defendants now move to dismiss the First Amended Complaint in its entirety. (Mot. 1, ECF No. 37.) The parties submitted briefs in support of their positions, and the Court heard the parties' arguments on April 9, 2018 at 1:30 p.m. (Mot.; Opp'n, ECF No. 39; Reply, ECF No. 41; ECF No. 42.) For the foregoing reasons, the Court DENIES Defendants' Motion to Dismiss.

II. BACKGROUND

A. Factual Background

Ticketmaster sells tickets for live entertainment events to the general public on behalf of its clients through its website, mobile app, and telephone call centers. (FAC ¶ 17.) Consumer demand for tickets to a given event often exceeds the supply available through Ticketmaster. (FAC ¶ 18.) This results in intense competition among consumers, who try to purchase tickets the moment that the tickets become available for sale on Ticketmaster's website and mobile app. (FAC ¶ 18.)

Ticketmaster has employed various measures in an effort to ensure a fair and equitable ticket purchasing process for its consumers. (FAC ¶ 19.) For instance, Ticketmaster requires each user to create a password-protected account before the user can purchase a ticket. (FAC ¶ 42.) This allows Ticketmaster to better regulate ticket sales, and it also functions as a form of password protection against unauthorized access to the Ticketmaster platform. (FAC ¶ 42.) Ticketmaster also limits the number of tickets that may be purchased in a single transaction and regulates the speed with which users may refresh their requests to search for, reserve, and purchase tickets. (FAC ¶ 19.)

Defendants are an enterprise that seeks to profit off the intense competition for tickets that Ticketmaster's platforms engender. They do this by purchasing large quantities of tickets from Ticketmaster and selling them at a markup on StubHub.com and other ticket resale sites. (FAC ¶ 47.) In order to gain an unfair advantage in searching for and buying these tickets, Defendants have employed robots, programs, and other automated devices, generally known and referred to herein as "bots." (FAC ¶¶ 3, 5.) These bots inundate Ticketmaster's website and mobile app with page requests and ticket reserve requests at a far higher rate than would be possible for a human alone. (FAC ¶¶ 3, 5.)

In an effort to put a stop to bots Ticketmaster has employed several countermeasures, including:

• CAPTCHA, a security program whose purpose is to distinguish between human users and bots by requiring the purchaser to retype a series of random, partially obscured characters, a task designed to be impossible for a bot to accomplish (FAC ¶ 20);

• Splunk and other commercial data compilation and analysis services, which help Ticketmaster analyze its sales data and detect patterns that indicate that tickets have been purchased by bots (FAC ¶ 21);

• Over Ticket Limit, a proprietary feature created to automatically block, in real time, the purchase of tickets that appear to be coming from bots (FAC ¶ 22).

Despite Ticketmaster's efforts, Defendants have found ways to circumvent these countermeasures by using, among other things, colocation facilities with high speed bandwidth, random number and letter generators, cookie trading, and CAPTCHA farms. (FAC ¶¶ 43–44, 47, 51, 52.)

Defendants' enterprise seems to have achieved its goals. Defendants used their bots to acquire tens of thousands of tickets for the New York stage play Hamilton , often purchasing thirty to forty percent of the entire amount of tickets available for a given performance. (FAC ¶ 5.) Defendants' bots also procured a majority of tickets available through Ticketmaster to the high-profile Mayweather v. Pacquiao boxing match in Las Vegas in 2015. (FAC ¶ 5.) In total, Ticketmaster estimates that between January 2015 and September 2016, Defendants generated 9,047 dummy user accounts and 313,528 ticket orders, sending a total of six million requests to the Ticketmaster website and mobile app. (FAC ¶¶ 42, 51, 58.)

Use of Ticketmaster's website is governed by its Terms of Use. (FAC ¶ 24.) Users must agree to the Terms of Use before they can view and use Ticketmaster's platforms, and both the website and mobile app repeatedly remind users that the Terms of Use govern the use of Ticketmaster's services. (FAC ¶¶ 25, 27.) The Terms of Use grant users a "limited, conditional no-cost, non-exclusive, non-transferable, non-sublicensable license to view Ticketmaster's site to purchase tickets as permitted by these Terms for non-commercial purposes only if" the user agrees not to conduct certain activities. (FAC ¶ 30.) These activities include:

• using "any robot ... or any other ... device, tool, or process to retrieve, index, data mine, or in any way reproduce or circumvent the navigational structure or presentation of the Content or the Site, including with respect to any CAPTCHA displayed on the site,"

• using any "automated software or computer system to search for, reserve, buy, or otherwise obtain tickets,"

• accessing, reloading, or refreshing transactional event or ticketing pages, or making any other request to transactional servers, more than once during any three-second interval,

• requesting "more than 1,000 pages of the Site in any 24–hour period, whether alone or with a group of individuals;" and

• reproducing, modifying, displaying, publicly performing, distributing, or creating derivative works of the Site or its Content.

(FAC ¶ 30.)

Ticketmaster owns registered copyrights in its website and mobile app. (FAC ¶ 28.) According to the express language in the Terms of Use, any of the above activities constitutes copyright, patent, and trademark infringement, because engaging in any prohibited activity revokes the user's permission to use the Ticketmaster website and mobile app. (FAC, Ex. A at 56.) Continued use of the Ticketmaster website without permission to do so, says the Terms of Use, constitutes infringement. (FAC ¶ 32.)

Ticketmaster diligently attempts to identify and stop the users of bots, but Defendants' sophisticated techniques have hindered Ticketmaster's ability to do so. (FAC ¶ 58.) After tracing the bot-related ticket purchases for the Mayweather–Pacquiao boxing match to Renaissance, Ticketmaster sent a cease-and-desist letter (the "Letter") in May 2015 addressed to Nicholas Lombardi describing some of the evidence Ticketmaster had uncovered that linked him, his colleagues, and their companies to the improper ticket purchases. (FAC ¶ 59, Ex. E.) The Letter demanded that Defendants "cease and desist from any further violations of Ticketmaster's rights." (FAC ¶ 59, Ex. E at 72.)

Lombardi acknowledged receiving the Letter, but Defendants continued their enterprise. (FAC ¶ 60.) On October 2, 2017, Ticketmaster initiated this lawsuit against Defendants and several Doe Defendants. Does 7 and 8 are the computer programmers and developers that created, marketed, and provided the named Defendants with the bots, and they are referred to herein as the Bot Developers. (FAC ¶ 6.) Does 9 and 10 are those entities who assisted and conspired with Prestige West by purchasing the improperly procured tickets from Defendants for later resale. (FAC ¶ 7.) These Doe defendants are referred to herein as the Additional Purchasers.

B. Procedural History

In its initial Complaint, Ticketmaster brought claims for: (1) breach of contract; (2) copyright infringement in violation of 17 U.S.C. § 101 et seq. ; (3) violation of the Digital Millennium Copyright Act ("DMCA"), 17 U.S.C. § 1201 et seq. ; (4) fraud; (5) aiding and abetting fraud; (6) inducing breach of contract; (7) intentional interference with contractual relations; (8) violation of the Computer Fraud and Abuse Act ("CFAA"), 18 U.S.C. § 1030 et seq. ; (9) violation of the California Computer Data Access and Fraud Act ("CDAFA"), California Penal Code section 502 et seq. ; and (10) violation of the New York Anti–Scalping Law, New York Arts and Cultural Affairs Law section 25.01 et seq.

After Ticketmaster filed its Complaint, Defendants moved to dismiss seven of Ticketmaster's ten claims. (ECF No. 24.) The Court granted Defendants' motion in part, dismissing the copyright infringement claim, the CFAA claim, and the California CDAFA claim. (Order Mot. Dismiss ("Order") 9, 14, ECF No. 32.) Dismissal was granted with leave to amend, except to the extent that the copyright infringement claim was based on Defendants' excess of the limitations on page refreshes and ticket requests imposed by the Terms of Use. (Order 9.) The Court also denied Defend...