Section 230 of the CDA, May – or May Not – Immunize Online Marketplace Providers from Ticket-scalping Liability

Author: Allison Pedrazzi Helfrich

Hill v. Stubhub

Jeffrey Hill and Lisa Hill brought suit against Stubhub, an online marketplace for reselling tickets, after purchasing four tickets to a Hannah Montana concert for $149 each. The face value printed on the tickets turned out to be only $56—a 152% markup. According to North Carolina’s anti-ticket scalping statute, the resale of a ticket “shall not be … greater than the combined face value of the ticket, tax, and the authorized service fee,” which should not exceed $3 per ticket. Unable to tell who exactly was the seller (Stubhub or a third party), the Hills sued Stubhub for scalping tickets. Stubhub moved to dismiss the plaintiffs’ suit, citing in part the immunity provided by Communications Decency Act (CDA).

The goal of the CDA is to “promote the continued development of the Internet and other interactive computer services.” 47 U.S.C. § 230(b)(1). As the court explained in Hill v. Stubhub, one way to achieve this goal is to distinguish between interactive service providers who chiefly provide access to the Internet from interactive content providers who are “responsible, in whole or in part, for the creation or development of information provided through the Internet.” Id. § 230(f)(3). In Hill v. Stubhub, CDA immunity depended on whether Stubhub was a mere access provider and not responsible for the actions of those who used its site to resell tickets, or whether Stubhub was also partly responsible for the resellers’ actions.

During oral arguments on the motions, Stubhub did not respond to the court’s inquiry about whether or not it actually sold the tickets in question or if it sold its own tickets to the concert. The plaintiffs claimed that even if the site did not actually sell the tickets itself, Stubhub only offers tickets to “hot acts,” where there are far more people who want to buy tickets than there are tickets. This necessarily guarantees price inflation and high commissions, both of which are prohibited in North Carolina. Ultimately, the court ruled discovery was needed to determine how much control Stubhub had over the third-party ticket sellers and whether they shape inflated market prices or merely reflect the actual market that already exists. While the CDA clearly favors immunity in close cases, the court held further inquiry was necessary and denied the motion to dismiss under section 230. This decision marked a possible answer to the question of how far immunity will be extended for internet service providers under the CDA.

Fehrs v. Stubhub

Just two months later, an Oregon Circuit Court ruled for Stubhub’s motion to dismiss a similar case over tickets to a Bruce Springsteen concert in Portland, Oregon. The plaintiff, Sharon Fehrs, brought a class-action suit against both Stubhub and eBay (Stubhub is a subsidiary of eBay). In contrast with Hill v. Stubhub, Fehrs did not actually purchase the high-priced tickets she found on Stubhub and eBay. Instead, she brought suit under the Portland City Code, which prohibits the public nuisance of offering any ticket for resale at a “price greater than the retail price printed thereon.” She also brought a claim for tortious interference with her prospective advantage, and sought to enjoin StubHub from allowing ticket sales with inflated prices.

In September, the court granted the defendants’ motions to dismiss, both on the ground that the plaintiff’s claims are barred by the CDA and because the Portland City Ordinance relied on by the plaintiff is a city ordinance that does not provide a private cause of action to citizens. The terse two-page opinion does not mention Hill v. Stubhub or the issue of Stubhub’s control of the prices on its site, other than to highlight the protection the CDA guarantees service providers.

Add new comment