Duffy v. Ticketreserve

Citation: Duffy v. The Ticketreserve Inc. (FirstDIBZ.com), 2010 WL 2681045 (N.D. Ill. July 6, 2010).

Factual Background
Ticket Reserve operates as an “online marketplace” in which internet users can buy, sell, and trade options to purchase tickets to sporting events, paying Ticket Reserve a fee for each transaction. Ticket Reserve is a corporation organized under the laws of Illinois and operates FirstDIBZ.com, a website marketplace in which consumers may reserve advance purchasing options for tickets to sporting events, concerts, and other occasions. The website’s User Agreement gives the holder the right to purchase a product or ticket to a known DIBZ event and obligates the holder to purchase the product or ticket if the event is scheduled to occur. DIBZ allows purchasers to buy directly from Ticket Reserve and the option of buying, trading, or selling their DIBZ in exchanges with other website users.

The plaintiffs are registered users of FirstDIBZ.com who purchased or resold DIBZ for the 2009 Super Bowl in the consumer-supplied marketplace. Duffy is a customer of the online marketplace who alleges that he was defrauded by other users in several exchanges in which they attempted to secure tickets to the 2009 Super Bowl. The tickets for the Super Bowl ultimately proved to be fraudulent as the plaintiffs who purchased DIBZ were sold by persons who did not actually own any options to purchase tickets for the Super Bowl. When Ticket Reserve learned that the plaintiffs had unwittingly purchased and resold fraudulent DIBZ for Super Bowl tickets, it notified plaintiffs all transactions involving false DIBZ would be voided and Ticket Reserve would be refunded the purchase price they had paid but advised reselling the false DIBZ to the other users.

Customers brought class action against operator of online marketplace, in which Internet users bought, sold, and traded options to purchase tickets to sporting events, paying operator a fee for each transaction, alleging that they were defrauded by other users in several exchanges, and asserting various fraud and breach of contract claims. Operator moved to dismiss.

District Court Proceedings
Under Illinois law, a plaintiff looking to state a claim for breach of contract must allege four elements: (1) the existence of a valid and enforceable contract; (2) substantial performance by the plaintiff; (3) a breach by the defendant; and (4) resultant damages. The User Agreement is a valid and enforceable contract under which plaintiffs substantially performed by paying Ticker Reserve its fees.

The contract construes the contract by giving its “unambiguous terms their clear and ordinary meaning in an effort to determine the parties’ intent.” The unambiguous terms of the contract bar all claims against Ticket Reserve “arising out of or in any way connected” with disputes between buyers and sellers in Ticket Reserve’s consumer-supplied marketplace. If not for the Sellers’ default, the plaintiffs would have no claim against Ticket Reserve based on the integrity of the website marketplace. Under the clear and ordinary meaning of the Agreement, the plaintiffs have agreed to release Ticket Reserve from claims arising directly out of the fraudulent ticket sales.

Under the incorporated terms of the contract, Ticket Reserve appears to have assumed an unqualified duty to “process and mail out” funds from online accounts within “14 business days after a user makes a withdrawal request”. The language does not contain any limitation and the claim does not appear to be barred by the Release provision as it has no immediate connection to any dispute between the plaintiffs and the fraudulent sellers. The reasonable inference is that the withholding of account funds was not ‘in any way connected” to a buyer/seller dispute.

The “Disclaimer of Warranties” and “Limitation of Liability” provisions unambiguously prohibit plaintiffs from pursuing and recovering on any such claims. The Disclaimer of Warranties excludes any claim based on a warranty and cautions that the services on the website are provided on an “as is” basis without any warranty or condition, express, implied, or statutory. Warranty limitations are enforceable only if they may be reasonably construed with the remainder of the contract and are sufficiently conspicuous. UCC 810 ILCS 5/2-316. The provisions preclude customers’ breach of warranty claims against the operator of online marketplace, in which customers bought options to purchase tickets to sporting events from sellers in operator’s consumer-supplied marketplace who were unable to provide ticket. The references to “guaranteed” rights in these provisions are not expanded warranties or extensive obligations that render the explicit disclaimer of warranties inoperative. A plaintiff may not supplement or amend his complaint by presenting new facts or theories in his briefing in opposition to a motion to dismiss.

The User Agreement explicitly releases Ticket Reserve from all liability resulting from a seller’s failure to produce tickets as promised. The contract bars all claims against Ticket Reserve that stem from a dispute with a seller, including a seller’s failure to “fulfill a confirmed order”. Under Illinois law, a plaintiff must allege (1) the defendant made a false statement of material fact; (2) the defendant knew the statement to be false; (3) the defendant made the statement intending to induce the plaintiff to undertake some act; (4) the plaintiff reasonably relied upon the truth of the statement; and (5) the plaintiff suffered damages as a result of his reliance.

The presence of explicit contractual terms that contradicts an extrinsic false statement renders any subsequent reliance by the plaintiff unreasonable as a matter of law. Under Illinois law, a breach of a contractual promise, without more, is not actionable under the Consumer Fraud Act. The Plaintiffs assert that they relied on express representations made on FirstDIBZ.com website, which they accepted by conducting transactions on the site. If Ticket Reserve has any duty to protect Plaintiffs, its obligations exist incident to its performance under the User Agreement.

Under Illinois law, an express contract covered subject matter of customers' unjust enrichment claims against operator of consumer-supplied online marketplace, in which customers bought options to purchase tickets to sporting events from sellers who were unable to provide tickets, precluding the unjust enrichment claims. Unjust enrichment is a quasi-contractual theory of recovery that ordinarily is not available where an express contract exists. When two parties' relationship is governed by contract, they may not bring a claim of unjust enrichment unless the claim falls outside the contract.

In determining whether an unjust enrichment claim falls outside a contract, the court considers the subject matter of the contract rather than the contract's specific terms or provisions. A party whose contractual expectations were not realized may not make an end run around contract law by pursuing an unjust enrichment theory.

The District Court held that: (1) release provision of parties' user agreement barred customers' breach of contract claim arising out of disputes between buyers and sellers; but (2) release provision did not bar customers' breach of contract claim arising out of operator's refusal to release funds from customers' online wallet accounts; (3) provisions in user agreement disclaiming warranties and limiting liability were enforceable under the Uniform Commercial Code (UCC); (4) customers failed to state a common law fraud claim; (5) customers failed to state a claim under the Consumer Fraud Act; and (6) existence of an express contract precluded customers' unjust enrichment claims.