Tuesday, March 06, 2012, 11:06 AM

COA: StubHub not liable for ticket scalping under NC law

Today, in Hill v. StubHub, Inc., the North Carolina Court of Appeals (Ervin, Beasley, and Thigpen) held that resale of athletic and other event tickets for a fee on the internet does not violate North Carolina law prohibiting ticket “scalping.” Womble Carlyle attorneys Burley Mitchell and Bob Numbers represented eBay Inc. as amicus curiae.

The case involved Defendant StubHub, Inc., a company that operates an online marketplace enabling third parties to buy and sell tickets to sporting contests, concerts, and similar events. In September 2007, Plaintiffs Jeffrey and Lisa Hill purchased four tickets to a "Miley Cyrus as Hannah Montana" concert through StubHub's website for $149.00 each, plus a shipping fee of $11.95 and a service fee of $59.60, bringing the total to $667.55. The face value of the tickets was $56.00 each. The Hills subsequently filed a complaint, both individually and as representatives of a proposed class, against StubHub and other defendants, claiming in part that StubHub had engaged ticket scalping and had violated fee provisions of N.C. Gen. Stat § 14-344.

The case presented an issue of first impression for the Court of Appeals: was StubHub entitled to immunity from liability pursuant to 47 U.S.C. § 230? Given that the United States Supreme Court has not addressed the scope of immunity under § 230 and that the North Carolina appellate courts had not yet construed the statute, the Court looked to persuasive decisions from lower federal courts and other state courts, which have broadly construed § 230 immunity.

In order to qualify for § 230 immunity, StubHub was required to meet three criteria: (1) StubHub must be a provider or user of an interactive computer service; (2) StubHub's liability must be based on its having acted as a publisher or speaker; and (3) StubHub could only claim immunity with respect to information provided by another information content provider. There was no dispute that StubHub met the first and second criteria. The issue was whether StubHub functioned as an "information content provider" with respect to the ticket price at issue.

That inquiry, the Court explained, hinges upon the extent to which a website materially contributed to the development of unlawful content. To materially contribute to the creation of unlawful material, a website must effectively control the content posted by third parties or take other actions which essentially ensure the creation of unlawful material. Merely encouraging the posting of market-based ticket prices or being congnizant of the risk that tickets are priced in excess of face value will not suffice to strip a website of § 230 immunity.

Here, the evidence showed that the seller, Defendant Justin Holohan, set the price of the concert tickets. StubHub did not price the tickets, require Holohan to sell them at a particular price, or act as Holohan's agent in making the price determination. Therefore, StubHub was not responsible for creating or developing the content at issue, which was the price at which Holohan sold the tickets. Accordingly, the Court held that pursuant to § 230, StubHub was immune from liability for claims based on that particular content. In so holding, the Court emphasized that the § 230 immunity analysis must focus on the specific content at issue in the case, rather than the website as a whole.

Finally, the Court held that the fees StubHub charged for its services did not violate N.C. Gen. Stat. § 14-344 because that statute applies only to sellers or sellers' agents, and StubHub was not the seller or Holohan's agent.

Click here for access to the record on appeal, parties' briefs, and amicus brief.

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