Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 1 of 46 Page ID #:834 1 2 3 4 5 6 7 8 9 10 11 12 13 Thomas H. Vidal (State Bar No. 204432) tvidal@pryorcashman.com Benjamin S. Akley (State Bar No. 278506) bakley@pryorcashman.com PRYOR CASHMAN LLP 1801 Century Park East, 24th Floor Los Angeles, California 90067-2302 Phone: (310) 683-6900 Fax: (310) 943-3397 Donald S. Zakarin (Pro Hac Vice Application forthcoming) dzakarin@pryorcashman.com Ilene S. Farkas (Pro Hac Vice Application forthcoming) ifarkas@pryorcashman.com Benjamin K. Semel (Admitted Pro Hac Vice) bsemel@pryorcashman.com PRYOR CASHMAN LLP 7 Times Square New York, New York 10036 Phone: (212) 326-0181 Fax: (212) 798-6326 Attorneys for Defendants Prestige Entertainment West, Inc. and Renaissance Ventures LLC, 14 15 UNITED STATES DISTRICT COURT 16 CENTRAL DISTRICT OF CALIFORNIA 17 18 19 20 21 22 23 24 25 26 27 28 ) ) ) ) ) Plaintiff, ) ) vs. ) ) PRESTIGE ENTERTAINMENT WEST, )) INC., a New York corporation et al., ) ) ) Defendants. ) ) ) ) ) ) TICKETMASTER LLC, a Virginia limited liability company, Case No. 2:17-cv-07232-ODW-JC ANSWER OF RENAISSANCE VENURES LLC AND PRESTIGE ENTERTAINMENT WEST, INC. TO SECOND AMENDED COMPLAINT AND COUNTERCLAIMS Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 2 of 46 Page ID #:835 1 2 3 4 5 6 7 8 9 Defendants Renaissance Ventures LLC (“Renaissance”) and Prestige Entertainment West, Inc. (“Prestige,” and together with Renaissance, “Defendants”) responds to the allegations in the numbered paragraphs in the Second Amended Complaint (“SAC”) filed by Ticketmaster L.L.C. (“TM” or “Plaintiff”) as follows. 1. The allegations in Paragraph 1 of the SAC state conclusions law that do not require a response by Defendants. To the extent that any response is required, Defendants deny that TM has adequately stated any claim for relief over which the Court has jurisdiction. 2. The allegations in Paragraph 2 of the SAC state conclusions law that do not 10 require a response by Defendants. 11 Defendants deny the allegations and the legal conclusions therein, except deny 12 knowledge or information sufficient to form a belief about TM’s principal place of 13 business. 14 3. To the extent that any response is required, Defendants deny the allegations in Paragraph 3 of the SAC, referring the 15 Court to TM’s various Terms of Use (“TOU”) over the years for the content and terms 16 thereof, and specifically and emphatically deny that TM “strives to provide an equitable 17 ticket distribution system that affords all consumers a fair opportunity to acquire the best 18 tickets for events.” TM relies upon and reaps substantial profits from its sale of tickets 19 to ticket resellers, and TM encourages the use of its system by such resellers, whether or 20 not those resellers use alleged “bots,” or other automation systems, or engage in other 21 alleged violations of the TOU. On information and belief, the same thousands of TM 22 user accounts and credit cards, operated by ticket resellers, continue to purchase the best 23 seats to the most popular shows throughout the country and to the present day, at a rate 24 faster than a consumer can type. TM has full knowledge that these accounts are used by 25 resellers, knowingly and intentionally choosing to not terminate or otherwise block those 26 accounts from making purchases because TM profits extensively from their business. 27 TM’s incentive to foster the use of its system by ticket resellers is plain. In addition to 28 operating the largest primary ticket exchange in the country, TM operates some of the 2 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 3 of 46 Page ID #:836 1 2 3 4 5 6 7 8 9 largest ticket reselling exchanges in the country (some of which are seamlessly integrated with its primary ticket sales exchange). On information and belief, when TM sells a ticket to a reseller, it not only collects the full commission from that primary sale, but it has a significantly higher chance of receiving a second, “double-dip” commission on the resale of that ticket on its secondary resale exchanges. Indeed, for many venues and events sold through TM, TM limits resale to only TM’s resale exchanges (rather than a competitor exchange such as StubHub), thus ensuring double-dip commission if a reseller purchases the ticket. Venues can also share in these double-dip commissions, depending on the provisions in their deals with TM, thus explaining why certain popular 10 events are priced well below the market – which enhances the likelihood that tickets will 11 be sought by resellers, providing valuable risk insurance against unsold seats and also 12 providing double-dip commissions on the inevitable resale. TM’s ticket listings for 13 popular shows are often dominated by tickets on its resale exchange – tickets which 14 originally came from its own primary exchange and thus for which it is getting double- 15 dip commissions. Since ticket resellers are by definition more likely to resell tickets 16 than other members of the public, and are the dominant source of tickets for TM’s resale 17 exchanges, TM large resale business depends on TM selling primary tickets to resellers. 18 TM stands to make significantly more commissions by selling to resellers than to other 19 members of the public. Far from using its website to protect the consumer, TM uses its 20 website to deceive consumers and line its pockets from double-dip commissions, 21 practices which it has engaged in for years. TM was investigated by the FTC as early as 22 2009 for “deceptive bait-and-switch tactics to sell event tickets to consumers,” and 23 agreed to refund overcharges to consumers as part of a settlement with the FTC 24 concerning practices where TM used misleading pages on its website “to steer 25 unknowing consumers to [TM’s reseller affiliate] TicketsNow, where tickets were 26 offered at much higher prices.” Of course it was not ticket resellers who were taken in 27 by such bait-and-switch tactics, but rather it was other members of the public who TM 28 was intent on deceiving. 3 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 4 of 46 Page ID #:837 1 2 3 4 5 6 7 8 4. Defendants deny the allegations in Paragraph 4 of the SAC, refer the Court to the TOU for the contents and terms thereof, and specifically deny that TM makes any bona fide attempt to prevent the use of bots on its system, or that TM considers the use of bots to be to its detriment. Ticker resellers, including those that (unlike Defendants) use bots, provide a critical benefit to venues, performers, teams and TM itself, in the form of risk absorption. Ticket resellers that purchase tickets up front provide event producers and TM with full value for tickets and commissions, absorbing the risk that seats go unsold, as they commonly do for a wide variety of reasons. Furthermore, as 9 TM operates ticket reseller exchanges as well, TM profits more from having a ticket sold 10 and then resold – thus obtaining its double-dip commission – than from a single sale 11 alone. Defendants admit that TM has the ability to clearly identify and track irregular 12 customer behavior. Indeed, the vast majority of ticket reseller activity is patently 13 obvious to TM, and yet TM does nothing to prevent this activity, failing to block or 14 terminate accounts purchasing ticket arrays and where account-holders are purchasing 15 tickets in quantities that are obviously not for personal use, with the exception of hosting 16 an occasional publicity stunt masquerading as a legal action against a ticket reseller, such 17 as the present action. TM’s willing embrace of ticket reseller activity on its website is a 18 core part of its business model as is the enhanced profits that TM obtains from double- 19 dip commissions, and which cannot support an action based on alleged damage from the 20 very same reseller activity that TM encourages on its system. Indeed, on information 21 and belief, TM is actually in the business of providing software bots to ticket resellers 22 for use on TM’s system, namely bots that allow resellers to purchase tickets from TM or 23 immediately post tickets purchased from TM to TM’s own secondary exchange for 24 resale, providing TM with a second commission on the resale of the same ticket. These 25 “double-dip bots” promote the double-dip commission r that TM’s thriving secondary 26 ticket exchange business is based upon. TM and its supplier partners further use the 27 secondary markets to manipulate ticket pricing. They can and do move large blocks of 28 tickets directly to secondary exchanges (in effect using secondary exchanges as primary 4 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 5 of 46 Page ID #:838 1 2 3 4 5 6 7 8 exchanges) in order to manipulate ticket pricing without transparency, allowing them to, for example, release blocks of tickets at lower-than-original pricing without offending the original purchasers at the higher face vale prices. TM and its supplier partners foster, exploit, rely upon and profit from the activities of ticket resellers and secondary ticket exchanges at every juncture, and it is wholly disingenuous for TM to now, as it faces scrutiny for its improper tactics, to seek to scapegoat and feign antagonism towards the industry. 5. Defendants deny the allegations in Paragraph 5 of the SAC except admit 9 that Renaissance and Lichtman entered into an Assurance of Discontinuance with the 10 Attorney General of the State of New York executed on March 5, 2017 (the “AOD”) and 11 refer the Court to the AOD for the provisions and contents thereof. Defendants further 12 deny that TM makes any bona fide attempt to implement security measures that 13 materially interfere with its sales of tickets to ticket resellers, sales activity that TM 14 encourages and from which TM obtains substantial profits, double-dip commissions, 15 insurance against low turnout and other benefits. Ticket resellers are often left holding 16 the bag with tickets to shows that they cannot resell due to insufficient demand, and 17 neither TM nor its suppliers complain about these common situations from which they 18 profit. Indeed, on information and belief, prior to the breakout popularity of Hamilton, 19 its producers and TM profited from ticket resellers who purchased large blocks of 20 preview tickets but were unable to resell many of them due to low demand, taking large 21 losses while in effect insuring - against the low turnout. Hamilton’s initial stated ticket 22 limits were 16 tickets per person per day, which is plainly not a bona fide attempt at 23 limiting tickets purchases for personal use. 24 Hamilton producers have sold significant quantities of tickets directly to ticket resellers 25 at prices well above the stated face value, with no disclosure to the public of such 26 practices, thus preserving a misleading public image while exploiting the ticket resale 27 industry to profit from higher ticket prices. 28 6. Moreover, since becoming popular, Defendants deny the allegations in Paragraph 6 of the SAC except deny 5 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 6 of 46 Page ID #:839 1 2 3 4 5 6 7 8 9 knowledge or information sufficient to form a belief as to the truth of allegations about Fast Software Solutions, LLC (“Fast Software”) or unidentified Doe Defendants. Defendants further deny that TM makes any bona fide attempt to implement security measures that materially interfere with its sales of tickets to ticket resellers, sales activity that TM encourages and from which TM obtains substantial profits, double-dip commissions, risk insurance and other benefits. TM has the capability to easily prevent purchases by large-scale ticket resellers, using just the data that it admits it collects about purchase histories, but intentionally allows such activities to continue for its own benefit. 7. Defendants deny the allegations in Paragraph 7 of the SAC except deny 10 knowledge or information sufficient to form a belief as to the truth of allegations about 11 unidentified Doe Defendants. 12 8. Defendants deny the allegations in Paragraph 8 of the SAC. Defendants 13 further deny that TM makes any bona fide attempt to implement security measures that 14 materially interfere with its sales of tickets to ticket resellers. Defendants further deny 15 that TM suffers any damage at all from the sales of tickets to ticket resellers, whether or 16 not involving the alleged use of bots, as TM obtains substantial benefits from these 17 transactions, which are part of the core of TM’s business model, and without which TM 18 would face substantially increased risk and decreased profits. For example, the SAC 19 contains numerous allegations about Hamilton tickets, and TM alleges that many tickets 20 to this show were purchased by bots, which it alleges deprived the public of fair access 21 to primary exchange tickets. However, TM fails to mention that, on information and 22 belief, many tickets for each show of Hamilton were in fact never placed onto the 23 primary ticket exchange, but went directly to the secondary ticket market for resale at 24 significantly higher prices. The lack of availability of Hamilton tickets on the primary 25 market was thus due not merely to resellers purchasing tickets from TM at face value, 26 but also because many tickets were provided directly to resellers by producers. Indeed, 27 the New York Attorney General investigated ticket sales to major concerts in New York, 28 and found that 54 percent of tickets were not made available to the general public by the 6 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 7 of 46 Page ID #:840 1 2 3 4 5 6 7 8 9 10 11 12 13 supplier, held back for insiders, special groups, or other non-public sales. TM complains in that SAC that ticket reseller activity causes loss of goodwill due to shortage of tickets available on TM’s website, but TM fails to disclose to the public that many, if not most, tickets for shows were not made available on the primary ticket exchange in the first place. 9. The allegations contained in Paragraph 9 of the SAC state conclusions law that do not require a response by Defendants. To the extent that any response is required, Defendants deny that TM has adequately stated any claim for relief against Defendants. 10. Defendants lacks knowledge or information sufficient to form a belief about the truth of allegations contained in Paragraph 10 of the SAC. 11. Defendants admit that Prestige Entertainment West, Inc. was incorporated in California and has maintained an office in California. 12. Defendants deny the allegations contained in Paragraph 12 of the SAC 14 except admit that Renaissance is a Connecticut limited liability company with its 15 principal place of business in Connecticut, and that Renaissance has done business under 16 the name of Prestige Entertainment. 17 13. Defendants deny the allegations contained in Paragraph 13 of the SAC. 18 14. Defendants deny the allegations contained in Paragraph 14 of the SAC 19 except admit that Steven K. Lichtman resides in Florida and is a member of Renaissance 20 and Prestige West. 21 22 23 24 25 26 27 28 15. Defendants lack knowledge or information sufficient to form a belief about the truth of the allegations contained in Paragraph 15 of the SAC. 16. Defendants deny the allegations of Paragraph 16 of the SAC and the legal conclusions therein. 17. Defendants deny the allegations of Paragraph 17 of the SAC and the legal conclusions therein. 18. Defendants lack knowledge or information sufficient to form a belief about the truth of the allegations contained in Paragraph 18 of the SAC, except admit that TM 7 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 8 of 46 Page ID #:841 1 2 3 4 5 6 7 8 9 10 distributes event tickets through a variety of means. 19. Defendants lack knowledge or information sufficient to form a belief about the truth of the allegations contained in Paragraph 19 of the SAC. Defendants deny that TM cannot affect the supply of tickets to the public, but aver that TM has substantial influence over the supply of tickets to the public, through its contracts with venues and other clients, as well as through its ticket resale platforms, that TM intentionally manipulates this supply to maximize its profits at the expense of the public, and that TM knowingly and intentionally uses sales to ticket resellers, whether or not involving bot use or other alleged violations of its TOU, as part of this strategy. 20. Defendants deny that TM makes bona fide attempts to implement security 11 measures that materially interfere with its sales of tickets to ticket resellers, sales activity 12 that TM encourages and from which TM obtains substantial profits, double-dip 13 commissions, risk insurance and other benefits. Defendants further deny that TM makes 14 bona fide efforts to make ticket buying “as fair and equitable as possible for consumers.” 15 Even beyond the conduct that led to the investigation by the FTC that forced TM to settle 16 in connection with deceptive bait-and-switch sales tactics to gouge consumers, and the 17 class action lawsuit that forced TM to enter into a $400 million settlement based on over 18 a decade of wildly overcharging consumers for “order processing” and delivery fees, 19 and the current U.S Department of Justice investigation into TM and its corporate 20 family’s anticompetitive conduct, TM’s outsized profits are built on using its excessive 21 market power to stifle competition and unfairly exact additional fees to line its pockets. 22 Defendants lack knowledge or information sufficient to form a belief about the truth of 23 the remaining allegations in Paragraph 20 of the SAC. 24 21. Defendants deny that TM makes any bona fide attempt to implement 25 security measures that materially interfere with its sales of tickets to ticket resellers, sales 26 activity that TM encourages and from which TM obtains substantial profits, double-dip 27 commissions, risk insurance and other benefits. 28 information sufficient to form a belief about the truth of the remaining allegations in 8 Defendants lack knowledge or Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 9 of 46 Page ID #:842 1 2 3 4 5 6 7 8 9 Paragraph 21 of the SAC. 22. Defendants deny that TM makes any bona fide attempt to implement security measures that materially interfere with its sales of tickets to ticket resellers, sales activity that TM encourages and from which TM obtains substantial profits, double-dip commissions, risk insurance and other benefits. Defendants lack knowledge or information sufficient to form a belief about the truth of the remaining allegations contained in Paragraph 22 of the SAC, and refers the Court to the TOU for the contents and terms thereof. 23. Defendants deny that TM makes any bona fide attempt to implement 10 security measures that materially interfere with its sales of tickets to ticket resellers, sales 11 activity that TM encourages and from which TM obtains substantial profits, double-dip 12 commissions, risk insurance and other benefits. 13 information sufficient to form a belief about the truth of the remaining allegations in 14 Paragraph 23 of the SAC. 15 24. Defendants lack knowledge or Defendants deny that TM has expended material resources on bona fide 16 efforts – as opposed to on superficial and deceptive publicity campaigns – to make the 17 ticket buying process fair for consumers. Defendants lack knowledge or information 18 sufficient to form a belief about the truth of the remaining allegations contained in 19 Paragraph 24 of the SAC. 20 21 22 25. Defendants deny the allegations of Paragraph 25 of the SAC and the legal conclusions therein, and refer the Court to the TOU for the contents and terms thereof. 26. Defendants lack knowledge or information sufficient to form a belief about 23 the truth of the allegations contained in Paragraph 26 of the SAC, and refer the Court to 24 the TOU for the contents and terms thereof. 25 27. Defendants lack knowledge or information sufficient to form a belief about 26 the truth of the allegations contained in Paragraph 27 of the SAC, and refer the Court to 27 the TOU for the contents and terms thereof. 28 28. Defendants lack knowledge or information sufficient to form a belief about 9 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 10 of 46 Page ID #:843 1 2 3 4 5 6 7 8 the truth of the allegations contained in Paragraph 28 of the SAC, and refer the Court to the TOU for the contents and terms thereof. 29. Defendants deny that that TM’s website and mobile app are works of authorship protected by copyright law. Defendants lack knowledge or information sufficient to form a belief about the truth of the remaining allegations contained in Paragraph 29 of the SAC. 30. Defendants lack knowledge or information sufficient to form a belief about the truth of the allegations contained in Paragraph 30 of the SAC, except deny that the 9 typing in the address of, or clicking on a link to, a TM web page creates a copy of that 10 web page, and aver that users who visit TM’s website do not have access to TM’s servers 11 to make copies of the content thereon, but simply send requests to TM, and TM then 12 chooses whether or not to make copies of portions of its website and send those copies 13 to the users, and those copies that TM makes of its website and sends to users may or 14 may not be displayed on the users’ devices depending on connectivity and security 15 settings. 16 31. Defendants lack knowledge or information sufficient to form a belief about 17 the truth of the allegations contained in Paragraph 31 of the SAC, and refer the Court to 18 the TOU for the contents and terms thereof. 19 32. Defendants lack knowledge or information sufficient to form a belief about 20 the truth of the allegations contained in Paragraph 32 of the SAC, and refer the Court to 21 the TOU for the contents and terms thereof. 22 33. Defendants lack knowledge or information sufficient to form a belief about 23 the truth of the allegations contained in Paragraph 33 of the SAC, except deny that the 24 TOU’s user license contains conditions or that the scope of such license is exceeded by 25 access in connection with the purchase of tickets, and refer the Court to the TOU for the 26 contents and terms thereof. 27 28 34. Defendants lack knowledge or information sufficient to form a belief about the truth of the allegations contained in Paragraph 34 of the SAC, and refer the Court to 10 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 11 of 46 Page ID #:844 1 2 3 4 5 6 7 8 9 10 11 the TOU for the contents and terms thereof. 35. Defendants lack knowledge or information sufficient to form a belief about the truth of the allegations contained in Paragraph 35 of the SAC, and refer the Court to the TOU for the contents and terms thereof. 36. Defendants lack knowledge or information sufficient to form a belief about the truth of the allegations contained in Paragraph 36 of the SAC, and refer the Court to the TOU for the contents and terms thereof. 37. Defendants lack knowledge or information sufficient to form a belief about the truth of the allegations contained in Paragraph 37 of the SAC, and refer the Court to the TOU for the contents and terms thereof. 38. Defendants lack knowledge or information sufficient to form a belief about 12 the truth of the allegations contained in Paragraph 38 of the SAC, and refer the Court to 13 the TOU for the contents and terms thereof. 14 39. Defendants lack knowledge or information sufficient to form a belief about 15 the truth of the allegations contained in Paragraph 39 of the SAC, and refer the Court to 16 the TOU for the contents and terms thereof. 17 40. Defendants lack knowledge or information sufficient to form a belief about 18 the truth of the allegations contained in Paragraph 40 of the SAC, and refer the Court to 19 the TOU for the contents and terms thereof. 20 41. Defendants deny the allegations of Paragraph 41 of the SAC. 21 42. Defendants deny the allegations of Paragraph 42 of the SAC. 22 43. Defendants deny the allegations of Paragraph 43 of the SAC except deny 23 knowledge or information sufficient to form a belief as to the truth of the allegations 24 concerning TM’s user account function. 25 44. Defendants deny the allegations of Paragraph 44 of the SAC, except admit 26 that third-party colocation facilities provide various services to various companies 27 (including, on information and belief, TM), and aver that ticket resellers do not “attack” 28 TM, but rather TM encourages reseller purchases, even providing “double-dip bots” to 11 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 12 of 46 Page ID #:845 1 2 3 4 5 6 7 8 9 resellers to automate their purchase and resale activities, and TM benefits from such activity in substantial profits, double-dip commissions, risk insurance and other benefits. 45. Defendants deny the allegations of Paragraph 45 of the SAC, except lack knowledge or information sufficient to form a belief as to the truth of the allegations concerning colocation providers connected to ticket purchases for the Mayweather v. Pacquiao event. 46. Defendants deny the allegations of Paragraph 46 of the SAC except lack knowledge or information sufficient to form a belief as to the truth of the allegations concerning TM’s reserve request system. 10 47. Defendants deny the allegations of Paragraph 47 of the SAC. 11 48. Defendants deny the allegations of Paragraph 48 of the SAC except lack 12 knowledge or information sufficient to form a belief as to the truth of the allegations 13 concerning TM’s use of cookies. 14 15 16 49. Defendants deny the allegations of Paragraph 49 of the SAC and refer the Court to the TOU for the terms and contents thereof. 50. Defendants deny the allegations of Paragraph 50 of the SAC except lack 17 knowledge or information sufficient to form a belief as to the truth of the allegations 18 concerning TM’s operation of its “Verified Fan” program, and further aver, on 19 information and belief, that TM sabotages Verified Fan program events by releasing the 20 same tickets for sale simultaneously at the box office, without requiring any special code, 21 and with full knowledge that ticket resellers will staff the box office to purchase the 22 tickets immediately. 23 24 51. Defendants deny the allegations of Paragraph 51 of the SAC and refer the Court to the TOU for the terms and contents thereof. 25 52. Defendants deny the allegations of Paragraph 52 of the SAC. 26 53. Defendants deny the allegations of Paragraph 53 of the SAC except lack 27 knowledge or information sufficient to form a belief as to the truth of the allegations 28 concerning TM’s utilization of CAPTCHA or OTL, and aver that TM makes no bona 12 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 13 of 46 Page ID #:846 1 2 3 4 5 6 7 8 fide attempts to implement security measures that materially interfere with its sales of tickets to ticket resellers, sales activity that TM encourages and from which TM obtains substantial profits, double-dip commissions, risk insurance and other benefits. Rather, upon information and belief, TM creates and distributes “double-dip bots” to allow ticket resellers to purchase and repost tickets to TM’s own, integrated secondary ticket exchange automatically and at a greater speed. 54. Defendants deny the allegations of Paragraph 54 of the SAC except lack knowledge or information sufficient to form a belief as to the truth of the allegations 9 concerning TM’s computer system, and aver that TM makes no bona fide attempts to 10 implement security measures that materially interfere with its sales of tickets to ticket 11 resellers, sales activity that TM encourages and from which TM obtains substantial 12 profits, double-dip commissions, risk insurance and other benefits. 13 information and belief, TM creates and distributes “double-dip bots” to allow ticket 14 resellers to purchase and repost tickets to TM’s own, integrated secondary ticket 15 exchange automatically and at a greater speed. 16 55. Rather, upon Defendants deny the allegations of Paragraph 55 of the SAC except lack 17 knowledge or information sufficient to form a belief as to the truth of the allegations 18 concerning TM’s computer system, and aver that TM makes no bona fide attempts to 19 implement security measures that materially interfere with its sales of tickets to ticket 20 resellers, sales activity that TM encourages and from which TM obtains substantial 21 profits, double-dip commissions, risk insurance and other benefits. 22 information and belief, TM creates and distributes “double-dip bots” to allow ticket 23 resellers to purchase and repost tickets to TM’s own, integrated secondary ticket 24 exchange automatically and at a greater speed. 25 56. Rather, upon Defendants deny the allegations of Paragraph 56 of the SAC except lack 26 knowledge or information sufficient to form a belief as to the truth of the allegations 27 concerning TM blocking IP addresses of third parties. 28 57. Defendants deny the allegations of Paragraph 57 of the SAC. 13 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 14 of 46 Page ID #:847 1 2 3 4 5 6 7 8 58. Defendants deny the allegations of Paragraph 58 of the SAC, and aver that TM makes no bona fide attempts to implement security measures that materially interfere with its sales of tickets to ticket resellers, sales activity that TM encourages and from which TM obtains substantial profits, double-dip commissions, risk insurance and other benefits. Rather, upon information and belief, TM creates and distributes “doubledip bots” to allow ticket resellers to purchase and repost tickets to TM’s own, integrated secondary ticket exchange automatically and at a greater speed. 59. Defendants deny the allegations of Paragraph 59 of the SAC, and aver that 9 TM makes no bona fide attempts to implement security measures that materially 10 interfere with its sales of tickets to ticket resellers, including those that (unlike 11 Defendants) use bots, sales activity that TM encourages and from which TM obtains 12 substantial profits, double-dip commissions, risk insurance and other benefits. Rather, 13 upon information and belief, TM creates and distributes “double-dip bots” to allow ticket 14 resellers to purchase and repost tickets to TM’s own, integrated secondary ticket 15 exchange automatically and at a greater speed. 16 60. Defendants deny the allegations of Paragraph 60 of the SAC, except admit 17 that a letter was sent by TM to Nicholas Lombardi dated May 2015, and refer the Court 18 to the letter and the TOU for the terms and contents thereof. 19 61. Defendants deny the allegations of Paragraph 61 of the SAC except admit 20 that Lombardi received a letter addressed to him from TM dated May 2015, refer the 21 court to that letter for the contents thereof, and aver that TM makes no bona fide attempts 22 to implement security measures that materially interfere with its sales of tickets to ticket 23 resellers, sales activity that TM encourages and from which TM obtains substantial 24 profits, double-dip commissions, risk insurance and other benefits. On information and 25 belief, prior to the breakout popularity of Hamilton, its producers and TM profited from 26 ticket resellers who purchased large blocks of preview tickets but were unable to resell 27 many of them due to low demand, taking large losses while in effect insuring Hamilton 28 against the low turnout. Hamilton’s initial stated ticket limits were 16 tickets per person 14 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 15 of 46 Page ID #:848 1 2 3 4 5 6 7 8 9 per day, which is plainly not a bona fide attempt at limiting tickets purchases for personal use, but rather a policy hoping that resellers would purchase blocks of tickets. In the beginning of its run, Hamilton tickets sat available and unpurchased on the market for significant periods of time, and bots were certainly not required to purchase tickets. Moreover, since becoming popular, Hamilton producers have sold significant quantities of tickets directly to ticket resellers for resale at prices well above the stated face value, with no disclosure to the public of such practices, thus preserving a misleading public image while exploiting the ticket resale industry to profit from higher ticket prices. 62. The allegations in Paragraph 62 of the SAC state conclusions law that do 10 not require a response by Defendants. To the extent that any response is required, 11 Defendants deny the allegations of Paragraph 62, and refer the Court to the statutes 12 referenced therein and the TOU for the terms and contents thereof. 13 63. Defendants deny the allegations of Paragraph 63 of the SAC except admit 14 that Renaissance and Lichtman entered into the AOD and refer the Court to the AOD 15 and the referenced press release for the provisions and contents thereof. 16 64. Defendants deny the allegations of Paragraph 64 of the SAC except admit 17 that Renaissance and Lichtman entered into the AOD and refer the Court to the AOD 18 and the referenced press release for the provisions and contents thereof. 19 65. Defendants deny the allegations of Paragraph 65 of the SAC except lack 20 knowledge or information sufficient to form a belief about the truth of the allegations to 21 the extent they refer to conduct allegedly undertaken by Fast Software or unidentified 22 Doe Defendants. 23 66. Defendants deny the allegations and legal conclusions of Paragraph 66 of 24 the SAC except lack knowledge or information sufficient to form a belief about the truth 25 of the allegations to the extent they refer to conduct allegedly undertaken by Fast 26 Software or unidentified Doe Defendants. 27 28 67. Defendants lack knowledge or information sufficient to form a belief about the truth of the allegations contained in Paragraph 67 of the SAC concerning alleged 15 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 16 of 46 Page ID #:849 1 2 3 4 5 6 7 8 conduct by Fast Software or unidentified Doe Defendants, except deny such allegations if and to the extent interpreted to refer to conduct allegedly undertaken by Defendants. 68. Defendants deny the allegations contained in Paragraph 68 of the SAC. 69. Defendants deny the allegations of Paragraph 69 of the SAC except lack knowledge or information sufficient to form a belief about the truth of the allegations to the extent they refer to conduct allegedly undertaken by Fast Software or unidentified Doe Defendants. 70. Defendants deny the allegations of Paragraph 70 of the SAC except lack 9 knowledge or information sufficient to form a belief about the truth of the allegations to 10 the extent they refer to conduct allegedly undertaken by Fast Software or unidentified 11 Doe Defendants. 12 71. Defendants lack knowledge or information sufficient to form a belief about 13 the truth of the allegations contained in Paragraph 71 of the SAC concerning alleged 14 conduct by Fast Software or unidentified Doe Defendants, except deny such allegations 15 if and to the extent interpreted to refer to conduct allegedly undertaken by Defendants. 16 72. Defendants deny the allegations of Paragraph 72 of the SAC except lack 17 knowledge or information sufficient to form a belief about the truth of the allegations to 18 the extent they refer to conduct allegedly undertaken by unidentified Doe Defendants, 19 and refer the Court to the TOU for the terms and contents thereof. 20 21 22 73. Defendants deny the allegations of Paragraph 73 of the SAC, and refer the Court to the TOU for the terms and contents thereof. 74. Defendants deny the allegations in Paragraph 74 of the SAC, and aver that 23 TM makes no bona fide effort to prevent the use of its system by ticket resellers, 24 including those that (unlike Defendants) use bots, and that the use of TM’s system by 25 resellers is to TM’s net benefit. TM’s willing embrace of ticket reseller activity on its 26 website is a core part of its business model and the enhanced profits that TM obtains 27 from double-dip commissions, and cannot support an action based on alleged damage 28 from such reseller activity, which TM encourages on its system. 16 Indeed, upon Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 17 of 46 Page ID #:850 1 2 3 4 5 6 7 8 9 information and belief, TM is actually in the business of creating and distributing ticket bot software to ticket resellers for use on its system, in the form of software “double-dip bots” that allow ticket resellers to purchase tickets from TM or immediately post tickets purchased from TM to TM’s own secondary exchange, providing TM with a second commission on resale of the same ticket. TM and its supplier partners foster, exploit, rely upon and profit from the activities of ticket resellers and secondary ticket exchanges at every juncture, and it is wholly disingenuous for TM to now, as it faces scrutiny for its improper tactics, to seek to scapegoat and feign antagonism towards the industry. 75. Defendants deny the allegations in Paragraph 75 of the SAC, and aver that 10 TM makes no bona fide effort to prevent the use of its system by ticket resellers, 11 including those that (unlike Defendants) use bots, and that the use of TM’s system by 12 resellers is to TM’s net benefit. TM’s willing embrace of ticket reseller activity on its 13 website is a core part of its business model and the enhanced profits that TM obtains 14 from double-dip commissions, and cannot support an action based on alleged damage 15 from such reseller activity, which TM encourages on its system. 16 information and belief, TM is actually in the business of creating and distributing ticket 17 bot software to ticket resellers for use on its system, in the form of software “double-dip 18 bots” that allow ticket resellers to purchase tickets from TM or immediately post tickets 19 purchased from TM to TM’s own secondary exchange, providing TM with a second 20 commission on resale of the same ticket. TM and its supplier partners further use the 21 secondary markets to manipulate ticket pricing. They can and do move large blocks of 22 tickets directly to secondary exchanges (in effect using secondary exchanges as primary 23 exchanges) in order to manipulate ticket pricing without transparency, allowing them to, 24 for example, release blocks of tickets at lower-than-original pricing without offending 25 the original purchasers at the higher face vale prices. TM and its supplier partners foster, 26 exploit, rely upon and profit from the activities of ticket resellers and secondary ticket 27 exchanges at every juncture, and it is wholly disingenuous for TM to now, as it faces 28 scrutiny for its improper tactics, to seek to scapegoat and feign antagonism towards the 17 Indeed, upon Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 18 of 46 Page ID #:851 1 2 3 4 5 6 7 8 9 10 industry. 76. Defendants deny the allegations in Paragraph 76 of the SAC, and aver that TM profits substantially from the use of its system by ticket resellers, including those that (unlike Defendants) use bots. 77. Defendants lack knowledge or information sufficient to form a belief about the truth of the allegations contained in Paragraph 77 of the SAC. 78. Defendants deny the allegations in Paragraph 78 of the SAC. 79. Defendants lack knowledge or information sufficient to form a belief about the truth of the allegations contained in Paragraph 79 of the SAC. 80. Defendants deny the allegations of Paragraph 80 of the SAC except lack 11 knowledge or information sufficient to form a belief as to the truth of the allegations 12 concerning TM’s conduct, and refer the Court to the TOU for the terms and contents 13 thereof. 14 15 16 81. Defendants allege and incorporate by reference all of the preceding responses. 82. Defendants lack knowledge or information sufficient to form a belief about 17 the truth of the allegations contained in Paragraph 82 of the SAC and refer the Court to 18 the TOU for the terms and contents thereof. 19 83. Defendants deny the allegations of Paragraph 83 of the SAC except lack 20 knowledge or information sufficient to form a belief about the truth of the allegations 21 insofar as they relate to the conduct of Fast Software or unidentified Doe Defendants, 22 and refer the Court to the TOU for the terms and contents thereof. 23 24 84. Defendants deny the allegations of Paragraph 84 of the SAC, and refer the Court to the TOU for the terms and contents thereof. 25 85. Defendants deny the allegations of Paragraph 85 of the SAC. 26 86. Defendants deny the allegations of Paragraph 86 of the SAC, and refer the 27 28 Court to the TOU for the terms and contents thereof. 87. Defendants deny the allegations of Paragraph 87 of the SAC, and refer the 18 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 19 of 46 Page ID #:852 1 2 3 4 5 6 7 8 9 10 11 Court to the TOU for the terms and contents thereof. 88. Defendants deny the allegations of Paragraph 88 of the SAC except lack knowledge or information sufficient to form a belief about the truth of the allegations insofar as they relate to the conduct of Fast Software or unidentified Doe Defendants. 89. Defendants deny the allegations of Paragraph 89 of the SAC except lack knowledge or information sufficient to form a belief about the truth of the allegations insofar as they relate to the conduct of Fast Software or unidentified Doe Defendants, and refer the Court to the TOU for the terms and contents thereof. 90. Defendants deny the allegations of Paragraph 90 of the SAC, and refer the Court to the TOU for the terms and contents thereof. 91. Defendants lack knowledge or information sufficient to form a belief about 12 the truth of the allegations contained in Paragraph 91 of the SAC, and refer the Court to 13 the TOU for the terms and contents thereof. 14 92. 15 the SAC. 16 93. Defendants deny the allegations and legal conclusions of Paragraph 92 of Defendants lack knowledge or information sufficient to form a belief about 17 the truth of the allegations contained in Paragraph 93 of the SAC, and refer the Court to 18 the TOU for the terms and contents thereof. 19 94. 20 the SAC. 21 95. 22 Defendants deny the allegations and legal conclusions of Paragraph 94 of Defendants allege and incorporate by reference all of the preceding responses. 23 96. Defendants deny the allegations and legal conclusions of Paragraph 96 of 24 the SAC. 25 97. Defendants deny the allegations of Paragraph 97 of the SAC. 26 98. Defendants deny the allegations of Paragraph 98 of the SAC. 27 99. Defendants deny the allegations of Paragraph 99 of the SAC. 28 100. Defendants deny the allegations and legal conclusions of Paragraph 100 of 19 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 20 of 46 Page ID #:853 1 2 3 4 5 6 7 8 9 the SAC. 101. Defendants allege and incorporate by reference all of the preceding responses. 102. Defendants lack knowledge or information sufficient to form a belief about the truth of the allegations contained in Paragraph 102 of the SAC. 103. Defendants lack knowledge or information sufficient to form a belief about the truth of the allegations contained in Paragraph 103 of the SAC concerning alleged conduct by Fast Software or unidentified Doe Defendants, except deny such allegations if and to the extent interpreted to refer to conduct allegedly undertaken by Defendants. 10 104. Defendants lack knowledge or information sufficient to form a belief about 11 the truth of the allegations contained in Paragraph 104 of the SAC concerning alleged 12 conduct by Fast Software or unidentified Doe Defendants, except deny such allegations 13 if and to the extent interpreted to refer to conduct allegedly undertaken by Defendants. 14 105. Defendants lack knowledge or information sufficient to form a belief about 15 the truth of the allegations contained in Paragraph 105 of the SAC concerning alleged 16 conduct by Fast Software or unidentified Doe Defendants, except deny such allegations 17 if and to the extent interpreted to refer to conduct allegedly undertaken by Defendants. 18 19 20 21 106. Defendants allege and incorporate by reference all of the preceding responses. 107. Defendants lack knowledge or information sufficient to form a belief about the truth of the allegations contained in Paragraph 107 of the SAC. 22 108. Defendants lack knowledge or information sufficient to form a belief about 23 the truth of the allegations contained in Paragraph 108 of the SAC concerning alleged 24 conduct by unidentified Doe Defendants, except deny such allegations if and to the 25 extent interpreted to refer to conduct allegedly undertaken by Defendant, and refer the 26 Court to the TOU for the full terms and contents thereof. 27 109. Defendants lack knowledge or information sufficient to form a belief about 28 the truth of the allegations contained in Paragraph 109 of the SAC concerning alleged 20 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 21 of 46 Page ID #:854 1 2 3 4 5 6 7 8 conduct by unidentified Doe Defendants, except deny such allegations if and to the extent interpreted to refer to conduct allegedly undertaken by Defendant. 110. Defendants lack knowledge or information sufficient to form a belief about the truth of the allegations contained in Paragraph 110 of the SAC concerning alleged conduct by unidentified Doe Defendants, except deny such allegations if and to the extent interpreted to refer to conduct allegedly undertaken by Defendant. 111. Defendants allege and incorporate by reference all of the preceding responses. 9 112. Defendants deny the allegations of Paragraph 112 of the SAC. 10 113. Defendants deny the allegations of Paragraph 113 of the SAC. 11 114. Defendants deny the allegations of Paragraph 114 of the SAC. 12 115. Defendants deny the allegations and legal conclusions of Paragraph 115 of 13 14 15 the SAC. 116. Defendants allege and incorporate by reference all of the preceding responses. 16 117. Defendants lack knowledge or information sufficient to form a belief about 17 the truth of the allegations contained in Paragraph 117 of the SAC concerning alleged 18 conduct by Fast Software or unidentified Doe Defendants, except deny such allegations 19 if and to the extent interpreted to refer to conduct allegedly undertaken by Defendants. 20 118. Defendants lack knowledge or information sufficient to form a belief about 21 the truth of the allegations contained in Paragraph 118 of the SAC concerning alleged 22 conduct by Fast Software or unidentified Doe Defendants, except deny such allegations 23 if and to the extent interpreted to refer to conduct allegedly undertaken by Defendants. 24 119. Defendants lack knowledge or information sufficient to form a belief about 25 the truth of the allegations contained in Paragraph 119 of the SAC concerning alleged 26 conduct by Fast Software or unidentified Doe Defendants, except deny such allegations 27 if and to the extent interpreted to refer to conduct allegedly undertaken by Defendants. 28 120. Defendants lack knowledge or information sufficient to form a belief about 21 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 22 of 46 Page ID #:855 1 2 3 4 5 6 7 8 9 the truth of the allegations contained in Paragraph 120 of the SAC concerning alleged conduct by Fast Software or unidentified Doe Defendants, except deny such allegations if and to the extent interpreted to refer to conduct allegedly undertaken by Defendants. 121. Defendants allege and incorporate by reference all of the preceding responses. 122. Defendants deny the allegations of Paragraph 122 of the SAC except lack knowledge or information sufficient to form a belief about the truth of the allegations insofar as they relate to the conduct of Fast Software or unidentified Doe Defendants, and refer the Court to the TOU for the terms and contents thereof. 10 123. Defendants deny the allegations of Paragraph 122 of the SAC except lack 11 knowledge or information sufficient to form a belief about the truth of the allegations 12 insofar as they relate to the conduct of Fast Software or unidentified Doe Defendants, 13 and refer the Court to the TOU for the terms and contents thereof. 14 124. Defendants deny the allegations of Paragraph 124 of the SAC except lack 15 knowledge or information sufficient to form a belief about the truth of the allegations 16 insofar as they relate to the conduct of Fast Software or unidentified Doe Defendants. 17 125. Defendants deny the allegations of Paragraph 125 of the SAC except lack 18 knowledge or information sufficient to form a belief about the truth of the allegations 19 insofar as they relate to the conduct of Fast Software or unidentified Doe Defendants. 20 126. Defendants deny the allegations of Paragraph 126 of the SAC except lack 21 knowledge or information sufficient to form a belief about the truth of the allegations 22 insofar as they relate to the conduct of Fast Software or unidentified Doe Defendants. 23 127. Defendants deny the allegations of Paragraph 127 of the SAC except lack 24 knowledge or information sufficient to form a belief about the truth of the allegations 25 insofar as they relate to the conduct of Fast Software or unidentified Doe Defendants. 26 128. Defendants deny the allegations of Paragraph 128 of the SAC except lack 27 knowledge or information sufficient to form a belief about the truth of the allegations 28 insofar as they relate to the conduct of Fast Software or unidentified Doe Defendants. 22 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 23 of 46 Page ID #:856 1 2 3 4 5 6 7 8 9 10 129. Defendants deny the allegations of Paragraph 129 of the SAC except lack knowledge or information sufficient to form a belief about the truth of the allegations insofar as they relate to the conduct of Fast Software or unidentified Doe Defendants. 130. Defendants lack knowledge or information sufficient to form a belief about the truth of the allegations contained in Paragraph 130 of the SAC concerning alleged conduct by Fast Software or unidentified Doe Defendants, except deny such allegations if and to the extent interpreted to refer to conduct allegedly undertaken by Defendants. 131. Defendants deny the allegations of Paragraph 131 of the SAC except lack knowledge or information sufficient to form a belief about the truth of the allegations insofar as they relate to the conduct of Fast Software or unidentified Doe Defendants. 11 132. Defendants deny the allegations of Paragraph 132 of the SAC except lack 12 knowledge or information sufficient to form a belief about the truth of the allegations 13 insofar as they relate to the conduct of Fast Software or unidentified Doe Defendants. 14 15 133. Defendants allege and incorporate by reference all of the preceding responses. 16 134. Defendants deny the allegations of Paragraph 134 of the SAC except lack 17 knowledge or information sufficient to form a belief about the truth of the allegations 18 insofar as they relate to the conduct of Fast Software or unidentified Doe Defendants. 19 135. Defendants lack knowledge or information sufficient to form a belief about 20 the truth of the allegations contained in Paragraph 135 of the SAC concerning alleged 21 conduct by Fast Software or unidentified Doe Defendants, except deny such allegations 22 if and to the extent interpreted to refer to conduct allegedly undertaken by Defendants. 23 136. Defendants deny the allegations of Paragraph 136 of the SAC except lack 24 knowledge or information sufficient to form a belief about the truth of the allegations 25 insofar as they relate to the conduct of Fast Software or unidentified Doe Defendants. 26 137. Defendants deny the allegations of Paragraph 137 of the SAC except lack 27 knowledge or information sufficient to form a belief about the truth of the allegations 28 insofar as they relate to the conduct of Fast Software or unidentified Doe Defendants. 23 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 24 of 46 Page ID #:857 1 2 3 4 5 6 7 8 138. Defendants allege and incorporate by reference all of the preceding responses. 139. Defendants lack knowledge or information sufficient to form a belief about the truth of the allegations contained in Paragraph 139 of the SAC concerning alleged conduct by Fast Software or unidentified Doe Defendants, except deny such allegations if and to the extent interpreted to refer to conduct allegedly undertaken by Defendants. 140. Defendants lack knowledge or information sufficient to form a belief about the truth of the allegations contained in Paragraph 140 of the SAC concerning alleged 9 conduct by Fast Software or unidentified Doe Defendants, except deny such allegations 10 if and to the extent interpreted to refer to conduct allegedly undertaken by Defendants. 11 141. Defendants deny the allegations of Paragraph 141 of the SAC. 12 142. Defendants deny the allegations of Paragraph 142 of the SAC. 13 143. Defendants deny the allegations of Paragraph 143 of the SAC. 14 144. Defendants deny the allegations of Paragraph 144 of the SAC except lack 15 knowledge or information sufficient to form a belief about the truth of the allegations 16 insofar as they relate to the conduct of Fast Software or unidentified Doe Defendants, 17 and refer the Court to the TOU for the terms and contents thereof. 18 145. Defendants deny the allegations of Paragraph 145 of the SAC except lack 19 knowledge or information sufficient to form a belief about the truth of the allegations 20 insofar as they relate to the conduct of Fast Software or unidentified Doe Defendants. 21 146. Defendants deny the allegations of Paragraph 144 of the SAC except lack 22 knowledge or information sufficient to form a belief about the truth of the allegations 23 insofar as they relate to the conduct of unidentified Doe Defendants, and refer the Court 24 to the TOU for the terms and contents thereof. 25 147. Defendants deny the allegations of Paragraph 147 of the SAC. 26 148. Defendants deny the allegations of Paragraph 148 of the SAC. 27 149. Defendants deny the allegations of Paragraph 149 of the SAC. 28 150. Defendants deny the allegations of Paragraph 150 of the SAC except lack 24 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 25 of 46 Page ID #:858 1 2 3 4 5 6 7 8 9 knowledge or information sufficient to form a belief about the truth of the allegations insofar as they relate to the conduct of Fast Software or unidentified Doe Defendants. 151. Defendants allege and incorporate by reference all of the preceding responses. 152. Defendants deny the allegations of Paragraph 152 of the SAC except lack knowledge or information sufficient to form a belief about the truth of the allegations insofar as they relate to the conduct of Fast Software or unidentified Doe Defendants. 153. Defendants deny the allegations of Paragraph 153 of the SAC, and refer the Court to the TOU for the terms and contents thereof. 10 154. Defendants deny the allegations of Paragraph 154 of the SAC. 11 155. Defendants deny the allegations of Paragraph 155 of the SAC except lack 12 knowledge or information sufficient to form a belief about the truth of the allegations 13 insofar as they relate to the conduct of Fast Software or unidentified Doe Defendants. 14 156. Defendants deny the allegations of Paragraph 156 of the SAC except lack 15 knowledge or information sufficient to form a belief about the truth of the allegations 16 insofar as they relate to the conduct of unidentified Doe Defendants. 17 157. Defendants deny the allegations of Paragraph 157 of the SAC. 18 158. Defendants deny the allegations of Paragraph 158 of the SAC except lack 19 knowledge or information sufficient to form a belief about the truth of the allegations 20 insofar as they relate to the conduct of Fast Software or unidentified Doe Defendants. 21 159. Defendants deny the allegations of Paragraph 159 of the SAC except lack 22 knowledge or information sufficient to form a belief about the truth of the allegations 23 insofar as they relate to the conduct of Fast Software or unidentified Doe Defendants, 24 and refer the Court to the TOU for the terms and contents thereof. 25 160. Defendants lack knowledge or information sufficient to form a belief about 26 the truth of the allegations contained in Paragraph 160 of the SAC concerning alleged 27 conduct by Fast Software or unidentified Doe Defendants, except deny such allegations 28 if and to the extent interpreted to refer to conduct allegedly undertaken by Defendants. 25 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 26 of 46 Page ID #:859 1 2 3 4 5 6 7 8 9 10 161. Defendants allege and incorporate by reference all of the preceding responses. 162. Defendants lack knowledge or information sufficient to form a belief about the truth of the allegations and legal conclusions contained in Paragraph 162 of the SAC. 163. Defendants deny the allegations of Paragraph 163 of the SAC except lack knowledge or information sufficient to form a belief about the truth of the allegations insofar as they relate to the conduct of Fast Software or unidentified Doe Defendants. 164. Defendants deny the allegations of Paragraph 164 of the SAC except lack knowledge or information sufficient to form a belief about the truth of the allegations insofar as they relate to the conduct of Fast Software or unidentified Doe Defendants. 11 165. Defendants deny the allegations of Paragraph 165 of the SAC. 12 166. Defendants deny the allegations and legal conclusions of Paragraph 166 of 13 14 15 the SAC. 167. Defendants allege and incorporate by reference all of the preceding responses. 16 168. Defendants deny the allegations and legal conclusions of Paragraph 168 of 17 the SAC except lack knowledge or information sufficient to form a belief about the truth 18 of the allegations insofar as they relate to the conduct of Fast Software or unidentified 19 Doe Defendants. 20 169. Defendants deny the allegations and legal conclusions of Paragraph 169 of 21 the SAC except lack knowledge or information sufficient to form a belief about the truth 22 of the allegations insofar as they relate to the conduct of Fast Software or unidentified 23 Doe Defendants. 24 170. Defendants deny the allegations and legal conclusions of Paragraph 170 of 25 the SAC except lack knowledge or information sufficient to form a belief about the truth 26 of the allegations insofar as they relate to the conduct of Fast Software or unidentified 27 Doe Defendants. 28 171. Defendants deny the allegations and legal conclusions of Paragraph 171 of 26 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 27 of 46 Page ID #:860 1 2 3 4 5 6 7 8 the SAC except lack knowledge or information sufficient to form a belief about the truth of the allegations insofar as they relate to the conduct of Fast Software or unidentified Doe Defendants. 172. Defendants deny the allegations and legal conclusions of Paragraph 172 of the SAC except lack knowledge or information sufficient to form a belief about the truth of the allegations insofar as they relate to the conduct of Fast Software or unidentified Doe Defendants. 173. Defendants deny the allegations and legal conclusions of Paragraph 173 of 9 the SAC except lack knowledge or information sufficient to form a belief about the truth 10 of the allegations insofar as they relate to the conduct of Fast Software or unidentified 11 Doe Defendants. 12 174. Defendants deny the allegations and legal conclusions of Paragraph 174 of 13 the SAC except lack knowledge or information sufficient to form a belief about the truth 14 of the allegations insofar as they relate to the conduct of Fast Software or unidentified 15 Doe Defendants. 16 175. Defendants deny the allegations and legal conclusions of Paragraph 175 of 17 the SAC except lack knowledge or information sufficient to form a belief about the truth 18 of the allegations insofar as they relate to the conduct of Fast Software or unidentified 19 Doe Defendants. 20 176. Defendants deny the allegations and legal conclusions of Paragraph 176 of 21 the SAC except lack knowledge or information sufficient to form a belief about the truth 22 of the allegations insofar as they relate to the conduct of Fast Software or unidentified 23 Doe Defendants. 24 25 26 27 28 177. Defendants deny the allegations and legal conclusions of Paragraph 177 of the SAC. 178. Defendants deny the allegations and legal conclusions of Paragraph 178 of the SAC. 179. Defendants deny the allegations and legal conclusions of Paragraph 179 of 27 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 28 of 46 Page ID #:861 1 2 3 4 5 6 7 the SAC. 180. Defendants allege and incorporate by reference all of the preceding responses. 181. Defendants deny the allegations of Paragraph 180 of the SAC. 182. Defendants deny the allegations of Paragraph 181 of the SAC. 183. Defendants deny the allegations of Paragraph 182 of the SAC. 184. The ad damnum paragraphs which immediately follow paragraph 183 of 8 the SAC state a demand for relief to which no responsive pleading is required but, should 9 a response be required, Defendants deny that Plaintiff is entitled to any relief demanded 10 therein (including any and all subparts). 11 12 AFFIRMATIVE DEFENSES 13 FIRST AFFIRMATIVE DEFENSE 14 185. The SAC fails to state a claim upon which relief may be granted. 15 SECOND AFFIRMATIVE DEFENSE 16 186. Plaintiff’s claims are barred in whole or in part by the doctrine of waiver. 17 THIRD AFFIRMATIVE DEFENSE 18 19 187. Plaintiff’s claims are barred in whole or in part by the doctrine of acquiescence. 20 FOURTH AFFIRMATIVE DEFENSE 21 188. Plaintiff’s claims are barred in whole or in part by the doctrine of unclean 22 hands. FIFTH AFFIRMATIVE DEFENSE 23 24 189. Plaintiff’s claims are barred in whole or in part by the doctrine of laches. SIXTH AFFIRMATIVE DEFENSE 25 26 27 190. Plaintiff’s claims are barred in whole or in part by the applicable statutes of limitation. 28 28 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 29 of 46 Page ID #:862 1 SEVENTH AFFIRMATIVE DEFENSE 2 191. Plaintiff’s claims are barred in whole or in part by estoppel. 3 EIGHTH AFFIRMATIVE DEFENSE 4 5 192. Plaintiff has suffered no damages or has failed to mitigate its damages, if any. 6 NINTH AFFIRMATIVE DEFENSE 7 8 9 10 193. Any damages or injuries allegedly sustained by Plaintiff were caused, in whole or in part, by the acts or omissions of Plaintiff itself, or any of its agents, employees, or other representatives, or by persons or entities other than Defendants, and any recovery is therefore barred. 11 TENTH AFFIRMATIVE DEFENSE 12 194. Plaintiff’s claims are barred because any award granted to Plaintiff would 13 result in unjust enrichment. 14 ELEVENTH AFFIRMATIVE DEFENSE 15 195. Plaintiff’s claims are barred because they have failed to join indispensable 16 parties. 17 TWELFTH AFFIRMATIVE DEFENSE 18 196. Plaintiff’s copyrights are invalid or unenforceable. 19 THIRTEENTH AFFIRMATIVE DEFENSE 20 197. Defendants did not commit any act of infringement. 21 FOURTEENTH AFFIRMATIVE DEFENSE 22 198. Without admitting the alleged copying of any copyrighted material 23 allegedly owned by plaintiff, the conduct of which Plaintiff complains constitutes fair 24 use. 25 26 27 FIFTEENTH AFFIRMATIVE DEFENSE 199. Without admitting any infringement, which is denied, the alleged infringements were innocent. 28 29 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 30 of 46 Page ID #:863 1 2 3 4 5 6 7 8 9 SIXTEENTH AFFIRMATIVE DEFENSE 200. Without admitting the alleged copying of any copyrighted material allegedly owned by plaintiff, plaintiff authorized, impliedly or explicitly, Defendants’ allegedly infringing use of its works. SEVENTEENTH AFFIRMATIVE DEFENSE 201. Plaintiff’s copyright claims are barred by the doctrine of misuse of copyright. Defendants reserve the right to assert one or more antitrust related claims. EIGHTEENTH AFFIRMATIVE DEFENSE 202. Plaintiff’s claim for fraud fails because Defendants did not make any 10 untrue statement of fact and Plaintiff did not and could not rely upon anything 11 Defendants did or did not say. 12 13 14 15 16 NINETEENTH AFFIRMATIVE DEFENSE 203. Plaintiff’s claim for fraud fails because Defendants did not make any untrue statement of fact with intent to deceive or reckless disregard for the truth. TWENTIETH AFFIRMATIVE DEFENSE 204. Plaintiff’s claim for aiding and abetting fraud fails because Defendants 17 Lombardi and Lichtman did not have actual knowledge of, or participate in, the 18 underlying alleged events. 19 TWENTY-FIRST AFFIRMATIVE DEFENSE 20 205. Plaintiff’s claims for fraud and aiding and abetting fraud fail because they 21 were not pled with the requisite particularity in accordance with Rule 9 of the Federal 22 Rules of Civil Procedure. 23 24 25 26 27 TWENTY-SECOND AFFIRMATIVE DEFENSE 206. Plaintiff’s claims for fraud and aiding and abetting fraud fail because Defendants have acted in good faith throughout. TWENTY-THIRD AFFIRMATIVE DEFENSE 207. Plaintiff’s contract claims fail for lack of consideration. 28 30 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 31 of 46 Page ID #:864 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 TWENTY-FOURTH AFFIRMATIVE DEFENSE 208. Plaintiff’s contract claims fail because the contract is a contract of adhesion, is unconscionable, and is against public policy. TWENTY-FIFTH AFFIRMATIVE DEFENSE 209. Without admitting any breach of contract, plaintiff’s contract claim fails because of mistake of fact. TWENTY-SIXTH AFFIRMATIVE DEFENSE 210. Plaintiff’s alleged damages due to loss of goodwill fail because Plaintiff has no valuable goodwill or because any loss of goodwill was due in whole or in part to Plaintiff’s own conduct or the conduct of third parties. TWENTY-SEVENTH AFFIRMATIVE DEFENSE 211. Plaintiff’s fraud claim is barred by the economic loss doctrine. TWENTY-EIGHTH AFFIRMATIVE DEFENSE 212. Plaintiff’s contract claim as to each Defendant fails because each such Defendant is not in privity with Plaintiff. TWENTY-NINTH AFFIRMATIVE DEFENSE 213. Defendants are informed and believe and on such basis allege that they 18 may have additional defenses available to them, which are not fully known and which 19 they are not presently aware of. Defendants reserve the right to raise and assert further 20 additional defenses after such defenses have been ascertained. 21 22 23 24 25 26 27 28 31 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 32 of 46 Page ID #:865 1 DEFENDANTS’ COUNTERCLAIMS AGAINST TICKETMASTER 2 3 4 5 6 7 8 9 1. TM, along with its affiliates and parent company, Live Nation Entertainment (“LNE”), exerts an overwhelming dominance over all aspects of the live event market. Prior to its merger with Live Nation, to create LNE, the Department of Justice found that for primary event ticketing, TM had maintained a market share of over 80% for more than 15 years. The DOJ noted that Live Nation was the first real challenge to TM’s hegemony, and TM responded by seeking to purchase Live Nation and squelch that competition. Despite the overwhelming case for anticompetitive risk, the merger was allowed in 2010 based upon TM and Live Nation entering into a 10 consent decree to avoid anticompetitive conduct. Eight years later, the DOJ is 11 reportedly investigating LNE based on substantial evidence of precisely such 12 anticompetitive behavior.1 This anticompetitive conduct under investigation includes 13 attempts to use control over one market (concert tours) to pressure venues to use TM 14 for another market (primary ticketing). Rather than seeking to create a balanced 15 playing field for consumers, TM and its family of companies have consistently abused 16 their market power to obtain excessive profits at the expense of the consumer and 17 competitors. 18 2. The TM merger hearings in 2009 included testimony that, “The 19 amalgamation of these two companies into one should make them the poster child for 20 why this country needs antitrust laws.”2 Now, the chief of the New York Attorney 21 General’s Antitrust Bureau confirms that, “The [TM/Live Nation merger] Consent 22 Decree… is now widely seen as the poster child for the problems that arise when 23 enforcers adopt these temporary fixes to limit the anticompetitive effects of deeply 24 problematic vertical mergers.” 3 3. 25 But TM’s abuse of its market position goes beyond its touring influence. 26 TM has dramatically expanded its secondary ticket exchanges – ticket reselling 27 1 https://www.nytimes.com/2018/04/01/arts/music/live-nation-ticketmaster.html http://articles.latimes.com/2009/feb/25/business/fi-ticketmaster25 3 https://www.nytimes.com/2018/04/01/arts/music/live-nation-ticketmaster.html 2 28 32 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 33 of 46 Page ID #:866 1 2 3 4 5 6 7 8 9 operations – which now generate billions in annual sales according to TM’s public releases. These exchanges primarily involve resales of tickets that were originally sold on TM through its primary exchange, thus setting up a perverse set of financial incentives for TM and its supplier clients. As early as 2009, TM was investigated by the FTC for deceptive bait-and-switch tactics to gouge consumers. Among allegations were that TM employed misleading web pages to redirect consumers to its secondary ticket exchanges, claims that TM settled by agreeing to refund consumers moneys from excessive ticket prices. 4. TM’s highly profitable deceptive conduct has never ceased. Today 10 Ticketmaster’s website seamlessly integrates its primary and secondary ticket 11 exchange inventory in a single seating map. However, TM provides no transparency to 12 consumers about how and why tickets wind up on one or another exchange, and indeed 13 TM and its suppliers deceptively slip tickets between primary and secondary markets 14 to manipulate consumer pricing and squelch competition. For example, TM’s SAC 15 contains numerous allegations about Hamilton tickets, and TM alleges that many 16 tickets to this show were purchased by bots, which it alleges deprived the public of fair 17 access to primary exchange tickets. However, TM fails to mention that, on 18 information and belief, many tickets for each show of Hamilton were in fact never 19 placed onto the primary ticket exchange, but went directly to the secondary ticket 20 market for resale at significantly higher prices. The lack of availability of Hamilton 21 tickets on the primary market was thus due not merely to resellers purchasing tickets 22 from TM at face value, but also because many tickets were provided directly to 23 resellers by producers. Indeed, the New York Attorney General investigated ticket 24 sales to major concerts in New York, and found that 54 percent of tickets were not 25 made available to the general public by the supplier, held back for insiders, special 26 groups, or other non-public sales. In making its disingenuous complaints in that SAC 27 that ticket reseller activity causes loss of goodwill due to shortage of tickets available 28 on TM’s website, TM fails to disclose that many, if not most, tickets for shows were 33 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 34 of 46 Page ID #:867 1 2 3 4 5 6 7 8 9 10 not made available on the primary ticket exchange in the first place. 5. TM further misrepresents its knowledge and complicity in its sale of tickets to third-party ticket resellers. TM reaps substantial profits from its sale of tickets to ticket resellers, and TM encourages the use of its system by such resellers, whether or not those resellers (unlike Defendants) use alleged “bots,” or other automation systems, or engage in other alleged violations of TM’s TOU. TM has the information to identify the accounts on its website that are used by resellers, but intentionally chooses to not restrict those accounts from making purchases because TM profits substantially from their business. 6. The rapid expansion of TM’s secondary market sales numbers is critical 11 to understanding TM’s incentive to foster the use of its system by ticket resellers. 12 When TM sells a ticket to a reseller, it not only collects the full commission from that 13 primary sale, but it has a significantly higher chance of that ticket being placed on one 14 of its secondary ticket exchanges – after all, resale is what resellers do. TM then 15 receives a second, “double-dip” commission on the resale of that ticket. TM’s ticket 16 listings for popular shows are often dominated by tickets on its resale exchange – 17 tickets which originally came from its primary exchange and thus for which it is 18 getting double-dip commissions. Since ticket resellers are by definition more likely to 19 resell tickets than other members of the public, and are a dominant source of tickets for 20 TM’s resale exchanges, TM resale business depends on TM selling primary tickets to 21 resellers and TM stands to make significantly more commissions by selling to resellers 22 than to other members of the public. 23 7. Upon information and belief, TM has actually provided automated 24 programs to ticket resellers in order to allow them to purchase tickets from TM or 25 immediately post those tickets to TM’s own secondary exchange for resale faster and 26 in automated fashion. Such “double-dip bots” created and distributed by TM for use 27 on its own ticketing system not only belie the false narrative that TM offers concerning 28 attempts to stop bots or ticket resellers from purchasing tickets, but also evidence TM’s 34 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 35 of 46 Page ID #:868 1 2 3 4 5 6 7 8 9 use of its overwhelming primary ticket exchange market power to control the secondary ticket market as well. 8. To be clear, often TM is reselling (on its secondary exchange) the same tickets that it sold initially to resellers (on its primary exchange), thereby collecting multiple commissions per ticket, and even apparently creates and distributes “doubledip bots” to resellers to allow them to purchase or repost these tickets automatically. The disingenuousness of TM’s complaints about sales to ticket resellers is stark. TM’s website generally contains seating maps that integrate tickets from its primary exchange and its secondary exchange into a single map for each event. Primary 10 exchange ticket availability is commonly shown by blue dots on the map, and 11 secondary ticket exchange availability is commonly shown by pink dots on the map, all 12 of which are shown side by side on the same seating map. TM can sell a blue dot 13 primary exchange ticket to a reseller, collect a commission, and immediately turn the 14 blue dot into a pink dot (likely with a different price), and collect a double-dip 15 commission on that resale – of the same seat to the same event using the same website. 16 The “double-dip bots” that TM provides to resellers automates this process to make it 17 faster, and to crowd out competition from other secondary exchanges. Of course, this 18 windfall is far less likely if a ticket is sold to a non-reseller consumer, who would be of 19 course less likely to resell the ticket. 20 9. TM even sabotages its Verified Fan program, which it publicizes as a 21 means to provide special advance tickets to a special set of consumers with codes, by 22 releasing the same tickets for sale simultaneously at the box office, without requiring 23 any special code, and with full knowledge that ticket resellers will staff the box office 24 to purchase the tickets immediately. 25 10. Notably, for many events sold through TM, the terms of purchase limit 26 resale to TM’s own resale exchanges, an attempt to further ensure a double-dip 27 commission whenever a reseller purchases a ticket. Suppliers such as venues can share 28 in these double-dip commissions, depending on the provisions in their deals with TM. 35 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 36 of 46 Page ID #:869 1 2 3 4 5 6 7 8 9 10 An event that is priced below market may even enhance profits through the engagement of ticket resellers – who can purchase large quantities of tickets, providing valuable risk insurance against unsold seats and also providing double-dip commissions on the expected resale. 11. On information and belief, TM also utilizes its primary ticket market power to squelch competition in the secondary ticket market by expediting the issuance of final tickets with bar codes when tickets purchased on TM’s primary exchange are offered for resale on TM’s secondary exchange, something that it does not do when tickets are offered for resale on any other exchange. 12. On information and belief, TM also manages its primary ticket exchange 11 website, and selectively asserts legal and contractual rights and claims relating thereto, 12 in order to gain control of the secondary ticket market. TM has information sufficient 13 to identify the accounts of virtually all ticket resellers, but knowingly allows such 14 activity to continue, despite its claim that such activity violates its TOU, so long as TM 15 sees double-dip commissions through placement of resale listings on TM’s own 16 secondary exchanges, as well as other benefits. On information and belief, TM only 17 selectively seeks to press alleged TOU breaches against non-favored resellers that use 18 different secondary market exchanges. 19 13. TM’s ticket reselling business has been and is in direct competition with 20 the business of other ticket resellers, including Defendants. However, TM asserts its 21 rights and influence in the primary ticket market to displace other competitor ticket 22 resellers, including Defendants, and to increase its market share of the secondary ticket 23 market. TM does this by, inter alia, seeking to block its secondary market competitors 24 from accessing the primary ticket exchange, which TM largely controls in the United 25 States. While claiming that the business of ticket reselling is somehow harmful to the 26 public, TM wants to simply suppress its competition in the secondary market, growing 27 its market share, obtaining more double-dip commissions for each seat, and ultimately 28 increasing its profits and market power. 36 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 37 of 46 Page ID #:870 1 2 3 4 5 6 7 14. TM’s SAC includes numerous claims to the effect that TM’s goal is to make ticket buying “as fair and equitable as possible for consumers.” This is not the reality. Even beyond the FTC investigation that forced TM to settle claims of its deceptive bait-and-switch sales tactics to gouge consumers4, and the class action lawsuit that forced TM to enter into a $400 million settlement in 2014 based on over a decade of wildly overcharging consumers for “order processing” and delivery fees5, and the current U.S Department of Justice investigation into TM and its corporate 8 family’s anticompetitive conduct6, TM’s outsized profits are built on using its 9 excessive market power to stifle competition and unfairly exact additional fees to line 10 its pockets. 11 15. Renaissance is a ticket reseller, and has operated an online secondary 12 ticket exchange platform. Renaissance is a direct competitor to TM in the secondary 13 ticket exchange market. Renaissance does not use bots to purchase tickets. 14 15 16. Prestige has operated as a ticket reseller and a direct competitor to TM in the secondary ticket exchange market. Prestige does not use bots to purchase tickets. 16 FIRST COUNTERCLAIM 17 (Violation of N.Y. Arts and Cultural Affairs Law Section 25.24(2)(b)) 18 17. 19 Defendants repeat and reallege each other paragraph of these Counterclaims as though fully set forth herein. 20 18. “Ticket purchasing software” (“TPS”) is defined in N.Y. Arts and 21 Cultural Affairs Law (“NYACL”) Section 25.24(1) to include “any machine, device, 22 computer program or computer software that, on its own or with human assistance, 23 bypasses security measures or access control systems on a retail ticket purchasing 24 platform, or other controls or measures on a retail ticket purchasing platform that assist 25 in implementing a limit on the number of tickets that can be purchased, to purchase 26 4 27 28 https://www.ftc.gov/news-events/press-releases/2010/02/ticketmaster-ticketsnow-settle-ftc-charges-deceptive-sales Order Preliminarily Approving Class Action Settlement, Schlesinger v. Ticketmaster, No. BC 304565 (L.A. Super. Ct., April 30, 2014) 6 https://www.nytimes.com/2018/04/01/arts/music/live-nation-ticketmaster.html 5 37 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 38 of 46 Page ID #:871 1 2 3 4 5 6 7 8 9 tickets. For purposes of this section, the term ‘retail ticket purchasing platform’ shall mean a retail ticket purchasing website, application, phone system, or other technology platform used to sell tickets.” 19. TM knowingly resells and offers to resell tickets that it knows were obtained using TPS, and which were not obtained for TM’s own use or the use of its invitees, employees, or agents. 20. As TM itself alleges in the SAC, TM is able to “clearly identify and track irregular (i.e., non-human) customer behavior.” Yet, even after obtaining and possessing information to identify and block TPS users from making purchases on the 10 TM website, TM knowingly allows purchasers to use TPS and to consummate 11 purchases on the TM website, obtaining commissions therefrom. TM then acquires the 12 rights to resell such tickets, which is knows were acquired using TPS, and TM then 13 proceeds to knowingly resell such tickets on its secondary ticket exchanges, collecting 14 additional double-dip commissions therefrom. 15 21. As a result of TM’s purposeful conspiracy with other ticket resellers who 16 use TPS to buy and resell tickets using TPS, Defendants have been prevented from 17 obtaining inventory on primary ticket exchanges, from growing their business and 18 reaching competitive economies of scale, and their business has suffered as a result. 19 Defendants have suffered substantial actual damages as a result, including costs and 20 expenses to investigate ticket inventories, increased business costs and lost business. 21 22. TM’s unfair competitive practices are ongoing, continue to the present, 22 and will continue unless relief enjoining these practices is granted. Defendants have 23 no adequate remedy at law. Defendants request that the Court enjoin TM from any and 24 all ticket sale transactions with entities that use TPS, or resale of tickets purchased 25 using TPS, pursuant to NYACL Section 25.24(7). 26 27 23. Defendants request reasonable attorney’s fees and costs pursuant to NYACL Section 25.24(8). 28 38 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 39 of 46 Page ID #:872 1 SECOND COUNTERCLAIM 2 3 4 5 6 7 8 9 (California Business and Professions Code, Section 17200) 24. Defendants repeat and reallege each other paragraph of these Counterclaims as though fully set forth herein. 25. TM has committed acts of unfair competition as defined by Business & California Professions Code section 17200 in performing the acts described herein and in failing to perform the acts described herein because these practices were unfair, unlawful, or fraudulent. 26. TM selectively uses its so-called security measures and claims of rights 10 under contract and copyright in connection with its primary ticket exchange in order to 11 gain control of the secondary ticket market and obtain double-dip commissions. 12 27. TM obscures information about ticket availability and misrepresents the 13 provenance of tickets on its website in order to obscure that it is selling secondary 14 market tickets at different prices than face value and that were obtained with the 15 knowledge of TM by reseller entities using TPS. 16 28. TM entices users to its website with the false promise and representation 17 that it is offering primary tickets to events at face value, when (a) TM’s intention and 18 practice is to knowingly allow ticket resellers to purchase the event primary inventory 19 or (b) TM knows that the supplier is not making a significant portion of the primary 20 inventory available to the public, which TM does not disclose to the public. Rather, 21 TM instead offers to the users that it lures tickets from its secondary exchange, at 22 different prices and providing a double-dip commission to TM. The allegations of this 23 paragraph will likely have evidentiary support after a reasonable opportunity for 24 further investigation or discovery. 25 29. TM uses the information that it tracks in its primary ticket exchange about 26 activities of so-called “irregular” users that it determines are resellers or are using TPS 27 on its website, and uses that information to expand its secondary exchange market 28 power and both suppress and exploit its competition. The allegations of this paragraph 39 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 40 of 46 Page ID #:873 1 2 3 4 5 6 7 8 9 will likely have evidentiary support after a reasonable opportunity for further investigation or discovery. 30. TM’s above representations are made as part of a plan or scheme with the knowledge and intent that it will not be selling tickets or providing the services as so advertised, but rather in a different manner that is more profitable for TM (e.g., via double-dip commissions) and more costly to consumers. The allegations of this paragraph will likely have evidentiary support after a reasonable opportunity for further investigation or discovery. 31. As a proximate cause of Defendants unfair business practices as alleged 10 herein, Defendants have suffered an injury in fact having lost or deprived of money or 11 property in an amount to be proven at trial. TM’s conduct in violation of Section 12 17200 has caused and continues to cause actual and substantial damage to Defendants. 13 TM’s unfair practices have significantly damaged Renaissance’s business, including by 14 unfairly refusing to sell inventory to Renaissance, diverting business and inventory 15 away from Defendants, preventing Defendants from obtaining competitive economies 16 of scale, and causing Defendants to expend time and costs to investigate and respond to 17 the changes in market inventory flow, all as a result of TM’s misrepresentations, unfair 18 practices, and abuse of its primary ticket exchange market power. 19 32. Moreover, California consumers have been harmed as a direct, 20 foreseeable and proximate result of TM’s actions, and are threatened with continued 21 such harm. Consumers face harm that includes further restriction on competition and 22 the lower-quality and higher-priced goods and services that flow therefrom as 23 described herein, increased prices for tickets, and continued deceptive conduct that 24 baits consumers into seeking primary exchange tickets that TM knowingly or 25 intentionally will not have available, instead to offer substitute and differently priced 26 secondary exchange tickets. 27 28 33. TM’s unfair, unlawful, or fraudulent acts and practices present a continuing threat to Defendants and to members of the public in that these acts and 40 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 41 of 46 Page ID #:874 1 2 3 4 5 6 7 8 9 practices are ongoing and are harmful and disruptive to business and ticket-sales markets. 34. As a direct and proximate result of the aforementioned acts and practices, TM has taken and received and continues to hold, as ill-gotten gains, monies owing to and owned by Defendants, which more should be restored to its rightful owners, Defendants. 35. TM’s unfair competitive practices are ongoing, continue to the present, and will continue unless relief enjoining these practices is granted under Section 17204. Defendants have no adequate remedy at law. 10 THIRD COUNTERCLAIM 11 (Violation of the Sherman Act, 15 U.S.C. § 1) 12 13 14 36. Defendants repeat and reallege each other paragraph of these Counterclaims as though fully set forth herein. 37. TM intentionally engaged in a course of conduct as part of a contract, 15 combination or conspiracy in an attempt to unreasonably restrain trade in the 16 secondary ticket exchange market. This course of conduct involved TM affiliates and 17 ticket suppliers with separate economic interests. As part of this course of conduct, 18 TM exercised its significant market power and knowingly used its control over the 19 primary ticket exchange marketplace in order to obtain increased control over the 20 secondary ticket exchange marketplace. This was accomplished through a variety of 21 means, including by (i) agreeing with ticket suppliers nationwide to restrict resale to 22 TM secondary ticket exchanges only, (ii) selectively acting to restrict access to TM’s 23 primary ticket exchange by other ticket resellers, particularly those who TM 24 determined were less likely to list tickets for resale on TM’s own secondary ticket 25 exchanges, and (iii) knowingly and intentionally allowing ticket resellers to use TPS on 26 TM’s site, in conflict with TM’s advertised policies, and offering such tickets for resale 27 to obtain double-dip commissions, including in violation of laws such as the NYACL. 28 38. TM’s acts as described herein are anticompetitive and exclusionary. TM 41 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 42 of 46 Page ID #:875 1 2 3 4 5 6 7 8 terminated a prior profitable course of dealing with Defendants, and selectively chose to allege contractual breaches to refuse to sell tickets to Defendants at retail prices for resale, while continuing to sell tickets to other resellers that TM was fully aware were operating and retail. Indeed many such resellers were and are using TPS. However, by selectively allowing primary ticket purchasing by resellers who TM perceived as supportive of its secondary ticket exchanges, while attempting to restrict access to primary ticket inventory by resellers that TM perceives as likely to use alternative secondary ticket exchanges, such as the one operated by Defendants, TM sacrifices 9 short-term profits in the primary ticket exchange market that it dominates, in order to 10 obtain additional market power and control of the secondary ticket exchange market. 11 39. TM’s attempted restraint of trade has caused direct injury to Defendants, 12 including by refusing to sell inventory to Defendants, diverting business and inventory 13 away from Defendants, entering into a series of exclusive contracts that prevented 14 Defendants from obtaining competitive economies of scale, and causing Defendants to 15 expend time and costs to investigate and respond to the changes in market inventory 16 flow. 17 FOURTH COUNTERCLAIM 18 (Violation of the Sherman Act, 15 U.S.C. § 2) 19 20 21 40. Defendants repeat and reallege each other paragraph of these Counterclaims as though fully set forth herein. 41. TM’s conduct described herein amounts to an intentional and unlawful 22 maintenance of monopoly power, and associated conspiracy and attempts to acquire 23 and maintain of monopoly power in the primary and secondary ticket exchange 24 markets, in violation of Section 2 of the Sherman Act. 25 42. TM maintains significant monopoly power in both the nationwide primary 26 and now secondary ticket exchange markets, including an ability to control prices and 27 exclude competition that TM regularly exercises unlawfully. Moreover, TM 28 unlawfully uses its overwhelming monopoly power in the primary ticket exchange 42 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 43 of 46 Page ID #:876 1 2 3 4 5 6 7 8 9 market to improperly exclude competition in the secondary ticket exchange market, including through exclusive contracts with primary ticket suppliers and venues nationwide to require that purchasers of primary tickets may only use Ticketmaster secondary exchanges for resale. 43. TM further uses its monopoly power to stifle competition by restricting access to its primary ticket inventory – which constitutes the vast majority of the primary ticket inventory in the nation – to resellers that it has determined are more likely to utilize its secondary ticket exchanges for resale, selectively asserting claims to restrict access to primary ticket inventory by entities more likely to use competitive 10 exchanges, including Defendants. TM thereby obtains double-dip commissions for its 11 affiliated or subsidiary resellers (as well as primary ticket suppliers who negotiate such 12 consideration), further monopolizing the market and preventing the growth of 13 competition. 14 44. TM’s unlawful conduct has suppressed and injured competitive business 15 activities and caused direct damage to Defendants, including by diminishing 16 Defendants’ sales opportunities and the sales opportunities of other ticket reseller 17 competitors, and increasing Defendants’ operating costs and the operating costs of 18 other ticket reseller competitors. 19 FIFTH COUNTERCLAIM 20 (Cartwright Claim, California Bus. And Prof. Code, Section 16720) 21 22 23 24 45. Defendants repeat and reallege each other paragraph of these Counterclaims as though fully set forth herein. 46. The conduct described herein amounts to a violation of California Business and Professional Code 16720. 25 SIXTH COUNTERCLAIM 26 (Declaratory Judgment of Copyright Misuse) 27 28 47. Defendants repeat and reallege each other paragraph of these Counterclaims as though fully set forth herein. 43 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 44 of 46 Page ID #:877 1 2 3 4 5 6 7 8 9 10 11 48. TM’s has used its alleged copyrights in an attempt to secure a monopoly not granted by the copyright office and contrary to public policy. 49. TM has asserted claims against Defendants for infringement in copyright in website content, although TM makes no allegation, nor provides any evidence tending to indicate, that Defendants have trafficked in substantially similar goods (let alone that either Defendants have profited, or TM has been damaged, by any such trafficking), nor that Defendants have created goods that in any way substitute in the market for TM’s allegedly infringed material, nor that TM’s allegedly infringed content has any license value (let alone that Defendants have trafficked in any product that would reduce such license value). 50. Indeed, TM’s copyright claim has nothing at all to do with the value of 12 any original work of authorship. Rather, TM is utilizing copyright registrations to 13 attempt to control the primary ticket exchange market, and to stifle ticket reseller 14 competitors such as Defendants. 15 51. The misuse is further highlighted by TM’s employ of copyright 16 registrations concerning website material that is not original or protectable, but consists 17 of mundane and functional commercial website code. The allegations of this 18 paragraph will likely have evidentiary support after a reasonable opportunity for 19 further investigation or discovery. 20 52. Further, TM’s copyright claims are based upon the theory that an alleged 21 violation of its website TOU turns the personal display and storage of a webpage – 22 something that is done to some degree by all users to a website – into infringement. 23 However the TOU do not provide for automatic termination in the event of any 24 violations of the TOU. Moreover, by the plain language of the TOU, all users of the 25 TM website are always in breach of the TOU. TM thus presides over a fabricated 26 scenario where it can launch a copyright infringement claim at any point against any 27 user of its site – although it offers its allegedly copyrighted content for free to the 28 world. 44 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 45 of 46 Page ID #:878 1 2 3 4 5 6 7 8 9 10 11 53. TM does not use its copyright to vindicate infringement of any exclusive right of authorship, but rather uses copyright registrations in bad faith and as a pretext to selectively attack competitors and establish additional control over a marketplace in which it already hold substantial monopoly power. 54. There is an actual, substantial and justiciable controversy concerning TM’s copyright misuse. WHEREFORE, Defendants request that the Court declare and award: • That TM has violated the NYACL, Cal. Bus. and Prof. Code 17200; the Sherman Act; • That TM has engaged in copyright misuse and its infringement claims are barred; 12 • That TM and its affiliates, subsidiaries and parent, and all persons acting on 13 their behalf or in concert with them be permanently enjoined and restrained 14 from in any manner: 15 16 o continuing, maintaining, or renewing the conduct alleged herein, or conduct having a similar purpose or effect; 17 • That TM is enjoined from continuing in its attempts to restrain trade, 18 foreclose competition and selectively restrict access to primary ticket 19 inventory by resellers; 20 • Damages in an amount to be proven at trial, trebled, plus interest; 21 • An award of Defendants’ reasonable attorneys’ fees, costs and expenses; and, 22 23 24 25 26 27 28 45 Case 2:17-cv-07232-ODW-JC Document 61 Filed 06/25/18 Page 46 of 46 Page ID #:879 1 • Such other and further relief as this Court may deem just and proper. 2 3 Dated: June 25, 2018 By: 4 5 6 /s/ Thomas H. Vidal Thomas H. Vidal tvidal@pryorcashman.com Benjamin S. Akley bakley@pryorcashman.com Attorneys for Defendants Prestige Entertainment West, Inc. and Renaissance Ventures LLC 7 8 9 10 11 12 13 14 15 DEMAND FOR JURY TRIAL Pursuant to Rule 38(b) of the Federal Rules of Civil Procedure, Prestige Entertainment West, Inc. and Renaissance Ventures LLC hereby demand a trial by jury on all issues so triable. 16 17 18 19 20 21 Dated: June 25, 2018 By: /s/ Thomas H. Vidal Thomas H. Vidal tvidal@pryorcashman.com Benjamin S. Akley bakley@pryorcashman.com Attorneys for Defendant Prestige Entertainment West, Inc. and Renaissance Ventures LLC 22 23 24 25 26 27 28 46