James Batson v. Live Nation, Entertainment, In, et al
Filing
Filed opinion of the court by Chief Judge Wood. AFFIRMED. Diane P. Wood, Chief Judge; Richard D. Cudahy, Circuit Judge and Ilana Diamond Rovner, Circuit Judge. [6562253-1] [6562253] [13-1560]
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In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 13‐1560
JAMES BATSON,
Plaintiff‐Appellant,
v.
LIVE NATION ENTERTAINMENT, INC., et al.,
Defendants‐Appellees.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 11 C 1226 — Gary S. Feinerman, Judge.
____________________
ARGUED NOVEMBER 14, 2013 — DECIDED MARCH 25, 2014
____________________
Before WOOD, Chief Judge, and CUDAHY and ROVNER, Cir‐
cuit Judges.
WOOD, Chief Judge. James Batson walked up to Live Na‐
tion’s box office at the Charter One Pavilion in Chicago and
purchased a non‐refundable ticket to see O.A.R., a popular
American rock band. Ticket in hand, he realized that the
ticket price included a $9 parking fee for a spot he did not
want. Believing that the bundled $9 fee was fundamentally
unfair, he sued on behalf of himself and a proposed class.
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I
Batson’s original complaint alleged claims under federal
antitrust and California unfair competition law. When Live
Nation moved to dismiss that action, Batson responded with
an amended complaint, which the district court accepted.
The amended complaint dropped the federal antitrust and
California unfair competition theories. Relying on the juris‐
diction supplied by the Class Action Fairness Act, 28 U.S.C.
§ 1332(d)(1), Batson substituted a single claim that Live Na‐
tion had committed an unfair practice in violation of the Illi‐
nois Consumer Fraud and Deceptive Business Practices Act
(Consumer Fraud Act or Act), 815 ILCS 505/2. (Batson is a
citizen of New York; each of the defendant corporations is
incorporated in Delaware and has its principal place of busi‐
ness in California.) The amended complaint criticizes the
2010 merger between Live Nation and Ticketmaster (a trans‐
action that was not blocked by the Department of Justice),
but its primary target is Live Nation’s tying of a parking
charge to each concert ticket. Batson insists that the manda‐
tory parking fee is unfair under the Consumer Fraud Act be‐
cause it forces consumers to purchase the parking or forego
the concert. Live Nation again moved to dismiss, arguing
this time that Batson failed to state a claim under the Con‐
sumer Fraud Act under the standards set out by the Su‐
preme Court of Illinois in Robinson v. Toyota Motor Credit
Corp., 775 N.E.2d 951 (Ill. 2002). The district court agreed and
dismissed, and Batson now appeals. We affirm.
II
The facts underlying Batson’s complaint are straightfor‐
ward. On July 10, 2010, Batson purchased a ticket for a con‐
cert by O.A.R. from Live Nation’s box office at the Charter
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One Pavilion in Chicago. After the transaction was complete,
Batson spotted on the face of the ticket a notation that a $9
parking fee was included in the price. Indeed, it is undisput‐
ed that every single ticket sold for that concert reflected the
same information: of the total price, $9 was designated as a
parking fee, whether or not the buyer needed to park a car.
Batson had no car to park; he had walked from downtown
Chicago to the concert venue and had bought the ticket im‐
mediately before the concert. As far as we know, Batson at‐
tended the concert, but the sting of the mandatory parking
fee stayed with him, leading to this lawsuit.
III
We review a district court’s decision granting a motion to
dismiss under Federal Rule of Civil Procedure 12(b)(6) de no‐
vo. Stayart v. Yahoo! Inc., 623 F.3d 436, 438 (7th Cir. 2010).
Illinois’s Consumer Fraud Act is intended to protect con‐
sumers from unfair methods of competition and other unfair
and deceptive business practices. See Robinson, 775 N.E.2d at
960. It is liberally construed to effectuate its purpose. Id. Bat‐
son chose to proceed under an unfairness analysis, as he was
entitled to do: “A plaintiff may allege that conduct is unfair
under [the Act] without alleging that the conduct is decep‐
tive.” Siegel v. Shell Oil Co., 612 F.3d 932, 935 (7th Cir. 2010)
(citing Saunders v. Mich. Ave. Nat’l Bank, 278 Ill. App. 3d 307
(1996)).
In determining whether particular conduct is unfair, the
Act dictates that “consideration shall be given to the inter‐
pretations of the Federal Trade Commission (FTC) and the
federal courts relating to Section 5(a) of the Federal Trade
Commission Act.” 815 ILCS 505/2; see Robinson, 775 N.E.2d
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at 960. The most important of those interpretations are the
“Sperry factors,” which the FTC has published and the Su‐
preme Court has cited with approval. Id. See Federal Trade
Comm’n v. Sperry & Hutchinson Co., 405 U.S. 233 (1972). Illi‐
nois recognizes the Sperry test, and so we too will use it as
our point of departure.
The Sperry factors ask whether the practice (1) offends
public policy; (2) is immoral, unethical, oppressive, or un‐
scrupulous; or (3) causes substantial injury to consumers.
Sperry, 405 U.S. at 244 n.5. See also Robinson, 775 N.E.2d at
961. The Illinois Supreme Court has confirmed that “all three
of the criteria in Sperry do not need to be satisfied to support
a finding of unfairness.” Robinson, 775 N.E.2d at 961; see Peo‐
ple ex rel. Fahner v. Walsh, 122 Ill. App. 3d 481, 484 (1984);
Boyd v. U.S. Bank, N.A., 787 F. Supp. 2d 747, 751 (N.D. Ill.
2011) (citing additional Illinois state cases). Instead, citing
Cheshire Mort. Serv., Inc. v. Montes, 223 Conn. 80 (1992) with
approval, the Illinois high court has held that “[a] practice
may be unfair because of the degree to which it meets one of
the criteria or because to a lesser extent it meets all three.”
Robinson, 775 N.E.2d at 418 (citing Cheshire, 223 Conn. at
106). Batson’s claim must therefore satisfy at least one of
these criteria, which we now consider.
1. Offense to Public Policy
Batson contends that Live Nation’s practice of including
the price of parking in the cost of the concert ticket violates a
public policy against tying, a public policy in favor of musi‐
cal diversity, and one in favor of the use of alternatives to
cars as methods of transportation (e.g., walking or cycling) to
get to concerts. We look at each in turn.
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Tying. Batson’s first argument presumes that there is a
general public policy against tying, which Live Nation is vio‐
lating. He insists that he is not alleging that the arrangement
violates either federal or state antitrust law. See Sherman Act
§ 1, 15 U.S.C. § 1; Clayton Act § 3, 15 U.S.C. § 14; 740 ILCS
10/1 et seq. He argues that a tie‐in need not violate antitrust
laws in order to offend a broader public policy against tying
arrangements, at least for purposes of the Act. Live Nation
counters that a tying arrangement cannot violate public poli‐
cy for purposes of the Consumer Fraud Act if it does not vio‐
late federal antitrust laws. In the alternative, Live Nation as‐
serts that Batson’s tying argument fails because antitrust‐
based claims may not be brought at all under the Act, ac‐
cording to Laughlin v. Evanston Hosp., 550 N.E.2d 986 (Ill.
1990).
Live Nation overreads Laughlin, in our view. The court
there was concerned about the possibility that the Consumer
Fraud Act might morph into an additional enforcement
mechanism for all antitrust violations, on the theory that all
such violations reflect unfair practices. It thus wrote that
“[t]here is no indication that the legislature intended that the
Consumer Fraud Act be an additional antitrust enforcement
mechanism. The language of the Act shows that its reach
was to be limited to conduct that defrauds or deceives con‐
sumers or others.” Id. at 993. The Illinois Appellate Court fol‐
lowed this rule when it refused to permit a Consumer Fraud
Act claim to proceed in a case filed against an alleged potash
cartel. See Gaebler v. N. M. Potash Corp., 676 N.E.2d 228, 230
(Ill. App. Ct. 1996). See also Zekman v. Direct Am. Marketers,
Inc., 695 N.E.2d 853, 859 (Ill. 1998). It remains possible, how‐
ever, that an unfair practice might be covered by both the
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antitrust law and the Consumer Fraud Act, and so we pro‐
ceed on the basis of that assumption.
That brings us to the next question: whether, for purpos‐
es of the Consumer Fraud Act, a tying arrangement can of‐
fend a public policy against tying arrangements if it does not
violate antitrust law. In this connection, it is worth recalling
the developments in the antitrust law governing tying. At
one time tying arrangements were thought to be so perni‐
cious that they should be condemned as per se illegal, see,
e.g., N. Pac. Ry. v. United States, 356 U.S. 1, 5 (1958), citing Int’l
Salt Co. v. United States, 332 U.S. 392 (1947). Today, the Su‐
preme Court takes a much more benign view of tying, rec‐
ognizing that it may be procompetitive or competitively neu‐
tral, and thus that it should be illegal only if there is “suffi‐
cient power in the tying product market to restrain competi‐
tion in the market for the tied product … .” Ill. Tool Works Inc.
v. Indep. Ink, Inc., 547 U.S. 28, 36 (2006). In light of that shift,
we reject the idea that there is any undifferentiated policy
against tying reflected in federal law, and to the extent that
Illinois law follows suit, in its law.
Antitrust law has backed away from flat condemnation
of tying arrangements because they are not always abusive,
and when they are not, they are a legitimate method of com‐
petition. Nothing in the Consumer Fraud Act is designed to
prohibit hard, but fair, competition. We can find no justifica‐
tion in Illinois law or policy for a rule that would ban a tying
arrangement under the Consumer Fraud Act, even if that ty‐
ing arrangement were found not to be anticompetitive for
antitrust purposes. Nor has Batson referred us to any case in
which the Illinois Supreme Court has found a tying ar‐
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rangement to violate Illinois public policy where that ar‐
rangement has not also violated antitrust law.
The cases on which Batson relies, Elder v. Coronet Ins. Co.,
558 N.E.2d 1312 (Ill. App. Ct. 1990), and Gainer Bank, N.A. v.
Jenkins, 672 N.E.2d 317 (Ill. App. Ct. 1996), are not to the con‐
trary. In Elder, the court found that denying insurance claims
on the basis of a polygraph test was sufficient to state a cause
of action under the Consumer Fraud Act. Although there
was no specific statute prohibiting insurance companies
from using polygraphs in this way, the court thought the
practice offended the policy against polygraphs “as it has
been established by statutes, the common law, or otherwise.”
Elder, 558 N.E.2d at 1316. In so holding, it rejected the de‐
fendant’s contention that there was no established anti‐
polygraph policy at the time. The court concluded that “the
public policy of the state as established by case law” rejects
defendant’s use of the polygraph. Id. (emphasis added). The
problem in Elder was thus the use of polygraphs in ways that
decisional law disapproved. In contrast, Batson cites no Illi‐
nois case in which a court has found that a tying arrange‐
ment that is permissible for antitrust purposes nonetheless
violates Illinois public policy. Without such authority, Elder is
inapposite.
Gainer does not help either. There, the court allowed an
unfairness claim to proceed based on policies embodied in
another statute that itself did not give a private right of ac‐
tion. It justified this step because the consumer was “not su‐
ing under the Act, but invok[ing] it merely to prove viola‐
tions of the [Consumer Fraud Act].” 672 N.E.2d at 319. But
Batson is not using another statute to prove a public policy
violation under the Consumer Fraud Act. Indeed, he has ex‐
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pressly disclaimed any intent to use the federal or state anti‐
trust laws that way.
Batson could still prevail if the forced purchase of park‐
ing along with the concert violated antitrust law. We agree
with the district court, however, that the allegations to this
effect in Batson’s amended complaint do not survive scrutiny
under Federal Rule of Civil Procedure 12(b)(6). As we noted
earlier, a tying arrangement exists when a seller exploits
power over one product (the tying product) to force the buy‐
er to accept a second product (the tied product). See Indep.
Ink, 547 U.S. at 36–37. “Such an arrangement violates § 1 of
the Sherman Act if the seller has appreciable economic pow‐
er in the tying product market and if the arrangement affects
a substantial volume of commerce in the tied market.” East‐
man Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 462
(1992) (internal quotation marks omitted).
Applying those principles here, we would need to find
that Live Nation had enough power in some market (O.A.R.
concerts? Live music concerts? Entertainment in Chicago?)
to permit it to force people to spend money for useless park‐
ing rights (the tied product). But is it possible to regard
O.A.R. concerts or the Charter One Pavilion as a meaningful
product market? In a related context, we have held that a
single popular venue is not a stand‐alone relevant market.
See Elliott v. United Center, 126 F.3d 1003 (7th Cir. 1997). We
are dubious here as well that the Charter One Pavilion in
Chicago has that much clout. Even if it does, however, Bat‐
son has failed to allege anything that would plausibly show
that Live Nation’s parking tie‐in has affected a substantial
volume of commerce in parking (we presume parking in
Chicago, but that is unclear). Indeed, Batson all but concedes
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this point and instead invites us to break new ground by
finding that a tying arrangement violates federal antitrust
law if its anticompetitive effect is felt in the tying product
market. We decline the invitation. We are not the arbiters of
fair prices for Illinois, and if the requisite market power is
missing, the antitrust laws do not prohibit a seller from ask‐
ing consumers to pay a higher price for a package.
Musical Diversity; Walking. Batson also argues that Live
Nation’s parking tie‐in violates public policy in favor of mu‐
sical diversity and the encouragement of walking to con‐
certs. He is grasping at straws. First, as the district court
found, the musical diversity argument was forfeited because
it was perfunctory and underdeveloped. Even on the merits,
there is nothing to these assertions. While Illinois no doubt
supports both musical diversity and walking, the Consumer
Fraud Act is concerned with public policy as established by
statutes and the common law. People ex rel. Fahner, 122 Ill.
App. 3d at 484. The link between those desiderata and the $9
parking fee is far too tenuous to take this point seriously.
2. Immoral, Unethical, Oppressive, or Unscrupulous
The relevant inquiry here is whether a defendantʹs con‐
duct is “so oppressive as to leave the consumer with little
alternative except to submit to it … .” Robinson, 775 N.E. 2d
at 961. As the district court saw, this element is not satisfied
if a consumer can avoid the defendant’s practice by seeking
an alternative elsewhere. See, e.g., Siegel, 612 F.3d at 936 (cit‐
ing Robinson for the proposition that oppression cannot be
proved if plaintiff could have avoided the defendant’s penal‐
ty provisions by going elsewhere to lease a car).
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Batson contends that he was not informed of the exist‐
ence of the charge until after he purchased his non‐
refundable ticket and saw “$9 PRK PAID” on its face. As‐
suming this is true, as we must, we will assume that there
was no way he could avoid paying that $9. This fact, how‐
ever, cuts both ways. When Batson purchased the O.A.R.
ticket he was told that it would cost a particular amount, and
he paid that amount. It was only later that he realized what
he paid “for the ticket” actually bundled the costs for the
ticket and parking. (Indeed, it probably bundled much more:
there may have been an opening act before O.A.R. took the
stage; the Charter One Pavilion might have had a policy
banning outside food or drink; and so on.) What we do
know is that Batson was willing to pay the face price in or‐
der to see O.A.R. He may be trying to argue that he paid an
overcharge in the amount of $9, but there is nothing in this
record to indicate that there was anything oppressive about
the full price. Moreover, “[a]s the Supreme Court of Illinois
instructs … , ‘charging an unconscionably high price gener‐
ally is insufficient to establish a claim of unfairness.’ Robin‐
son, 201 Ill. 2d at 418.” Siegel v. Shell Oil Co., 656 F. Supp. 2d
825, 833 (N.D. Ill. 2009), affʹd, 612 F.3d 932 (7th Cir. 2010).
Batson offers, as persuasive authority, the district court’s
opinion in Thompson v. Fajerstein, No. 08 C 3240, 2008 WL
4279983 (N.D. Ill. 2008), but we do not think it helps him. In
Thompson, the plaintiff had met with the defendant, a pur‐
ported diamond buyer, and asked him to obtain a very spe‐
cial diamond for his wife. The defendant agreed to do so,
asking for $150,000 up front to conduct the search. The plain‐
tiff gave him the money and told him what he wanted (and
did not want) in the diamond. Defendant eventually found a
diamond that fit the bill, but he said it would cost $450,000,
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$150,000 more than what plaintiff originally wanted to
spend. Plaintiff said he was interested, but he asked the de‐
fendant first to provide him with a certification of the jewel’s
properties from the Gemological Institute of America. When
plaintiff received the certificate, he found that the stone had
qualities he had specifically nixed (strong blue fluorescence
— something his wife did not like) and that it was actually
worth only about $300,000. Plaintiff then asked for his
$150,000 back, but the defendant evaded him. This is an ex‐
ample of abusive circumstances. The defendant in Thompson
was holding $150,000 hostage, putting plaintiff in the posi‐
tion of losing that money or getting an overpriced diamond
he did not want and never agreed to buy. In our case, Batson
was told how much the ticket would cost before he handed
over his money. Even if he learned about the $9 parking
component afterwards, there is no evidence that the concert
was worth any less than the face price of the ticket.
While we understand why a consumer who does not
want parking would prefer to purchase a concert ticket un‐
bundled from that benefit, there is no rule that requires eve‐
rything to be sold on a fully unbundled basis. Nothing could
have stopped Live Nation from erasing “$9 PRK PAID,”
charging $9 more for the ticket, and announcing that there
was “free” parking for all who needed it. And indeed, as a
result of backlash against the parking fee, it appears that
Live Nation has done just that. See Hilary Lewis, Latest Tick‐
eting Scandal: Live Nation’s Secret Parking Fee, BUSINESS
INSIDER
(Mar.
18,
2009,
8:52
PM),
http://www.businessinsider.com/latest‐ticketing‐scandal‐
live‐nations‐secret‐parking‐fee‐2009‐3 (“[Live Nation] recent‐
ly unveiled a $6‐per‐ticket parking charge for shows at New
Jersey’s PNC Bank Arts Center. Yesterday, in the wake of
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complaints, Live Nation eliminated the itemized fee from its
Web site, only to add it to the basic ticket price.”).
3. Substantial Injury to Consumers
The third Sperry factor asks whether defendant’s practice
caused substantial injury. It does so only if the injury is (1)
substantial; (2) not outweighed by any countervailing bene‐
fits to consumers or competition that the practice produces;
and (3) one that consumers themselves could not reasonably
have avoided. Siegel, 612 F.3d at 935. See also Cheshire Mort.
Serv., Inc. v. Montes, 223 Conn. 80, 113 (1992).
We assume for the sake of argument that the parking fee
here meets the first two criteria. This brings us to the third
question, that is, whether the fee could reasonably have been
avoided. The district court found that Batson could have
done so by choosing not to go to the O.A.R. concert and opt‐
ing instead for alternative entertainment. While in general
we agree with this analysis, there is a separate issue related
to the non‐refundable nature of the ticket. Batson was una‐
ware of the parking fee before he bought the ticket, and once
he learned about it, he was stuck with the purchase. That
takes us back to the question whether the full price was op‐
pressive, however, and we already have explained that there
is nothing in Batson’s complaint that would permit such a
finding. We therefore conclude that Batson has failed to state
a claim under Illinois’s Consumer Fraud Act.
**********************
There are times when consumers are required to accept a
package deal in order to get the part of the package they
want. An airline passenger with no luggage may prefer the
cost of baggage to be decoupled from the cost of a seat, and a
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law student may prefer to pay lower tuition and avoid “free”
pizza days. But while some people may find these bundles
annoying, or even unfair, the tie is not illegal unless the
standards set forth in the governing antitrust cases have
been met. (Batson did not allege that the offer of a parking
place was fraudulent because all places were filled; we thus
have nothing to say about that or any other variation on the
facts before us.) We AFFIRM the district court’s dismissal of
Batson’s claim.
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