9th Circuit Holds that Online Ticket Seller’s Arbitration Agreement is Unconscionable

In a recent antitrust case, the Ninth Circuit Court of Appeals affirmed the district court’s denial of a motion to compel arbitration, holding the arbitration agreement between ticket purchasers and an online ticket seller was unconscionable under California law.

The court based its decision on its determination that four key aspects of the procedural rules for the arbitrations made the agreement unconscionable.  First, the arbitration administrator, an entity newly formed to provide arbitration of claims between the ticket seller and its customers, had the unilateral right to replace the arbitrator under certain circumstances within its sole discretion.  Second, the arbitrator would “batch” similar cases from which the parties and the arbitrator each select one case to serve as bellwethers for the entire batch.  The arbitrator’s rulings on these bellwether cases would be precedential for all other cases in the batch even though the hearings and awards in the bellwether cases would remain confidential.  Third, the parties must submit all evidence and briefing within fourteen days of the filing of the complaint, and discovery is permitted only at the arbitrator’s discretion.  Fourth, a party could appeal an award of injunctive relief but not a denial of injunctive relief.