May a ticket broker be sued for selling event tickets that it does not actually possess?

The Chancery Division of the New Jersey Superior Court in Essex County recently decided that ticket brokers who offer event tickets for sale without actually possessing those tickets are “service providers” entitled to immunity under the Communications Decency Act of 1996 (“CDA”).  Milgram v. Orbitz Worldwide, Inc., No. 09-4-9349 (Judge Costello, August 26, 2010).

Anne Milgram, New Jersey’s Attorney General, sued Orbitz and its ticket-broker affiliates for violation of New Jersey’s Consumer Fraud Act (“CFA”).  The grounds for that suit were two-fold.  First, Milgram alleged Orbitz was offering to sell tickets to attend a concert at Giants Stadium featuring Bruce Springsteen and the E Street Band without actually possessing those tickets.  Second, at least two of the tickets had section and row numbers that did not exist. Milgram alleged violations of the CFA and advertising regulations created pursuant to the CFA.

Orbitz argued that it was merely a “service provider” entitled to protection under the immunity provision of §230 of the CDA.  In other words, Orbitz was taking the position that the lawsuit for alleged violation the CFA was pre-empted by the immunity provision of the CDA.  The immunity provision grants immunity to service providers for posting information originating with a third-party user of its service.  Orbitz argued that the descriptions of the offered tickets were created by third-party sellers, not Orbitz.  Thus, Orbitz was simply a service provider entitled to immunity under the CDA.

The Court agreed with Orbitz and held that it was immune from suit pursuant to §230 of the CDA.  The Court noted that qualifying for immunity under the CDA requires three elements: 1) the entity seeking immunity must be a “provider or user of an interactive computer service;” 2) the alleged liability must be based on the entity having acted as a “publisher or speaker;” and 3) the entity may only claim immunity with regard to “information provided by another information content provider.”  Id.

The Court held that Orbitz satisfied all three elements.  First, there was no issue that it qualified as a “provider of an interactive computer service” as defined by the CDA.  Second, Orbitz acted as a “publisher or speaker.”  Per the Court, the plain language of §230 was designed to promote e-commerce and prevent lawsuits from shutting down websites.  Orbitz’ conduct in advertising and selling concert tickets to consumers without actually possessing those tickets is conduct that “fits squarely within the CDA’s purview.”  Id.  Third, Orbitz was not an “information content provider” under the CDA.  While such a designation would have been fatal to Orbitz’ immunity claim, the Court determined that Orbitz actions were “nothing more than the exercise of a publisher’s traditional editorial functions.”  Id.  Orbitz was not responsible for creating the inaccurate or misleading ticket listings as the information originated with the third-party sellers using Orbitz’ website.  Thus, the Court held that Orbitz was entitled to immunity under the CDA as “a provider of interactive computer service that served as a conduit for information provided by another information content provider.”  Id.

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