The Implications of Suing the NFL’s Super Bowl Ticketing Scheme

Posted in: Consumer Law

It was the kind of headline you could not pass over without stopping to take a look: “An Aggrieved Fan Tackles the N.F.L.,” with the story dominating almost the full page of my print edition of The New York Times. It is the story of Josh Finkelman, 28 years old, the president of a warehouse business, and a serious football fan, who went looking for Super Bowl XLVIII tickets and ended up taking on the entire National Football League’s (NFL) Super Bowl ticketing system.

It’s a bold undertaking. And it could become a doozy of a lawsuit. I am certainly cheering for Josh, for a number of reasons.

Finkelman v. NFL

Josh Finkelman did get tickets to Super Bowl XLVIII, “a pair of nosebleed seats, in a lonesome upper deck, for $2000 apiece,” He also has got his wits about him. He realized that he and thousands of others were getting ripped off. He told the Times that he started thinking, “maybe I should do something here.”

The Times did not report what Finkelman did next. Maybe we’ll learn that when the story becomes a book, or a movie, or both. But we do know that he made his way to the law offices of Bruce Nagel at the Nagel Rice firm in Roseland, New Jersey. Mr. Nagel knew exactly what to do. On January 6, 2014, he filed a class action complaint for Josh Finkelman, and all similarly situated people, who had been scalped, so to speak, by the NFL’s Super Bowl ticketing scheme at Super Bowl XLVIII.

The NFL allocates only one percent (1%) of its Super Bowl tickets to the general public, and the remaining ninety-nine percent (99%) go to other NFL teams, or they keep them for their own use. And most of these tickets, spread around the leagues, make their way into the secondary market via brokers and are sold for anywhere from a few thousand dollars to as high as almost a million dollars. The markup is obscene. That fact, and the relevant New Jersey law, are at the core of this lawsuit.

The New Jersey Consumer Fraud Laws

New Jersey has some of the most aggressive and comprehensive consumer fraud laws in the United States. It is not clear whether the NFL was aware of this fact when it agreed upon New Jersey’s MetLife Stadium as the home for Super Bowl XLVIII.

According to Times reporter Alan Feuer, Bruce Nagel “excitedly explained” the situation, and it appears Josh Finkelman’s attorney has good reason to be excited. Nagel explained, “They’ve sold their tickets to the Super Bowl the same way, year after year, in other jurisdictions because it’s legal. But now that they’re in New Jersey, they’re in trouble. The statute here is different. And Josh’s suit is going to right a major wrong.”

The Times story set forth the applicable section of the New Jersey Consumer Fraud Act, at Section 56:8-35-1: “It shall be an unlawful practice for a person, who has access to tickets to an event prior to the tickets’ release for sale to the general public, to withhold those tickets from sale to the general public in an amount exceeding 5 percent of all available seating for the event.”

I looked at this law in context, and the legislative history that I could find. There does not appear to be an exception for an organization like the NFL, and, clearly, a 99 percent withholding seriously exceeds the five percent withholding permitted by the New Jersey statute.

If this is, in fact, the law, then Mr. Nagel should be very excited for his client, not to mention other people who wanted Super Bowl tickets, and excited for his firm as well. The NFL may be in deep trouble, because not only does this statute provide for attorneys’ fees but it also provides for treble damages for violations. When you read the complaint in this action, along with the Times report on Super Bowl ticket distribution, it is clear that only the privileged few (plus the lucky few who win in the lottery for the one percent that the NFL makes available at face price, although they are not good seats) it becomes clear how the NFL pulls in about $200 million on the Super Bowl. The Finkelman lawsuit also includes a claim for unjust enrichment.

How Could This Happen?

There is, of course, no such thing as a sure-thing lawsuit, so I do not expect that Nagel and Company will do to the NFL what the Seattle Seahawks did to the Denver Broncos at the MetLife Stadium on February 2, 2014. Nonetheless, this lawsuit is a big league undertaking. Bruce Nagel is a seasoned and able litigator, who knows both class actions and New Jersey law. (Non-lawyers sometimes forget that attorneys cannot file frivolous claims based on hunches about the law and facts. Under Rule 11 of the Federal Rules of Civil Procedure, the attorney filing the action, in effect, warrants to the court that based on his or her knowledge and belief, after a reasonable inquiry, that he or she has a real claim.)

Needless to say, the NFL will respond to this claim, and set forth its understanding of the New Jersey law. The NFL has assembled a legal team for this action headed by Jonathan D. Pressman of the law firm of Haynes and Boone, who will respond to the complaint. According to the Docket Sheet and the order issued by U.S. District Court Judge Peter G. Sheridan, this will occur on February 21, 2014. Undoubtedly, the NFL will seek to dismiss the lawsuit.

My first reaction was to see who had appointed Judge Sheridan. It should not make any difference, but unfortunately, it makes a lot of difference. I find it uncanny how Republican- appointed federal judges frequently reject class action lawsuits, not to mention that they do not encourage little guys to file lawsuits taking on big business, like the NFL. Judge Sheridan was appointed by Bush II, and while I only looked at a sample of his rulings, I would say that he is a rather typical Republican appointee to the federal bench.

So we will have to wait to see how this plays out, but my first reaction was not to predict who would win or lose this lawsuit, but rather to ask how could Governor Chris Christie have allowed this to happen to the NFL in New Jersey. To woo the Super Bowl to New Jersey four years ago, Christie promised them everything from an $8 million tax gift to his assurance that every detail would be taken care of. The New Jersey Legislature was right there helping, doing whatever was necessary. But it seems that they may have all missed something: The New Jersey Consumer Protection law.

Finkelman’s Lawsuit Could Focus Light in Dark Places

If this lawsuit withstands a motion to dismiss it means Judge Sheridan agrees that there is a New Jersey law that may have been violated by the NFL’s current scheme. Also, he must find that there is an appropriate class of persons who have been injured. If those rather low, but not insignificant, hurdles are overcome, then this will be a potentially historic lawsuit, not to mention that it may also probe into two highly secretive operations that are involved here: The NFL (for sure) and the Christie Administration (quite possibly). There is zero transparence regarding the NFL’s distribution of Super Bowl tickets, and the inner circle of Governor Christie’s office has zero transparency, as has been recently shown by the mafia-like levels of Fifth Amendment sealed lips. But the Finkelman lawsuit could open up both entities for scrutiny.

Discovery in this lawsuit could force the NFL to detail exactly how they cut their myriad deals in order to maximize earnings from Super Bowl ticket sales, which apparently always result in substantial returns (surely not kickbacks) for the NFL. As Denver Bronco fans have learned, the NFL does not wish to share this information. If this action goes forward, they will have no choice but to do so, and divulging that information could change the way they do business.

In defending this lawsuit, if it proceeds, the NFL could easily claim that it was given some sort of tacit waiver from compliance with the New Jersey consumer protection law, for there are reports that the N.J. Division of Consumer Affairs was actively investigating the other areas of Super Bowl ticket scalping under this law, but needless to say, they did not investigate the statutory provisions that are now at issue in the Finkelman lawsuit. The Division of Consumer Affairs is now run by a Christie appointee, Eric Kanefsky. But Governor Christie’s current scandal problems with the George Washington Bridge lane closures and the distribution of Hurricane Sandy money make it much less likely that Mr. Kanefsky, or the person who fills the currently vacant position of New Jersey Attorney General, both of whom might otherwise have exerted influence in this civil proceeding, can very easily help out.

In fact, the Finkelman lawsuit offers a lot to get excited about, if Judge Sheridan finds there is good law upon which this case can proceed. I will keep you posted.

Posted in: Consumer Law