NPS, LLC v. StubHub, Inc.
25 Mass. L. Rptr. 478 (2009)
Rule of Law:
A defendant may be liable for intentional interference with advantageous relations if the plaintiff can demonstrate an advantageous relationship, knowing inducement of a breach, improper means (which can include intentionally encouraging or profiting from statutory violations), and pecuniary loss, where even minor, quantifiable administrative costs may satisfy the harm element.
Facts:
- The New England Patriots (NPS LLC and New England Patriots, LP) issue revocable license tickets for home football games, primarily season tickets, with warnings against non-licensed reselling.
- The Patriots reserve the right to revoke season tickets for any reason, including unacceptable conduct by a ticket holder's guest, and have a policy of revoking tickets for impermissible transfers, refunding face value.
- The Patriots maintain a wait list for season tickets and provide TicketExchange, an online forum for season ticket holders and wait list members to exchange tickets at face value, with original tickets cancelled and new ones issued, ensuring accountability for conduct.
- StubHub operates a website that facilitates the buying and selling of tickets to various events, including Patriots games, requiring users to agree to comply with all applicable laws.
- StubHub earns a 25% commission (15% from seller, 10% from buyer) on each ticket sale on its platform, and the majority of Patriots tickets sold on StubHub are for prices significantly exceeding face value.
- StubHub created a 'LargeSeller' program, offering incentives such as waiving buyer-side fees and, until 2008, encouraging LargeSellers to find 'underpriced tickets' and allowing them to 'mask' ticket locations by listing a different row.
- Beginning in 2005, the Patriots observed a rise in patrons attempting to enter Gillette Stadium with invalid or cancelled tickets, with most reporting purchasing them through StubHub.
- On November 21, 2006, the Patriots formally requested that StubHub cease facilitating the resale of Patriots tickets, but StubHub refused to comply.
Procedural Posture:
- The New England Patriots (comprising NPS LLC and New England Patriots, LP) initiated an action against StubHub, Inc. in the Massachusetts Superior Court.
- The Patriots' Amended Complaint included claims against StubHub for intentional interference with advantageous relations (Count I), misappropriation of name (Count II), and unfair trade practices in violation of G.L.c. 93A, §11 (Count III).
- Count VII of the Amended Complaint sought to hold all StubHub profits obtained through the sale of Patriots’ tickets in a constructive trust.
- StubHub filed a motion for partial summary judgment on Count I (intentional interference with advantageous relations).
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Issue:
Does a genuine issue of material fact exist as to whether StubHub, Inc. intentionally interfered with the New England Patriots' advantageous relations with its season ticket holders and wait list members by employing improper means, specifically by actively encouraging or profiting from violations of anti-scalping laws, and thereby causing the Patriots to suffer pecuniary loss, such that StubHub's motion for partial summary judgment should be denied?
Opinions:
Majority - Gants, Ralph D., J.
No, StubHub's motion for partial summary judgment on Count I is DENIED because genuine issues of material fact exist regarding whether StubHub's interference was improper in means and whether the Patriots suffered pecuniary loss. The court affirmed that the Patriots satisfied the first element by having an existing and probable future business relationship with season ticket holders and wait list members, with a reasonable expectation of financial benefit. While StubHub conceded knowingly inducing breaches of the Patriots' revocable license terms, Massachusetts law requires 'improper motive or means.' The court rejected claims of common-law misrepresentation (due to StubHub's FanProtect Guarantee and website disclosures) and trespass (as the Patriots did not consider all transferred tickets to constitute trespass). However, the court found a triable issue concerning 'improper means' related to anti-scalping laws (G.L.c. 140, §§185A & D). StubHub's pricing structure, which directly linked its revenue to higher ticket prices, its decision not to require face-value information from sellers (which hindered policing), and its historical encouragement of 'LargeSellers' to buy 'underpriced' tickets to resell (from which StubHub profited via commissions), could reasonably lead a factfinder to conclude StubHub intentionally induced or encouraged statutory violations, or profited from them while declining to limit them, a standard akin to secondary liability for copyright infringement as seen in Grokster. Furthermore, the court held that StubHub could not claim immunity under 47 U.S.C. §230(c)(1) of the Communications Decency Act if it 'materially contributed to the alleged unlawfulness' of the content by its actions. Finally, regarding pecuniary loss, the court dismissed speculative claims of 'goodwill' damage but found that increased administrative costs incurred by the Patriots from managing inquiries and complaints from fans with invalid StubHub tickets, and investigating resale activity, constituted a sufficient 'toehold' of pecuniary loss to defeat summary judgment.
Analysis:
This case underscores that online platforms, even those claiming neutrality, may face liability for tortious interference if their operational models actively encourage or benefit from users' breaches of contract or violations of law. The ruling clarifies that 'improper means' can extend beyond direct engagement in illegal acts to include business practices that facilitate or profit from statutory non-compliance. By accepting 'scant' administrative costs as sufficient pecuniary loss to survive summary judgment, the court demonstrates a flexible approach to damages in digital contexts, potentially lowering the bar for plaintiffs seeking to hold platforms accountable for the negative externalities of their business models.
