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SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF NEW YORK
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:
EVENTVEST, INC. d/b/a TICKET GALAXY, :
: Index No. ______/2018
Plaintiff, : IAS Part. ___
:
- against - :
: COMPLAINT FOR
BARBARA D. UNDERWOOD, in her official capacity as : DECLARATORY JUDGMENT
Attorney General of the State of New York, :
:
Defendant. :
:
:
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Plaintiff Eventvest, Inc. d/b/a Ticket Galaxy (“Ticket Galaxy”), by and through its

undersigned attorneys, for its complaint against Defendant Barbara D. Underwood, in her official

capacity as Attorney General of the State of New York (the “NYAG”), hereby alleges:

NATURE OF THE ACTION

1. Ticket Galaxy is a well-known live event ticket reseller with an A+ rating

from the Better Business Bureau, which annually sells millions of tickets to events across the

globe. Its business practices are standard across many industries, involve no misrepresentations

and benefit customers – whose continued satisfaction is integral to Ticket Galaxy’s lasting

success. Despite its exceptional reputation and sterling business practices, Ticket Galaxy is now

forced to bring this declaratory judgment action because the NYAG – although unable to cite any

case law or statutory authority – demands that Ticket Galaxy enter into an Assurance of

Discontinuance (“AOD”) and pay millions of dollars in penalties. Because the NYAG has no

basis for its stated theories of liability – theories that contravene regularly accepted business

This is a copy of a pleading filed electronically pursuant to New York State court rules (22 NYCRR §202.5-b(d)(3)(i))
which, at the time of its printout from the court system's electronic website, had not yet been reviewed and
approved by the County Clerk. Because court rules (22 NYCRR §202.5[d]) authorize the County Clerk to reject
filings for various reasons, readers should be aware that documents bearing this legend may not have been
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practices both in New York and across the nation – Ticket Galaxy respectfully seeks a

declaration that its relevant business practices are both lawful and without misrepresentations.

2. For a small subset of Ticket Galaxy’s ticket sales, the NYAG contends

that Ticket Galaxy misrepresents that it already owns all of the tickets that it sells. The NYAG is

mistaken. On the contrary, all customers who order tickets from Ticket Galaxy that are not yet

owned by the company are fully informed that the tickets are not in Ticket Galaxy’s possession

and that their availability cannot be guaranteed. Simply stated, there is no misrepresentation.

3. Furthermore, it is an entirely normal business practice to offer products for

sale that a seller does not yet own. In retail businesses, whether on-line or bricks-and-mortar,

this is known as “drop shipping.” Once an order is placed by a customer, the retailer purchases

the product from a third party, such as a manufacturer or distributor, which facilitates delivery of

the product directly to the customer. This practice is regularly employed by well-known

companies like Amazon and eBay, as well as start-up on-line sellers who, otherwise, would not

have the resources to pre-purchase and hold the varied products that a consumer might want.

4. Declaring this practice illegal, as the NYAG threatens, would endanger a

well-established system across multiple industries that benefits consumers in many ways.

Allowing companies to enter the marketplace and offer greater and more diverse goods than they

otherwise could afford to carry benefits consumers through broader selection, increased

competition and often, lower prices. These are the very benefits afforded by Ticket Galaxy’s

practices, which the NYAG seeks to halt, all without any basis in statute or law.

5. Despite Ticket Galaxy’s numerous written communications, document

productions, phone calls, and in-person meetings with the NYAG’s Office, in which Ticket

Galaxy has attempted to address the NYAG’s issues, the NYAG informed Ticket Galaxy on or

about September 4, 2018, that if it did not pay millions of dollars to the State as a settled
2
This is a copy of a pleading filed electronically pursuant to New York State court rules (22 NYCRR §202.5-b(d)(3)(i))
which, at the time of its printout from the court system's electronic website, had not yet been reviewed and
approved by the County Clerk. Because court rules (22 NYCRR §202.5[d]) authorize the County Clerk to reject
filings for various reasons, readers should be aware that documents bearing this legend may not have been
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resolution of the NYAG’s claims by mid-September, then the NYAG would pursue a lawsuit

against the company. In fact, the NYAG’s demand reflected many years of Ticket Galaxy’s

total global profits. As such, Ticket Galaxy regrets that in order to protect its business it has no

choice but to seek the protection of this Court by way of declaratory judgment.

THE PARTIES

6. Plaintiff, Eventvest, Inc. d/b/a Ticket Galaxy, is a Connecticut corporation

with a principal place of business in South Windsor, Connecticut.

7. Defendant, Barbara D. Underwood, is the Attorney General of the State of

New York and is sued in her official capacity.

JURISDICTION AND VENUE

8. This action for declaratory judgment is within this Court’s jurisdiction

pursuant to the New York Civil Practice Law and Rules (“CPLR”) § 3001.

9. Venue is proper in this Court pursuant to CPLR § 505.

SUBSTANTIVE ALLEGATIONS

A. Ticket Galaxy’s Ticket Offerings

10. Ticket Galaxy’s primary business is professional ticket resale on the

secondary market. Ticket Galaxy acquires tickets for concerts, sports, theater, and other live

events from a variety of sources, including venues, teams, artists, sponsors, season ticket holders,

promoters and box offices, and offers the tickets for resale on various online platforms, including

StubHub, VividSeats, Ticketmaster, Gametime, FanXchange, SeatGeek, TicketNetwork, and

others. Ticket Galaxy offers tickets at highly competitive prices on these platforms by partnering

with some of the premier and identifiable brands in sports, music, and entertainment.

11. For the overwhelming majority of its sales, Ticket Galaxy lists concert,

sports, or theater tickets for sale that it already owns and has in its possession, or will receive in
3
This is a copy of a pleading filed electronically pursuant to New York State court rules (22 NYCRR §202.5-b(d)(3)(i))
which, at the time of its printout from the court system's electronic website, had not yet been reviewed and
approved by the County Clerk. Because court rules (22 NYCRR §202.5[d]) authorize the County Clerk to reject
filings for various reasons, readers should be aware that documents bearing this legend may not have been
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due course. For a very small percentage of sales, Ticket Galaxy offers tickets for sale that it does

not yet own. In these instances, Ticket Galaxy does not seek to acquire the tickets until after a

customer places an order. These offers are referred to as “Category” offers, because the tickets

are listed for sale based on various areas, or “categories,” within the venue.

12. Ticket Galaxy does not list specific seat numbers for sale, but instead

offers the tickets by venue area. For example, the tickets offered for sale may be described as

seats in a section of the venue denominated as “Zone A,” or they may describe the tickets by

venue section and row.

13. This practice of making Category offers is analogous to “drop shipping,” a

common business practice in the retail industry. Many retailers, both bricks-and-mortar and on-

line, both big and small, use drop shipping to offer products to customers before the companies

own or have the products in hand. For example, eBay not only permits drop shipping, but its

Customer Service portal makes clear that a seller need not disclose that an item might be coming

from another supplier. Similarly, Amazon offers many products that it or its seller does not own,

does not have in inventory, and needs to purchase from a third party in order to fulfill a

customer’s order.

14. In numerous ways, the “drop shipping” business practice benefits

customers. First, it allows businesses to sell products without maintaining costly warehouses and

inventory. Such “just-in-time” delivery minimizes cost to the seller and consumer. Second, drop

shipping allows small, start-up companies to compete by offering products and variety that

otherwise only the biggest businesses could offer. That competition benefits customers by

increasing selection and often driving down prices.

15. Other parts of the New York state government recognize this practice as

lawful commercial conduct. The New York State Department of Taxation and Finance, for
4
This is a copy of a pleading filed electronically pursuant to New York State court rules (22 NYCRR §202.5-b(d)(3)(i))
which, at the time of its printout from the court system's electronic website, had not yet been reviewed and
approved by the County Clerk. Because court rules (22 NYCRR §202.5[d]) authorize the County Clerk to reject
filings for various reasons, readers should be aware that documents bearing this legend may not have been
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example, provides guidance regarding the sales tax treatment of drop shipment sales. See Tax

Bull. ST-190, N.Y. Dep’t of Tax and Finance (Aug. 5, 2014),

https://www.tax.ny.gov/pdf/tg_bulletins/ sales/b14_190s.pdf.

16. In fact, on June 20, 2018, the New York State Senate and Assembly

passed legislation that confirms that Ticket Galaxy’s Category ticket sales are legal. The bills,

S8501B and A8245C, make clear that ticket resellers may lawfully sell tickets that they do not

yet own or have in their possession. With respect to such tickets, the legislation requires

resellers to provide proper disclosure and to refund any money paid if they are unable to obtain

the tickets in question. Ticket Galaxy already provides significant disclosures and full refunds if

it is unable to obtain tickets. By adding these new disclosures and refund requirements – never

before part of New York law – the Legislature showed its commitment to continuing to allow

Category offers like those made by Ticket Galaxy. The Governor signed the legislation into law

on or about July 2, 2018.

17. Ticket Galaxy only makes Category offers when the company’s

professionals are confident, based on their experience and connections in the industry, that any

tickets ordered by customers will be procured successfully for the venue area listed in the offer,

or at least for an equivalent or better area, meaning one closer to the stage or field or with a

better vantage point. While there is necessarily a certain amount of risk inherent in Category

offers, Ticket Galaxy is nonetheless able to successfully fulfill almost all such ticket orders. On

average, approximately 1% of tickets ordered from Ticket Galaxy are unfulfilled. In these

unfortunate instances, Ticket Galaxy provides the customer with a 100% or greater refund.

18. Ticket Galaxy’s dedication to customer satisfaction and order fulfillment

means that the company will sometimes incur losses in order to fulfill Category offers. Ticket

Galaxy’s profits come from the difference between the cost of tickets acquired by the company
5
This is a copy of a pleading filed electronically pursuant to New York State court rules (22 NYCRR §202.5-b(d)(3)(i))
which, at the time of its printout from the court system's electronic website, had not yet been reviewed and
approved by the County Clerk. Because court rules (22 NYCRR §202.5[d]) authorize the County Clerk to reject
filings for various reasons, readers should be aware that documents bearing this legend may not have been
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and the price at which it sells them to customers, less overhead. Despite Ticket Galaxy’s best

efforts at cost projection, it sometimes proves impossible for the company to acquire tickets to

fulfill Category sales at a price lower than that offered to Ticket Galaxy’s customers who

purchased the tickets. When this happens, Ticket Galaxy frequently purchases the tickets

anyway and incurs a loss so that the customers will receive their tickets and the company will

maintain its reputation for quality. One dramatic example occurred when Ticket Galaxy incurred

almost $100,000 in losses to fulfill Category sales for the musical artist Pink’s 2017 tour.

19. Moreover, while Ticket Galaxy offers its tickets for sale across multiple

third-party online platforms hosted by various companies, including StubHub, VividSeats,

Ticketmaster, Gametime, FanXchange, SeatGeek, and others, Ticket Galaxy currently makes

Category offers on only one platform: the TicketNetwork marketplace, hosted by

TicketNetwork, Inc.1 and accessible at http://www.ticketnetwork.com2 (the “TicketNetwork

Platform” or “Platform”).

20. The TicketNetwork Platform discloses in its stated policies that, while

most tickets listed on the website “are a unique set of tickets from an individual ticket seller,”

“[s]ome ticket listings on [the website] may only be representations of available tickets and not

actual seat locations or currently available tickets.” Terms & Policies, TicketNetwork.com,

https://www.ticketnetwork.com/policies (capitalization omitted). TicketNetwork’s stated

policies further provide that “ticket availability” “cannot [be] guarantee[d].” Id.

21. When Ticket Galaxy makes a Category offer on the TicketNetwork

Platform, Ticket Galaxy reports to the Platform that it does not yet own the tickets offered for

1
Ticket Galaxy and TicketNetwork are separate companies with independent businesses.
2
Other websites provide access to the same marketplace, but ticketnetwork.com is
TicketNetwork’s signature retail website.

6
This is a copy of a pleading filed electronically pursuant to New York State court rules (22 NYCRR §202.5-b(d)(3)(i))
which, at the time of its printout from the court system's electronic website, had not yet been reviewed and
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sale and the date by when the tickets will be “in hand” and ready to ship. Then, before a

customer buys the tickets via the TicketNetwork Platform, the customer is provided with the

latest date by when the tickets will be delivered and this note: “The seller has not yet received

your tickets, but you’ll get them before the event. When the seller receives your tickets, they’ll be

delivered in the manner you select.”

22. In short, Ticket Galaxy currently only makes Category offers on one

online platform and that platform provides potential customers with full disclosure when tickets

offered for sale are not yet in the seller’s possession and that the tickets’ availability cannot be

guaranteed. Thus, every customer who makes a Category purchase from Ticket Galaxy is fully

informed of the nature of the offer before any purchase is made and is guaranteed a full refund in

those instances where a ticket cannot be obtained.

B. The NYAG’s Investigation and Threatened Lawsuit

23. On or about May 27, 2016, the NYAG issued a subpoena to Ticket

Galaxy, seeking a broad set of documents and information about Ticket Galaxy’s business.

24. Over the course of more than two years, Ticket Galaxy has expended

extraordinary time and considerable expense complying with the NYAG’s requests. In addition

to producing more than 50,000 pages of documents to the NYAG and holding multiple

conference calls between the respective offices, Ticket Galaxy and its representatives have met

with the NYAG’s Office on numerous occasions to answer the NYAG’s questions, provide

information about the company’s business, and demonstrate its commitment to sound business

practices and customer satisfaction.

25. On or about August 3, 2018, the NYAG informed Ticket Galaxy that the

NYAG had concluded that the company was in violation of several New York state statutes that

prohibit fraudulent and deceptive conduct. The NYAG appeared to contend that when Ticket
7
This is a copy of a pleading filed electronically pursuant to New York State court rules (22 NYCRR §202.5-b(d)(3)(i))
which, at the time of its printout from the court system's electronic website, had not yet been reviewed and
approved by the County Clerk. Because court rules (22 NYCRR §202.5[d]) authorize the County Clerk to reject
filings for various reasons, readers should be aware that documents bearing this legend may not have been
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Galaxy makes Category offers, the company falsely implies that it already owns or at least has

some sort of immediate access to tickets in the area described in the offer, while in fact, Ticket

Galaxy does not yet have the tickets and would have to acquire them once ordered by the

customer. The NYAG claimed that these Category offers are “speculative” and deceptive.

26. The NYAG’s contention that Ticket Galaxy misrepresents to customers

that it already owns Category tickets is incorrect. As discussed above, all customers who order

Category tickets from Ticket Galaxy are fully informed by the TicketNetwork Platform, the sole

platform currently used by Ticket Galaxy for Category sales, that the seller does not yet possess

and may not own their tickets. Simply stated, there is no misrepresentation, not by implication

or otherwise.

27. It appears to be the NYAG’s view that an offer to sell a product inherently

represents that the seller already owns the product. This view is incorrect. A seller’s offer to sell

a product does not by any means imply that the seller already owns the product at the time the

offer is made. Importantly, Ticket Galaxy only makes Category offers when its professionals

believe in good faith that they will be able to fulfill the offer. And as noted, the New York

Legislature recently endorsed Ticket Galaxy’s position. Ticket Galaxy already provides

disclosures and guarantees substantially similar to those envisioned by the recent legislation.

Ticket Galaxy has always complied with the law and has never misrepresented its ticket policies

to its customers.

28. Additionally, the NYAG claimed to Ticket Galaxy that in some of the

instances when Ticket Galaxy was unable to fulfill a customer’s order for Category tickets, or the

company filled the order but with equal or better tickets than the exact ones ordered, Ticket

Galaxy’s customer service representatives had made misrepresentations to the customers about

why this occurred. Ticket Galaxy vehemently disagrees with this mischaracterization of a few
8
This is a copy of a pleading filed electronically pursuant to New York State court rules (22 NYCRR §202.5-b(d)(3)(i))
which, at the time of its printout from the court system's electronic website, had not yet been reviewed and
approved by the County Clerk. Because court rules (22 NYCRR §202.5[d]) authorize the County Clerk to reject
filings for various reasons, readers should be aware that documents bearing this legend may not have been
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communications between Ticket Galaxy’s customer service representatives and customers. And

in those instances where Ticket Galaxy cannot fulfill a Category offer at the listed price, Ticket

Galaxy’s customers will receive either a full refund or better tickets at the original price.

29. Ticket Galaxy has endeavored to demonstrate to the NYAG that it has

made no misrepresentations under state law. Despite Ticket Galaxy’s entreaties, the NYAG

informed Ticket Galaxy on or about September 4, 2018 that the NYAG intended to sue the

company if it did not, by mid-September, pay millions of dollars to the State to settle the

NYAG’s baseless claims. Ticket Galaxy cannot accede to the Attorney General’s excessive

demand, which reflects many years of the company’s total global profits. Ticket Galaxy regrets

that in order to protect its business, it has no choice but to seek from this Court a judicial

declaration that its conduct is lawful.

CAUSE OF ACTION
(FOR DECLARATORY JUDGMENT)

30. The foregoing paragraphs 1 through 29 of this Complaint are incorporated

by reference and re-alleged.

31. The NYAG claims that Ticket Galaxy has made misrepresentations related

to the company’s Category ticket sale offers that violate New York Executive Law § 63(12) and

General Business Law §§ 349, 350, and 396.

32. Executive Law § 63(12) authorizes the Attorney General to sue companies

for “repeated fraudulent or illegal acts.”

33. General Business Law § 349 prohibits “deceptive acts or practices in the

conduct of any business, trade or commerce or in the furnishing of any service.”

34. General Business Law § 350 prohibits “false advertising in the conduct of

any business, trade or commerce or in the furnishing of any service.”

9
This is a copy of a pleading filed electronically pursuant to New York State court rules (22 NYCRR §202.5-b(d)(3)(i))
which, at the time of its printout from the court system's electronic website, had not yet been reviewed and
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35. General Business Law § 396 prohibits “offer[ing] for sale any

merchandise, commodity, or service, as part of a plan or scheme . . . with the intent, design or

purpose not to sell the merchandise, commodity, or service so advertised.”

36. Ticket Galaxy denies that it has made any misrepresentations related to its

Category ticket sale offers that are actionable under the statutes cited.

37. Ticket Galaxy is entitled to a declaration under CPLR § 3001 that its

conduct, which is the subject of a threatened lawsuit by the NYAG, is lawful.

PRAYER FOR RELIEF

WHEREFORE, Plaintiff respectfully requests, pursuant to CPLR § 3001:

(a) A judgment declaring that Ticket Galaxy has not misrepresented its
Category ticket sales practices so as to violate New York Executive Law
§ 63(12) or General Business Law §§ 349, 350, or 396; and

(b) Any other and further relief as the Court deems just and proper.

Dated: September 6, 2018

New York, New York

MANATT, PHELPS & PHILLIPS, LLP

/s/ Ronald G. Blum

Ronald G. Blum
7 Times Square
New York, NY 10036
(212) 790-4500

Attorneys for Plaintiff

204616128.1

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