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Opinions – 1/24/13: Maryland Court of Appeals

Commercial Law

Ticket sales 

BOTTOM LINE: If a ticket agency is authorized in writing by a licensed exhibitor to sell tickets as an agent of the exhibitor, the ticket agency is not required to be licensed by reason of exercising that authority.

CASE: Bourgeois, et al. v. Live Nation Entertainment, Inc., No. 8, Sept. Term 2012 (filed Jan. 18, 2013) (Judges Bell, Harrell, Greene, Adkins, Barbera, McDonald & WILNER (retired, specially assigned)). 46 pages.

FACTS: The plaintiff, Mr. Bourgeois, purchased online from Ticketmaster a ticket to a concert held at the Lyric in November 2009. The price printed on the ticket that Mr. Bourgeois received was $52. To that amount, Ticketmaster added a “service charge” of more than $12.

Mr. Bourgeois was informed of that charge before deciding to purchase the ticket from Ticketmaster and knowingly decided to proceed. He received the ticket and attended the concert.

Two years later, on behalf of himself and a proposed class of others similarly situated, he filed an action in the District Court for the District of Maryland challenging the legality of Ticketmaster’s collection of the service charge. That challenge was based on Art. 15, §§21-1 through 21-5 and Art. 19, §55-1 of the Baltimore City Code. The complaint contained nine counts, one of which (Count I) was the “common count” for money had and received.

Article 15, subtitle 21 of the 2000 version of the City Code regulates the sale of tickets to certain licensed events in Baltimore City, both by the entity putting on the event, such as Lyric, and by certain ticket agencies that also sell tickets to those events. The subtitle consists of five sections — §§21-1 through 21-5. Section 21-1 is a licensing provision. It states, in relevant part: “No person shall engage in the business of selling tickets…evidencing the right of admission to exhibitions, performances, games, or sports conducted by licensees under licenses issued by the State of Maryland or City of Baltimore…unless a license shall have been issued to such persons by the Director of Finance upon the payment of the fee herein prescribed.”

An exception provides “that no license shall be required of any agent duly authorized in writing by a licensed exhibitor to sell tickets for said licensee at the established price printed thereon.”

“Each such license shall be limited to a single location or place of business and shall expire on January 1 next ensuing the grant thereof…The fee for such a license shall be $250 and the said license fee shall not be prorated.”

Sections 21-2 through 21-5 are regulatory statutes. In pertinent part, they provide as follows: “A licensee…shall not…exact, accept, or receive for any ticket…to an exhibition, performance, game, or sport conducted by a licensee under a license granted by the State of Maryland, or the City of Baltimore, any greater amount than 50¢ in excess of the sum of the regular or established price or charge therefor printed on the face of such ticket,” plus any State or Federal tax.

An exception provides, however, that “[n]othing in this section shall be construed to make illegal or invalidate the excess sum which is permitted to be charged for certain tickets by a person engaged in the business of selling tickets under the provisions of Article 15, Subtitle 21 {“Ticket Agencies”} of the City Code.

Ticketmaster and Lyric were parties to a Facility Agreement, under which, in relevant part: Lyric granted to Ticketmaster “exclusive Outlet Sales and Telephone Sales rights for all Events.” Under the definitions of those terms, that gave Ticketmaster the exclusive right to sell tickets through outlets other than Lyric, by telephone, over the Internet, and by other electronic means to events held at Lyric.

Ticketmaster was “authorized” to collect, in addition to the price established by Lyric and printed on the ticket, a service charge and certain other charges. The Facility Agreement authorized Ticketmaster to “impose a per Ticket Service Charge on all Outlet Sales and Telephone Sales.” The service charge on telephone sales must include a per order handling fee, to be determined solely by Ticketmaster.

It was apparent that, on all telephone and outlet sales, both Ticketmaster and Lyric receive an amount of money in excess of the price stated on the ticket (and, indeed, in excess of 50¢ more than the price stated on the ticket) and that it also may be the case, even on box office sales of tickets by Lyric to its own events, that Lyric receives a sum greater than the price stated on the ticket.

With this background, the District Court certified, in pertinent part, the following question: Where a ticket agency is authorized in writing by a licensed exhibitor to sell tickets to an event, and the ticket agency collects both the established price printed on the ticket and an additional, separately-stated per-ticket service charge that would not be charged as part of the established ticket price when tickets are sold directly by the exhibitor, does the exception contained in Article 15, §21-1(b) of the Baltimore City Code apply, so as to exempt the ticket agency from the requirement of licensure, and from the limitation of maximum service charges?

LAW: Although the first question centered on §21-1(b), other provisions of the subtitle have some relevance to the licensing issue. Section 21-1(a) provides that “no person” shall “engage in the business of selling [] tickets” evidencing the right to admission to events “conducted by licensees under licenses issued” by the State of Maryland or the City of Baltimore “unless a license shall have been issued to such persons by the Director of Finance.” Section 21-1(b), however, provides that no such license is required “of any agent duly authorized in writing by a licensed exhibitor to sell tickets for said licensee at the established price printed thereon.”

Ultimately, of course, the language of those ordinances will determine their meaning. Because the ordinances are more than 60 years old and have never been construed by the Court of Appeals, however, and because the circumstances offered as justification for Ticketmaster’s service changes either did not exist or have changed rather dramatically since the enactment of the ordinances, consideration of the legislative history was useful, in part to expose what the City Council was attempting to address and also to clarify what otherwise might be ambiguous from a later non-substantive reorganization of the ordinances and provide a rationality not otherwise immediately apparent.

The initial concern was over ticket scalping, mostly involving the resale of tickets to Naval Academy football games, both in Baltimore and in Philadelphia in 1947. The initial ordinance was later modified to include other types of events. It established broader regulation of both exhibitors and ticket agencies, provided for the licensing of the latter, and permitted licensed ticket agencies to add a premium of 50¢ on the sale of tickets. Today, a 50¢ limit on surcharges by licensees may seem an anachronism. That was not the case when the ordinance was enacted, however.

The certified question seems to assume that, if §21-1(a) were read by itself, agencies such as Ticketmaster would be required to have a license, as it asks only whether such agencies are exempt from the licensing requirement under §21-1(a) (and the 50¢ premium limit) by virtue of §21-1(b).

The Court rejected Ticketmaster’s arguments in support of limiting §21-1(a) to resellers. The requirement that “[n]o person shall engage in the business of selling the tickets…evidencing the right of admission to [performances] conducted by [licensed exhibitors]” without a license issued by the Director of Finance means precisely what it says. There is nothing ambiguous about it and no basis for us to read the word “selling” as limited to “reselling.” Whether or not §21-1(a) could be read as including reselling, it cannot properly be read as limited to reselling. Laws applicable only to the resale of tickets expressly so provide, and those, like the ordinances before us, that make it unlawful “to sell or offer for sale” have been construed as not limited to resales. See McMillan v. Live Nation Entertainment, Inc., S.W. 3d, 2012 Ark. 166 (2012).

The legislative history does not indicate an intent to reach only resellers of tickets. Although there certainly was concern over the scalping of tickets, principally football tickets and most particularly tickets to Naval Academy football games, a lesson was learned from the nullification of the earlier ordinance, which was directed only at that. The ordinance now at issue is broader in scope. It applies not just to ticket agencies but also to exhibitors and their agents and prohibits both from selling tickets to licensed events in the City at more than the established price. There is nothing in the legislative history that would warrant a construction of §21-1(a) inconsistent with its plain language.

Furthermore, the clear import of §21-1(b), when read in conjunction with §21-3, is that an exhibitor is not lawfully permitted to authorize anyone to charge more than the established price. A licensed ticket agency may charge an additional 50¢, not because the exhibitor authorizes it but because §21-2 allows it by law. If the exhibitor purports to authorize charges over and above the established price, the authorization is invalid and therefore cannot be regarded as relevant to whether the agent must be licensed.

The true crux of §21-1(b) is that a ticket agency license is not required for an entity that is authorized in writing by a licensed exhibitor, as an agent for the exhibitor, to make original sales for the exhibitor. Although §21-1(a) may extend to those who resell tickets, the authorization under §21-1(b) necessarily can relate only to original sales. Absent allegations or evidence, of which there are none in the record before us, that tickets to an event are in the nature of special invitations restricted to the initial recipient and are non-transferrable, original sales are all that the exhibitor can control. No authority from the exhibitor is necessary to allow people who have already purchased tickets to resell them.

The Facility Agreement clearly provided a written authorization for Ticketmaster to make original sales of tickets to Lyric events as an agent for Lyric, and, for that reason, Ticketmaster (as the only agency so authorized) is not required to be licensed by reason of exercising that authority.

Because, under §21-1(a), a license is required in order to “engage in the business” of selling tickets, the exception in § 21-1(b) applies only if all of the tickets sold or offered for sale by the agency to covered events in Baltimore City are pursuant to written authorization by licensed exhibitors.

Thus, the certified question was answered as follows: If a ticket agency is authorized in writing by a licensed exhibitor to sell tickets as an agent of the exhibitor, the ticket agency is not required to be licensed by reason of exercising that authority. A purported authorization by the exhibitor to charge more than the established price is invalid and does not limit or expand the exception in §21-1(b).

COMMENTARY: The District Court also certified the following question: Does Article 19, §55-1 Apply to Original Sales or Only Resales?

What is now Art. 19, §55-1 was first enacted in 1958 as Ordinance No. 1574. The only amendments that have been made since were an increase in the fine for violations in 1994 and permitting violations to be charged by citation in 2003. Like the 1949 ordinance, its provisions were originally all in one undivided section of the Code. In later codifications, the section was split into subsections, there now being four of them.

The Court reached the same conclusion with respect to §55-1 as it did with respect to Art. 15, subtitle 21 — that the language used by the City Council is unambiguous and cannot properly be read as limited to the resale of tickets. If the City Council meant to limit the ordinance in that manner, it could easily have said so, as other legislatures have done.

The Court therefore answered the second certified question as follows: Article 19, §55-1(a) is not limited to ticket resales. Except as permitted in §55-1(b), it prohibits the collection of a service charge, in addition to the established price printed on a ticket, in connection with the original sale of the ticket by the exhibitor or the exhibitor’s authorized agent.

PRACTICE TIPS: Maryland continues to recognize a common law action for money had and received. Unless otherwise precluded by statute, such an action will lie to recover money paid in excess of that allowed by statute, including the Baltimore City ordinances, if the agreement pursuant to which it was paid has not been fully consummated, i.e., remains executory. Except with respect to a usurious contract, however, the action does not lie to recover money paid under a fully consummated contract as to which the parties may be regarded as being in pari delicto.

Professional Responsibility

Reinstatement 

BOTTOM LINE: Where disbarred attorney’s petition for reinstatement was granted, dissent would not have reinstated attorney because attorney failed to acknowledge the extent of his misconduct.

CASE: Matter of Rex B. Wingerter, No. 98, Sept. Term, 2011 (filed Jan. 15, 2013) (Judges BELL, Harrell, Greene, Adkins, Barbera & McDonald). 6 pages.

FACTS: In 2007, attorney Rex B. Wingerter was disbarred for violating Rule 8.4(b) and (c) of the Maryland Lawyer’s Rules of Professional Misconduct. Attorney Grievance v. Wingerter, 400 Md. 214 (2007). Mr. Wingerter’s violations related to his conviction, after a guilty plea, of misprison of a felony, in violation of Section 4 of Title 18 of the United States Code, based on his concealment of immigration fraud being committed at a company for which he was working.

In the Statement of Facts supporting his guilty plea, Mr. Wingerter admitted to taking an active role in concealing the fraud underlying his conviction, including making misrepresentations to the government that he knew, or should have known, were false. The Court of Appeals made particular note that Mr. Wingerter accepted the Statement of Facts supporting his guilty plea, in which he admitted that all the actions he took “were in all respects knowing and deliberate, and were not committed by mistake, accident, or any other innocent reason.”

The Court’s statement in the underlying case formed one of the bases of overruling an exception posited by Mr. Wingerter, by which he asserted that he never took any active steps to assist in the commission of the fraud and that his transgression was one of willful blindness, not active participation. This argument was dismissed, however, because the concealment steps were clearly alleged in the undisputed statement of facts.

Mr. Wingerter petitioned the Court for reinstatement. The Court, having considered the petition and the response of the Attorney Grievance Commission, granted the petition and reinstated Mr. Wingerter as a member of the Maryland Bar.

LAW: The Court provided no opinion with its Order reinstating Mr. Wingerter. However, the dissent, which opposed reinstatement, issued the following analysis.

A determination of whether or not an attorney should be readmitted to the practice of law after having been disbarred requires consideration of a number of factors, specifically including that “the petitioner recognizes the wrongfulness and seriousness of the professional misconduct for which the discipline was imposed.” Maryland Rule 16-781(g)(4).

In this case, there was no question that Mr. Wingerter, in his own words in his declaration in support of his reinstatement has not acknowledged the extent of his misconduct; he alleged that his misconduct “largely was that of omission and not commission.” He further described his misconduct as “a failure to pay sufficient attention to the operational details; failing to recognize the power of money to corrupt the workplace; and overlooking and not voicing protest when witnessing the illegal conduct” of other employees.

While Mr. Wingerter did refer in one sentence, in the introduction to his declaration in support of reinstatement, to the fact that he “also took steps to conceal the misdeeds” of other employees, he did not include in any of his specific descriptions of his misdeeds that which he did to actually facilitate the fraud. Rather, in his Petition for Reinstatement, Mr. Wingerter summarized his misconduct by stating that he had negligently failed to review or verify the claims put forth in his employer submissions to the Department of Labor or the U.S. Citizenship Immigration Services, did not investigate suspicious conduct by his employer, failed to acknowledge that as legal counsel, he personally was responsible for the applications and petitions submitted to the federal agencies, and that he turned a blind eye when witnessing wrongdoing.

His own version of events in no way acknowledged having taken an active role to conceal the immigration fraud that permitted non-citizens to enter the country illegally, even though it was clear from the Court’s sanction discussion in the original case that Mr. Wingerter was disbarred because of intentionally dishonest conduct. Thus, it was anomalous and incongruous to say that an attorney who was disbarred for intentionally dishonest conduct should be reinstated, when he still has not acknowledged the seriousness of his criminal acts.

Because the dissent believes that Mr. Wingerter has not met his burden of proving that he appreciates the seriousness and wrongfulness of his misconduct, the dissent would not readmit him to the Bar of Maryland until he does.