Eventbrite seeks dismissal of Wantickets suit
Eventbrite has moved to have its legal dispute with Wantickets dismissed by the supreme court of New York, citing lack of evidence and conflict with a counterclaim in California, where plaintiff Wantickets is largely based.
EDM/nightclub ticketer Wantickets accuses Eventbrite of tortious interference and aiding and betting breaches of fiduciary duty over its hiring of former president Barak Schurr and CEO Diego Carlin, who are alleged to have been sending clients to their new employer while still at Wantickets.
In their motion to dismiss, filed on Tuesday, Eventbrite’s attorneys, Michael Ng and Lindsey Weiss Harris of Kobre & Kim, argue Wantickets has failed to make a convincing case for either of the claims.
Regarding the alleged breaches of fiduciary duty – or the duty of loyalty by people controlling a company to look to after its interests – Ng and Weiss Harris note the law in Delaware, where Wantickets is registered (as Wantickets RDM LLC), “does not impose by default a fiduciary duty on the officers of a limited liability company”, meaning Wantickets’ “merely stating that Schurr and Carlin were the president and CEO of Wantickets is an insufficient factual foundation for the existence of a fiduciary duty owed by Schurr or Carlin to the LLC”.
They further allege that “the only factual allegations in the complaint about Eventbrite’s alleged aiding and abetting is that it ‘pitched itself to potential clients’ introduced through Schurr and Carlin and ‘paid for Mr Schurr to take a business trip to Ibiza, Spain, so that he could develop business for Eventbrite'”. “Those allegations,” says Kobre & Kim, “are insufficient to plead a factual basis for, or to allow the court to draw an inference that Eventbrite knew Schurr or Carlin owed fiduciary duties to Wantickets; knew they were breaching any fiduciary duties owed to Wantickets; or advocated for or assisted in those breaches.”
“Merely stating that Schurr and Carlin were the president and CEO of Wantickets is an insufficient factual foundation for the existence of a fiduciary duty”
As for the claim of tortious interference – that a defendant intentionally convinced a third party to breach its contract with the plaintiff – the lawyers write that Wantickets “fails to allege any factual basis for its claim that Eventbrite had knowledge of [Schurr and Carlin’s] employment agreement or its terms”. They continue: “The only non-conclusory allegation in the complaint regarding Eventbrite’s alleged tortious interference with Carlin’s and Schurr’s employment contracts is that ‘Eventbrite has approached multiple longtime Wantickets customers about switching their business to Eventbrite’, and claims that these contacts ‘were orchestrated or directed by Mr Schurr and/or Mr Carlin’. It does not allege what contractual obligation prohibited Schurr and Carlin from undertaking those actions, or how Eventbrite induced them to do so.”
Finally, as both companies “have their principal place of business in California” and “a broader action among the same parties that includes the claims herein is already further along in California”, Ng and Weiss Harris argue the dispute should be settled there, rather than in New York. (Though Wantickets’ original complaint says its headquarters are in New York, the attorneys claim “Wantickets RDM LLC is not even authorised to do business in New York and that it “does not appear to have an office at the location plaintiff has told the court is its principal place of business”.)
The plaintiff, however, accuses Eventbrite of seeking to “litigate the same issues simultaneously” in two separate venues, according to a motion filed on 6 December in the San Francisco superior court. “Eventbrite has filed an action in this […] court seeking resolution of the exact issues that are already pending before a New York court,” writes law firm Steptoe & Johnson. “This later-filed action should be stayed pending resolution of the earlier-filed New York action.”
Eventbrite’s motion to dismiss will be considered by judge Shirley Werner Kornreich on 5 January.
Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.
Now Wantickets sues Eventbrite
Wantickets has expanded its legal fight against its former CEO and president to include their new employer, Eventbrite.
The company, one of North America’s largest EDM ticket agencies, in September initiated legal action against ex-CEO Diego Carlin and ex-president Barak Schurr for allegedly transferring business to rival Eventbrite while still employed by Wantickets.
In a claim denied by Schurr (pictured) and Carlin, Wantickets CFO Richard Blakeley accused the two men of “doing work for, and sending clients to, Eventbrite – all while being employed and paid by Wantickets.”
Now, in a separate lawsuit (Wantickets RDM, Inc. vs Eventbrite, Inc.), Wantickets’ lawyers have levelled similar allegations at Eventbrite, accusing the company of “having actively encouraged and participated in a series of disloyal acts” by the two former executives and being “eager to take advantage of the[ir] disloyalty”.
“Eventbrite was eager to take advantage of the disloyalty of Mr Schurr and Mr Carlin”
In Wantickets’ initial complaint, which has yet to be responded to by Shirley Wener Kornreich (the same judge presiding over its sister lawsuit), Steptoe & Johnson’s Charles Michael writes: “Eventbrite was eager to take advantage of the disloyalty of Mr Schurr and Mr Carlin. Eventbrite pitched itself to potential clients via the introductions from Mr Schurr and/or Mr Carlin, knowing that Mr Schurr and Mr Carlin were still employees of Wantickets and that Mr Schurr’s and Mr Carlin’s diversion of business violated their duties to Wantickets.”
Michael further alleges the defendant “even paid for Mr Schurr to take a business trip to Ibiza, Spain, so that he could develop business for Eventbrite”.
“Competing fairly is of critical importance and central to our ethics at Eventbrite. We maintain that we have not engaged in any wrongdoing or inappropriate conduct”
As in the previous case, Wantickets seeks “damages in an amount to be proven at trial”, as well as “such other and further relief as the court may deem appropriate”.
Carlin and Schurr joined Eventbrite in July.
Reached for comment, an Eventbrite spokesman tells IQ: “It’s a competitive industry, and competing fairly is of critical importance and central to our ethics at Eventbrite. We maintain that we have not engaged in any wrongdoing or inappropriate conduct. We dispute Wantickets’ allegations and intend to defend our position.”
Wantickets, EB in wrongful interference suit
Wantickets, one of North America’s largest primary ticket agencies for nightclub and dance music events, is suing former employees Barak Schurr and Diego Carlin for breach of contract, aiding and abetting breaches of fiduciary duty and ‘tortious interference’ in relation to their recent move to Eventbrite.
Charles Michael and Michael A. Keough of Steptoe & Johnson, representing Wantickets, allege the rival online ticketing platform has “joined forces with two former employees of the plaintiff [Wantickets]” to exploit “the plaintiff’s confidential information for the purpose of redirecting business away from the plaintiff and to Eventbrite”.
The lawsuit, Wantickets RDM, Inc. v Barak Schurr et al, also seeks to prevent Schurr and Carlin – formerly president and CEO, respectively – from working with Eventbrite by holding them to their contracts with Wantickets, which tie both into a three-year period of employment ending 9 April 2017. (Both Schurr’s and Carlin’s employment agreements, which commenced 9 April 2014, were presented to the court on 3 August.)
A summons was also issued on 12 August by the New York County Supreme Court for a potential separate suit against Eventbrite (Wantickets RDM, Inc. v Eventbrite, Inc.) for “damages in an amount to be proved at trial”, although Wantickets has not yet filed a request for judicial intervention and the case has not been assigned a judge.
First reported by Dave Brooks’s The Real, much of Wantickets’ evidence for its claims against Schurr and Carlin comes in the form of a ten-page affidavit by Wantickets chief financial officer, Richard Blakeley, who reveals the company had conditionally agreed to sell to Eventbrite before the deal fell apart.
“Thanks to the disloyalty of our own salesperson, we face the risk of losing our largest client”
Blakeley writes: “The Eventbrite transaction never closed, however, for reasons that only Eventbrite can explain. It appeared to me that Eventbrite was never very serious about the transaction because […] its representatives made few efforts to contact me or to discuss the financials of Wantickets.
“Wantickets thereafter entered into a different sale transaction, and the new owners promptly terminated Mr Schurr and Mr Carlin for cause. Specifically, Wantickets had discovered that, even though the Eventbrite transaction never closed, Mr Schurr and Mr Carlin had been doing work for, and sending clients to, Eventbrite — all while being employed and paid by Wantickets.”
Blakeley provides as evidence over 20 emails, seen by IQ, between Schurr, Carlin and over 20 high-profile dance music festivals, promoters, venues and nightclubs in which Schurr – then still a Wantickets employee – appears to suggest they switch to Eventbrite’s platform for ticketing. In one typical example, Schurr offers to give a “full demo of Eventbrite’s capabilities”.
In his affidavit, Blakeley says Wantickets has “spent years building relationships and goodwill with clients that Mr Schurr and Mr Carlin can quickly exploit and destroy for Eventbrite’s benefit”. He cites as an example the company’s largest client, “a casino with several nightclubs and similar venues that sell tickets via Wantickets.
“This casino represents 26% of our annual revenue. We met with representatives from the casino on 28 July, and they told us that Mr Schurr had already proposed moving their business over to Eventbrite. They asked for a proposal from us by 5 August to compete with the economic terms proposed by Eventbrite.
“In other words, thanks to the disloyalty of our own salesperson, we face the risk of losing our largest client.”
“At no time during this process was I moving business from Wantickets to Eventbrite”
Schurr’s affidavit, however, tells a different story. He says the Chehabar family, then Wantickets’ owners, had lost their “appetite for the technology and ticketing business, and directed […] Carlin and myself to expedite an exit strategy”, which involved exploring the possibility of a sale to Eventbrite.
He says the two men were “at all times entirely transparent with the Chehebars, and kept them fully informed of the discussions with Eventbrite” and “at no time during this process was I moving business from Wantickets to Eventbrite”.
Schurr’s recollection of his and Carlin’s termination also differs from Blakeley’s: “It was my understanding that the new Wantickets owner, Mr [Joe] Schnair, had promised the Chehebar family that both Mr Carlin and myself would remain with Wantickets following the newest change in ownership [live-streaming company LiveXLive]. However, on 18 July 2016, we were told by Mr Blakeley that we were both terminated. Mr Blakeley apologised profusely to us and simply said that the new owner felt no need to continue with existing management.”
Quoting from Blakeley’s affidavit, he adds: “At no time during the interactions with Mr Blakeley did he state, imply or suggest that were were terminated for “cause”, that we were “sending clients to Eventbrite”, that our behaviour was “shocking” or that we had engaged in “flagrant misconduct”.
When reached for comment, an Eventbrite spokesperson told IQ: “As you know, it’s a competitive industry. Due to pending litigation, I’m unfortunately unable to share any specifics about Barak and Diego, but what I can assure you is that competing fairly is of critical importance and central to our ethics at Eventbrite and we continue to operate as such.”
The case continues.
Eventbrite targets club sector with new hires
Barak Schurr and Diego Carlin, the former president and CEO, respectively, of recently sold US nightclub ticketer Wantickets, have joined Eventbrite.
They are joined by Senthil Chidambaram, founder and CEO of EDM news website Dancing Astronaut, as the event management and discovery platform plots further expansion into ticketing for dance music venues/nightclubs.
“We’re excited to further our commitment within the dance music market and extend our proven success in dance music festivals to nightclubs and venues,” says Greg Patterson, Eventbrite’s director of music and live events.
“We’re excited to further our commitment within the dance music market and extend our proven success in dance music festivals to nightclubs and venues”
“Barak, Diego, and Senthil share Eventbrite’s passion for live experiences and an aligned interest in helping nightclubs and venues run their event business as smoothly as possible. We look forward to marrying their deep industry knowledge with our global leadership in event technology to better serve this important and fast-growing part of the music ecosystem.”
Wantickets was acquired by live music streaming service LiveXLive last week.
LiveXLive expands into ticketing
Live music streaming company LiveXLive has acquired Wantickets, one of North America’s largest ticketers for dance music and DJ/nightclub events.
Founded in 1999, Wantickets has since sold more than 250 million tickets and generated close to US$50 million in revenue last year. It also offers self-service and full-service B2B solutions for promoters, including tools for event management, accounting and real-time reporting.
Joe Schnair, CEO of Wantickets, says the acquisition will combine “our strong marketing and ticketing capabilities with LiveXLive’s live music streaming network, allow[ing] the company to take advantage of synergies in the emerging digital music market.”
“Our strong marketing and ticketing capabilities combined with LiveXLive’s live music streaming network allows the company to take advantage of synergies in the emerging digital music market”
Robert Ellin, LiveXLive’s founder and chairman, adds: “We believe the acquisition of Wantickets presents an ideal opportunity to expand content reach and build LiveXLive’s subscription model by utilising the company’s massive database of live music buyers.”
LiveXLive, owned by Loton Corp, launched last July and is positioning itself as the “ESPN of premium live music experience” with its aim to create a 24-hour network of live music broadcasting digitally and on mobile. In May it signed a strategic partnership with MTV which saw the broadcaster carrying LiveXLive’s stream of the closing night of Rock in Rio Lisbon.