Ticketmaster Has ‘Had It’ With Brokers : Lawsuit: Ticket agency asks $1 million in damages against an Encino broker for allegedly thwarting the legal distribution system.

How do ticket brokers--the legal middlemen who sell concert and sporting event tickets at sometimes 20 times face value--always seem to have the best seats in the house?

The California Assn. of Ticket Agencies, an organization that represents about two dozen of these firms in the Southland, maintains that brokers purchase choice seat locations from season ticket holders and/or from people hired to stand in line at box offices when events go on sale.

But music industry insiders and thousands of disgruntled fans have long speculated that some brokers purchase their best seats under the table from employees working for ticket agencies, promoters or at venues where events are staged.

A $1-million-plus federal lawsuit filed in Los Angeles on March 15 by Ticketmaster, the largest ticket agency in the nation, is the first legal action in California against a ticket broker for allegedly thwarting the legal ticket distribution system.

The suit charges Barry’s Ticket Service in Encino with fraud, unfair business practices and violations of the Racketeering Influenced and Corrupt Organizations Act, alleging that the broker solicited a Ticketmaster sales operator to “unlawfully” provide Barry’s with prime seats. Ticketmaster is seeking to recover at least $1 million in punitive damages plus injunctive relief against the broker.

“We filed this suit to send a message out loud and clear to all the brokers,” said Fred Rosen, chairman of the board and CEO of Ticketmaster. “We have had it up to here with brokers and intend to use every means at our disposal to vigorously prosecute anybody who practices this kind of abominable conduct.”

Barry Clark Rudin, owner of Barry’s Ticket Service, acknowledged purchasing tickets from the sales operator but denies initiating the contact or even knowing the young man worked for Ticketmaster.

“I never solicited or bribed anybody,” Rudin said in an interview. “I bought tickets from the guy, but when he called us he never told us he worked for Ticketmaster. What I did was not illegal or unethical. If it wasn’t for all the hassle with this suit, I’d probably do the same thing again.”

Scalping--selling tickets on or near the grounds of an event without a license--is a misdemeanor in California. Still, no law prohibits individuals from buying up blocks of seats and reselling tickets for profit off grounds.

To prevent brokers from obtaining entire sections of choice seats, concert promoters and facility owners often set a six-ticket limit on the number of tickets any consumer is allowed to purchase. But hundreds of tickets fall into hands of brokers, who then mark up the price dramatically for such hot attractions as Bruce Springsteen, U2 and Michael Jackson. For instance, $30 tickets for Madonna’s Los Angeles Sports Arena concerts last year were sold by brokers for as much as $600.

According to Ticketmaster, Barry’s “conspired” with a Ticketmaster employee at the Wilshire Center in Los Angeles to gain “unlawful” access to preferred seat locations by requesting that the sales operator withhold blocks of tickets and secretly charge them to a series of credit card numbers that were subsequently found to be associated with Barry’s Tickets.

To induce the operator--who earned about $250 per week from Ticketmaster--to cooperate and participate in the scheme, Barry’s allegedly paid the employee $25 per ticket for seats in the first 10 rows and $10 per ticket for all other seats, according to court documents.

The suit alleges that the employee was paid about $3,000 on the sly between December and March and that as a result of the scheme Ticketmaster customers were deprived of purchasing at least 200 tickets at four recent performances by Sting, INXS, Hall & Oates and Keith Sweat in and around Los Angeles.

Rudin, a 26-year-old San Fernando native who runs his five-employee firm out of a 400-square-foot office in Encino, said he is shocked that Ticketmaster is suing him.

“Buying and selling tickets like I do does not hurt society,” Rudin said. “In fact, I provide a service for society. Joe Public does business with me because he knows I’m honest and he can trust me. That’s what I like about the business I’m in. People pay me high sums of money and thank me for what I do.”

But not everyone is grateful.

Two weeks ago, California Senate Judiciary Committee chairman Bill Lockyer (D-Hayward) introduced a stringent ticket-scalping bill aimed at putting brokers out of business.

Lockyer’s proposal would make it illegal to resell tickets for profit anywhere “without the written permission of the owner or operator or sponsor of an entertainment or athletic event.”

“It’s a traditional function of government to intervene in the free market when innocent citizens are being exploited,” Lockyer said. “I view this as a consumer protection bill.”

Under the terms of the proposal, a broker caught selling a ticket for more than face value could be found guilty of a misdemeanor punishable by a maximum penalty of up to six months in jail and/or a fine of up to $1,000 for the first offense.

Individuals caught selling more than 20 tickets could be subject to felony prosecution punishable by a maximum penalty of $5,000 and one year in prison. Second-time offenders would face felony charges punishable by a $10,000 fine and up to three years in jail.

Fred Ross, owner of Front Row Center Tickets and secretary-treasurer for the California Assn. of Ticket Agencies (CATA), said his organization believes the Lockyer bill poses a serious threat to the livelihood of brokers.

“We face being put out of business by this bill,” said Ross, who has operated four offices with 18 employees for more than a decade. “I know our opponents like to portray us as if we’re a bunch of scumbags, but the fact is, we’re family men with legit businesses, concerned citizens who pay taxes.”

Ross claims that ticket brokers control only about 2% of the total number of tickets at any given concert in Los Angeles.

“We don’t bribe anybody and we don’t rip anybody off,” Ross said. “We sell dreams. We sell fantasies. We provide our customers with great seats that they could never get on their own.”

Lockyer introduced his ticket-scalping bill in Sacramento at the urging of the Californians Against Ticket Scalping, an organization of promoters and venue operators founded last May by San Francisco promoter Bill Graham.

Graham said he initiated his campaign for the legislation after he learned that rock fans of average means were being excluded from concerts he presented. The promoter said he expects to be accompanied by several entertainment heavyweights at a legislative hearing for the bill scheduled April 23.

“The average fan doesn’t stand a chance at purchasing a decent seat anymore,” Graham said. “Artists and promoters and people who own venues believe that brokers are exploiting our customers and we intend to put a stop to it.”

Meanwhile, Rudin--who has been solicited for donations by CATA to help lobby against the Lockyer proposal--said he believes that Ticketmaster’s motivation for the lawsuit against his company is political.

“Personally, I think Ticketmaster is using this case for ammunition to help Bill Graham’s anti-broker bill to pass,” Rudin said. “I think the lawsuit is a publicity stunt to make Ticketmaster look good politically. They can generate a lot of attention by picking on a small businessman like me.”