Facts

Launched in 2006, Eventbrite is an event management and ticketing website based in San Francisco, California. In September 2017, Eventbrite made its largest acquisition when it purchased Ticketfly LLC from Pandora Media Inc. for approximately $200 million, in order to expand the company's music-related events. Eventbrite went public in September 2018. On October 11, 2019, Michael Gomes and others filed suit against Eventbrite Inc. and others for violations of the federal securities laws.

PLAINTIFFS' CONTENTIONS: Plaintiffs contended that the Registration Statement defendants used to sell shares in the initial public offering (IPO) of the company was materially misleading because defendants negligently omitted that Eventbrite was then failing with its migration of Ticketfly customers to Eventbrite's platform. Because Ticketfly offered its customers certain features and services not available on and could not be easily added to Eventbrite, Ticketfly customers did not migrate to Eventbrite as expected, a situation defendants negligently omitted. The unavailable features could not be easily integrated into Eventbrite's system, and therefore defendants misleadingly concealed that Eventbrite's platform could not be extended to include features that influenced customers to choose Ticketfly, consequently losing an extensive customer base. As Ticketfly was Eventbrite's largest acquisition and accounted for approximately one quarter of Eventbrite's revenue, the omission was important and substantial.

DEFENDANTS' CONTENTIONS: Defendants argued generally that they acted in good faith and their actions were in accordance with applicable rules, regulations and laws. As to the Ticketfly acquisition, its migration and integration was complex and consuming, proving to be far more difficult than initially planned or conceived, especially because Ticketfly's system was inherently and systemically different. Moreover, unforeseeable, external factors occurred that resulted in unanticipated, negative consequences.

Result

On January 22, 2021, the district court denied plaintiffs' motion for preliminary approval of a settlement after a motion to intervene by plaintiffs in an action in San Mateo County Superior Court, case number 19CIV02798. On June 10, 2022, the judge in that state court action approved a final settlement. Consequently, the district court judge, noting that plaintiffs in the federal action did not request exclusion from the state court action settlement, no longer had standing to pursue. Plaintiffs in the federal suit then agreed to dismiss the action with prejudice.