Ticket Galaxy (“the Company”), a leading secondary market ticket distribution company, today announced that, in response to the New YorkAttorney General’s (“the NYAG”) deeply flawed interpretation of New York state law and demand that the Company pay millions of dollars into state coffers to avoid facing a civil action, it has been forced to seek the protection of the Supreme Court of the State of New York. Ticket Galaxy has filed for a declaratory judgment seeking the Court’s confirmation that it operates in full compliance with all applicable rules and regulations, and that the NYAG has no valid legal basis on which to allege that the Company is in violation of any state or federal law.
The lawsuit follows over 24 months of extensive engagement and cooperation with the NYAG during its examination of Ticket Galaxy and its business practices, a process that included the production of over 50,000 pages of documents and innumerable phone calls, in-person meetings and written communications. Despite the Company’s extraordinary transparency, the NYAG has deployed a flawed interpretation of state law to target Ticket Galaxy’s successful and lawful business practices.
The NYAG contends that a seller breaks the law if it offers products for sale that are not yet in the seller’s possession, but that will be procured after the customer orders them. This common practice is known as “drop shipping” and is employed across a range of industries, including by leading retailers such as Amazon and eBay. The NYAG’s ill-conceived view has no legal precedent – as reflected by New York’s own Department of Taxation and Finance which has issued guidance on the sales tax treatment of drop shipping sales, and by Governor Cuomo’s recently signing into law a bill that confirms that this practice is lawful in New York. Under the law, ticket sellers are allowed to list tickets before they have purchased them, provided that they disclose certain information about the tickets. In short, if the NYAG’s view were correct, it would conflict with this new law as well as the state’s own administrative guidance. Through this lawsuit, Ticket Galaxy is seeking to protect its business and to prevent harm to its customers, business partners, and the thousands of companies throughout New York State who use drop shipping, which increases consumer selection and market competition.
Ticket Galaxy President, Stephen Kobelski, said: “Ticket Galaxy operates honestly and in compliance with the law. The New York Attorney General has threatened us with millions of dollars of penalties for engaging in drop shipping, while ignoring the innumerable other companies that employ the same practice. We have worked cooperatively with the Attorney General for over two years, attempting to provide a deeper understanding of our business and trying to reason with them. The AG’s actions are without precedent under the law and Ticket Galaxy will not capitulate to baseless demands.”
Ticket Galaxy noted that in a separate action today, TicketNetwork, an affiliated company, also filed for declaratory judgment against the NYAG.
