11:27am PT by Eriq Gardner
Comic Con Fans Had Coronavirus Refunds Stolen, Organizer Alleges in Fraud Lawsuit
ACE Universe was expecting big things for its March 20-22 Comic Con in Boston. Chris Evans, Tom Hiddleston and Chris Hemsworth were among the stars scheduled to attend. The event was nearly sold out. Then came the coronavirus and cancellation. Now comes one of the first lawsuits by an entertainment promoter over the fallout from the pandemic. It will hardly be the last.
In a complaint filed Monday in New York federal court, ACE accuses GrowTix of "stealing millions of dollars" of customer refunds. Additionally, the lawsuit alleges that ACE gave GrowTix $680,000 to facilitate refunds only to be advised that the refund plan no longer worked. The event organizer is now suing for breach of contract and fraud as the vendor puts the blame squarely on ACE.
GrowTix provided the ticketing services and event management software. According to the complaint, GrowTix was to be compensated based on a percentage of sales, and the two companies had an agreement with each other covering the processing of refunds in the event of cancellation. That contract also contained a force majeure provision, which ACE says excused performance when the parties were prevented from living up to obligations by reason of “governmental action” or an “act of God” beyond control.
ACE says its Boston event was shaping up to be "one of the biggest comic cons ever" until Massachusetts Gov. Charlie Baker declared a state of emergency on March 10 after 92 coronavirus cases had been confirmed in the state. Baker prohibited gatherings of more than 250 people, and ACE says the governor's decision triggered the force majeure clause.
The two sides are said to have then discussed a refund plan.
"The Parties agreed that all customers would receive a full refund within 30 days of ACE’s notice to fans that ACE Northeast had been shut down," states the complaint (read here). "In reliance upon the Refund Agreement, 1) ACE funded the $680,000 for GrowTix to use for refunding customers and, 2) ACE made an announcement, on March 11, 2020, on Facebook, Twitter, and Instagram that all customers would receive full refunds after the government shut down of the event in response to the coronavirus."
But less than a week later, continues the complaint, ACE received a letter from the chief of GrowTix's corporate parent Patron Technologies "advising it that it was not only withholding the money transferred to it for refunds, but was also demanding more money from ACE in regards to its own fees."
On March 17, states ACE, "Patron sought to attach and withdraw $2.3 million from ACE bank accounts in the middle of the night. Fortunately, this unauthorized attack on ACE’s bank accounts, which would have jeopardized the company and all but destroyed any chance at refunds, was prevented."
Nevertheless, ACE says its vendor is improperly withholding funds as banks and credit card companies have begun submitting chargebacks en masse.
Adds the complaint, "The losses to ACE, due to Defendants’ improper conduct, will amount to hundreds of thousands of dollars in improper transactional fees, and even more, much greater harm to its reputation with the inevitable failure to meet its refund obligations."
Patron Technologies tells a different story about what happened.
In response to the an initial story about this lawsuit, Patron's vice president of marketing Doug Lyons reached out to The Hollywood Reporter to share that as part of the arrangement for the Boston event, GrowTix " processed transactions worth over $2.9million, which was paid to ACE Universe over a period of several months - as the transactions occurred - prior to the event's cancellation."
Lyons says that ACE provided $680K for limited refunds as a result of specific changes in programming before the entire cancellation of the event but that didn't cover all the money that would be needed for full refunds.
"After repeated attempts to find a fair method to help ACE pay out refunds to their customers over time from the funds ACE were already paid and to allow them to manage their cash flow in the process, it became clear that ACE had no intention of willingly supplying the funds Growtix had passed along to them in order to compensate ACE's customers," says Lyons. "Therefore, in order to attempt to help the fans receive their refunds in the time frame ACE had promised them, and as per the specific terms in the contract between the two entities, Growtix made requests to transfer the remaining money... from ACE's bank account so Growtix could process ACE's customers' refunds. Growtix followed the exact terms of the contract and was doing everything they could to help fans receive the treatment they expected and deserved."
UPDATED 3/25 12:30 pm PST