Recently, a small, exclusive group of taut, fit looking young people with large disposable incomes attended the Fyre Festival in the Bahamas. They could have gone to Ibiza, or on safari, or a ski chalet, or anywhere else really, and they are now bitterly regretting their decision not to do so.
The promotional material invited them to “a cultural moment created from a blend of music, art, and food,” in which they would unplug from the everyday and “ignite their inner flame”. It was to be the music festival and experience on a remote island they would never forget. Imagine the Instagram photos!
Instead, the catastrophe that followed led to the ‘postponement’ of the Festival, a promise of full refunds, and a groveling explanation on the Fyre Festival Website from its founders (Billy McFarland, a computer programmer and entrepreneur, and Ja Rule aka ‘Jeffrey Atkins’, a rapper) that included the following:
As amazing as the islands are, the infrastructure for a festival of this magnitude needed to be built from the ground up. So, we decided to literally attempt to build a city. We set up water and waste management, brought an ambulance from New York, and chartered 737 planes to shuttle our guests via 12 flights a day from Miami. We thought we were ready, but then everyone arrived.
The team was overwhelmed. The airport was jam packed. The buses couldn’t handle the load. And the wind from rough weather took down half of the tents on the morning our guests were scheduled to arrive. This is an unacceptable guest experience and the Fyre team takes full responsibility for the issues that occurred.
Prominent United States’ lawyer Mark Geragos, otherwise described as a “master manipulator of the news” (and the inspiration for US TV show, Notorious) has now launched the inevitable class action against Fyre Media as well as McFarland and Ja Rule in their personal capacities, with the lead plaintiff Daniel Chung being a person who purchased one of the less expensive Fyre Festival packages at $2000.
Naturally enough, the sum sought is “in excess of $100,000,000.00 on behalf of himself and his class“, because we need round numbers when we sue for lots of money.
For another example of big round numbers, see my post on Martin D. Singer’s letter of demand to Google when he sued for $100 million on behalf of celebrities who had unauthorised nude photos of them published online.
The Class Class Action Complaint filed in the US District Court, California reads in part as follows:
Defendants promoted their “Fyre Festival” as a posh, island-based music festival featuring “first-class culinary experiences and a luxury atmosphere.” Instead, festival-goers were lured into what various media outlets have since labeled a “complete disaster”, “mass chaos” and a “post-apocalyptic nightmare”.
The festival’s lack of adequate food, water, shelter and medical care created a dangerous and panicked situation among attendees, suddenly finding themselves stranded on a remote island without basic provisions – that was closer to “The Hunger Games” or “Lord of the Flies” than Coachella.
What happened at Fyre Festival?
The Fyre Festival was to take place over two weekends, the last in April and the first in May, and cost $1,500 to $250,000 a person for one weekend, depending on amenities. VIP packages started at $3,500 a person for tented accommodations, or $2,500 for fans with their own yachts. There were to be meditation stations and a grazing hut to help feed the 6,000 and 7,000 people expected to come for each of the festival’s two weekends.
Said to be located on Fyre Caye in the Bahamas, a private island formerly owned by Pablo Escobar (although these facts are now disputed), the Fyre Festival was going to have amazing headline acts. Like the Good Music Family (that I’ve never heard of but apparently has something to do with Kanye West). And Blink-182. All one had to do was fly down to Miami and charter a plane. Easy.
There were going to be hot models. On boats.
Which means you needed to hire a boat.
And more hot models (but not many male ones).
However, the Wall Street Journal reported that there was trouble in paradise. Advance payments to artists were missed. The price tag was reportedly high because costs were out of control.
Targeted at millennials, Fyre’s creative director, Mark Musters, told WSJ that the festival would “capture those Instagram moments” in an “offline experience”. He was right, but not in the way he expected.
According to a rather fascinating Twitter account from an apparent insider with the tendentious handle @FyreFraud (the organisers have denied anything untoward, but I’m confident Mark Geragos’ team has printed off this material), things started to get ominous when Fyre Festival turned off Instagram comments to its posts. Given that social media had helped spawn the festival through the viral posts of ‘influencers’, this seemed a little odd.
However, and as the class action alleges (which is replete with social media that has been doing the rounds), the reality came nothing close to matching the promise.
For example, this was meant to be (at least some of) the accommodation:
However, the luxury tents also had more in common with disaster relief than the five star experience.
A now infamous photograph of a cheese sandwich from a disappointed, gourmet-loving attendee, also started to do the social media rounds.
The advertised caterers were then quick to point out the sandwich was not due to them.
In short, imagine thousands of people on Gilligan’s Island (or some island), but without Ginger, or accommodation, or much food (although it sounds like there was plenty of tequila), and all they want to do is to get off. The New Yorker has an evocative, insider’s account.
My personal favourite from the Class Action Complaint is the allegation that, in addition to the substandard accommodations, “wild animals” were seen in around the festival grounds. This is accompanied by an Instagram post of a giant, friendly pig being patted by two millennials in bathing suits in pristine, crystalline water.
How are the sums sought calculated?
The organisers have offered a refund but, pursuant to the Complaint, this is regarded as insufficient. Instead, the money sought is broken into categories:
- All actual, consequential and incidental losses and damages
- Punitive damages (presumably, to help get the big bucks)
- Attorneys’ fees
Such loss and damage is further explained by reference to the lead plaintiff: “Plaintiff expended thousands of dollars on his ticket and travel accommodations to the event. Plaintiff made further expenses on emergency travel after the event collapsed. Additionally, Plaintiff experienced significant emotional pain and suffering from being stranded in a foreign country” (ed: ahem, being the Bahamas).
I have emphasised the words “emotional pain and suffering” because this is a vexed issue under Australian law, and I will return to this issue below.
What are the claims?
To the extent the matters below refer to US law, please do not think I am an expert in that jurisdiction. Because I am not. I am an Australian lawyer.
Fraud – Intentional misrepresentation
This claim is predicated on the following alleged representations that were said to be completely false:
- This event would take place on a private island.
- The island was previously owned by infamous drug lord Pablo Escobar [when “the island isn’t even private as there is a “Sandals” resort down the road”].
- All food would be provided, including five-star cuisine.
- The living quarters would be fully furnished.
- Guests would take private jets from Miami to the festival.
- The event would be attended by celebrities and top-level musical talent.
Interestingly, there is no reference to the intention element under this heading, although the earlier narrative alleges that the defendants were aware for months that the festival was dangerously under-equipped posing a serious danger to anyone in attendance.
It is also interesting that the above alleged false representations do not refer to safety issues. It is a curious feature of the Complaint that the earlier narrative focusses on safety issues but these do not find expression under the specific heads of claim.
Presumably, the fraud allegation has been included because, if proven, it might facilitate a claim for punitive damages.
This claim looks close to the Tort of Malicious Falsehood which is available under common law systems such as Australian law. It is relevant when a person tells a lie with the intention of causing harm to someone else. Here, of course though, the objective was the opposite. The organisers wanted to create a great experience, even if they failed miserably.
Fraud – Negligent misrepresentation
This allegation is ‘Fraud-lite’, in that the intentional element is plainly not required. The above false representations are relied upon, but this time in circumstances where it is alleged that the defendants may have honestly believed that the representations were true but, based on the lack of preparation for the event, they had no reasonable grounds for believing the representations were true when they were made.
This is very similar to section 18 of the Australian Consumer Law (ACL), in which conduct will contravene the law if it misleading or deceptive or likely to mislead or deceive.
When the representation is about a future matter (e.g. Fyre Festival will be amazing), one also needs to examine the operation of section 4 ACL which requires an analysis of whether the person making the representation had reasonable grounds for doing so at the relevant time.
The point the Class Complaint seeks to make is that the defendants had no reasonable grounds to be so enthusiastic given the troubled history of the Festival. It is alleged that McFarland and Ja Rule began personally reaching out to performers and celebrities in advance of the festival and warning them not to attend (noting that this allegation, in particular, is not yet proven and may be denied).
Breach of contract
It is alleged that:
- the plaintiff entered into a contract with the defendants to provide a luxury festival experience in exchange for money;
- the plaintiff provided payment in consideration for the defendants’ promise to provide lavish accommodation, top-tier cuisine and A-level musical talent;
- the defendants breached the contract by providing accommodation “rivalling a refugee camp“, bread and cheese sandwiches and no musical acts;
- the plaintiff spent thousands of dollars on his ticket and travel and accommodation;
- after the defendants failed to perform, he spent thousands of dollars on emergency travel plans to leave the event.
From this we infer that a ticket refund is regarded as insufficient, because the lead plaintiff also wants compensation for his travel and accommodation, including the extra money spent to get home.
There is no mention of the plaintiff’s emotional pain and suffering, something that is referred to in the earlier narrative. This is curious.
Australian law takes a conservative view to contract claims arising from disappointed expectations.
For example, a famous contract case (Baltic Shipping v Dillon (1993) 176 CLR 344) involved a cruise ship passenger called Mrs Dillon. Nine days into her 14 day cruise, the ship sank. Mrs Dillon lost her belongings and suffered injuries. She wanted her money back, and she wanted damages.
She was not able to obtain a refund, but she did recover damages for disappointment. The case is a landmark case, because until then it was uncertain whether the courts could award loss for such pain and suffering.
There is method to the High Court’s madness as to why Mrs Dillon was unable to get a refund. That is, the basis on which she could have done so (total failure of consideration) would mean there was no contract on foot. If so, she could not have claimed for disappointment because such a claim depended on there being a breach of a contractual term.
Consider it this way: if Mrs Dillon could prove there had been a total failure of consideration, there would be no contract, and not much money by way of refund. However, if there was a contract the shipping company could be said to have breached, she could possibly end up with much more (nudge nudge, wink wink).
And so it transpired that Mrs Dillon was able to recover considerable damages for distress or disappointment arising from breach of contract. According to the High Court, it was an object of the contract (an ‘implied’ term because it was not expressly stated) that she would be provided with pleasure, enjoyment and physical protection, whereas in fact she had a horrendous time when the ship sank and she almost died.
The money awarded was $5000, which does not sound a lot, but it was almost three times the cost of the fare.
Something to keep in mind is that, under Victorian law at least, Part VBA of the Wrongs Act 1958 (Vic.) has created hurdles for people to bring claim for psychological injury as a result of claims, including contract claims. A high degree of proof is required. There is also a statutory limit for non-economic loss claims under that Act.
In completion, the Class Action complaint also has a separate head of claim for breach of good faith. Under Australian law, such a duty has been held to exist, but not independently of contract. Rather, it informs the court’s interpretation of a relevant contractual clause.
There is not much point suing after a holiday has turned bad, unless you feel strongly about the matter, you want to send a message, and you also want to get a lot of money back.
The practical question in the present case, is whether the Fyre Festival has enough money to provide a refund, let alone to compensate disgruntled attendees. One expects a great deal of the cash flow from ticket sales and accommodation has already been paid to music acts or for infrastructure, so that there is little left. The organisers might put their hands into their own pockets to pay refunds. But the organizing entity is almost certainly a $2 vehicle with no assets.
Mark Geragos’ legal team may anticipate that Fyre Media (the corporate defendant) has insurance, which one would think inevitable in light of the nature of the event. That said, many insurance policies carve out fraudulent conduct.
It is otherwise a no brainer that this is why the individual promoters of the festival have also been sued. The idea will be to target their (presumably) deep pockets, and also to ensure they have a vested interest in settling the dispute quickly on terms favourable to the affected class.
If I were cynical, which of course I’m not, I might also suspect that a $100 million legal action in relation to a dispute that has gone cray-cray on social media is a strong foundation to a very successful Mark Geragos PR exercise. There you go, I’ve said his name again.