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SXSW sues insurance company over funds for class action lawsuit

South by Southwest, otherwise known as SXSW, a festival that takes place each year in Austin, Texas, is suing its insurance company for not funding its defence in a class action lawsuit. 

SXSW was hit with the class action lawsuit in April last year, on behalf of ticket holders that were not offered a refund for the event, which was cancelled by the city due to COVID-19. 

At the time, SXSW was one of the first major events to be cancelled in March 2020 due to the pandemic. 

Organisers said they could not provide refunds because the festival spends a lot of money on preparing to host a festival. Instead, organisers offered ticket holders the option to defer credentials to a later date, as well as the right to purchase tickets for another year at 50%.

Around 80% of ticket holders accepted this offer, but some attendees were not happy with this and filed a lawsuit against South by Southwest in April last year. This was filed by attendees Steven Leventhal, Maria Bromley and Kleber Pauta. 

According to recent reports from Pitchfork, the festival and the plaintiffs have reached a settlement for the lawsuit brought by plaintiffs Bromley and Pauta. 

It is also reported that a district court judge granted preliminary approval of the settlement on September 30. 

Austin attorney Peter D. Kennedy filed a complaint in the US District Court for Western Texas, arguing that SXSW purchased a $1m (£735,000/€864,500) policy from Federal Insurance in August 2019 and has said that the company is not following through with its obligation to defend and indemnify the event. 

Kennedy is also arguing that SXSW’s Federal Insurance policy includes liability coverage, and requires the business to pay for the festival’s legal defence in the class action lawsuit. 

Federal Insurance said that there is language in the policy which excludes coverage relating to contractual disputes and professional services. Kennedy also said that Federal Insurance is still obligated to defend the organisers against conversion and unjust enrichment claims.

Kennedy has asked a district court judge to force Federal Insurance to pay for SXSW’s legal defence and pay any occurring damages, interests and legal costs. 

TheTicketingBusines.com has contacted SXSW for comment but has not received a response at the time of writing. 

Image: A. L. on Unsplash