Imburgia v. DIRECTV, Inc.
170 Cal. Rptr. 3d 190
Cal. Ct. App.2014Background
- Plaintiffs Amy Imburgia and Kathy Greiner filed a California class action accusing DIRECTV of improperly charging early termination fees.
- The actions proceeded alongside a multidistrict federal MDL with similar claims.
- DIRECTV moved to stay or dismiss and to compel arbitration under the FAA after Concepcion; the superior court denied.
- The 2007 customer agreement’s Section 9 waives class arbitration and Section 10 says FAA governs, with a state-law caveat for Section 9.
- Plaintiffs argued California law would render the class-action waiver unenforceable, thereby making Section 9 unenforceable; the court agreed.
- On appeal, the order denying arbitration was affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Section 9’s law-of-your-state clause controls enforceability | Imburgia argues state law governs and CA would unenforce the waiver | DIRECTV argues FAA governs or state law interpretation should be harmonized with FAA | Section 9 refers to state law only for enforceability, unenforceable in CA, rendering entire Section 9 unenforceable |
| Whether the class action waiver is unenforceable under California law | CA law would find the waiver unenforceable (e.g., CLRA provisions) | FAA preempts Discover Bank and enforces the waiver | Class action waiver unenforceable under California law; whole arbitration agreement unenforceable |
| Whether FAA preemption resolves the issue | Preemption is not decisive if contract language governs | Concepcion preempts Discover Bank, making waiver enforceable under FAA | Court declines to apply Concepcion to override the contract-interpretation issue; relies on contract interpretation showing CA unenforceability |
| Whether contract-interpretation principles apply to ambiguous drafting | Ambiguity should be construed against the drafter | No ambiguity; FAA governs the arbitration framework | Ambiguity construed against DIRECTV; leads to unenforceability of Section 9 |
Key Cases Cited
- In re DIRECTV Early Cancellation Fee Marketing and Sales Practices Litigation, 810 F.Supp.2d 1060 (C.D. Cal. 2011) (district court recognized conflicts between FAA and state law on section 9)
- Murphy v. DIRECTV, Inc., 724 F.3d 1218 (9th Cir. 2013) (arbitration enforceability under Concepcion; preemption argument)
- Concepcion, 563 U.S. __ (Supreme Court 2011) (FAA preempts Discover Bank rule; class arbitration incompatible with FAA)
- Discover Bank v. Superior Court, 36 Cal.4th 148 (Cal. 2005) (rule that class-action waivers may be unconscionable)
- Volt Info. Sciences v. Leland Stanford Jr. Univ., 489 U.S. 468 (U.S. 1989) (contracts may choose arbitration rules; FAA governs enforcement of terms)
- Cable Connection, Inc. v. DIRECTV, Inc., 44 Cal.4th 1334 (Cal. 2008) (choice of law provisions in arbitration agreements; enforceability under CA law)
- Roadway Package System, Inc. v. Kayser, 257 F.3d 287 (3d Cir. 2001) (supremacy of contract-selected rules for arbitration)
- Nedlloyd Lines B.V. v. Superior Court, 3 Cal.4th 459 (Cal. 1992) (standard for enforcing choice-of-law provisions)