In Re DirecTV Early Cancellation Fee Marketing & Sales Practices Litigation
810 F. Supp. 2d 1060
C.D. Cal.2011Background
- This MDL involves DirecTV customers allegedly charged improper early cancellation fees under various Customer Agreements with arbitration clauses.
- The Arbitration Clause includes a class action waiver and a provision that if the class waiver is unenforceable, the arbitration clause is unenforceable.
- Versions of the Customer Agreement relevant to several Plaintiffs were issued in 2007, 2009, and 2010, with substantially identical arbitration terms.
- Post-Concepcion, the Court lifted a prior stay and re-evaluated whether to compel arbitration for Plaintiffs from different states, with varying state-law implications.
- Plaintiffs are grouped into three categories based on prior motions to compel arbitration and the governing law for each Plaintiff’s home state.
- The Court proceedings involve whether to reconsider prior rulings, whether to compel arbitration for new Plaintiffs, and whether injunctive-relief claims should be arbitrable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rule 62.1 indicates substantial issues on reconsideration | Kahaly et al. argue reconsideration warranted given Concepcion | DirecTV seeks to overturn denial as to certain Plaintiffs | Indicative ruling issued; substantial issues exist; remand decisions pending Ninth Circuit |
| Whether arbitration should be compelled for California, New Jersey, Oregon, and Washington Plaintiffs | Arbitration clause should be enforced or reconsidered under home-state law | Concepcion makes arbitration enforceable for these Plaintiffs | Motion to Compel granted in part; UCL/CLRA injunctive-relief claims severed from arbitration; other claims compelled |
| Whether the UCL and CLRA injunctive-relief claims are arbitrable | Arellano/Broughton guidance may allow arbitration of public-injunctive claims | Cruz/Broughton should not override Concepcion for public-right injunctive relief | UCL/CLRA injunctive-relief claims not compelled; severed from arbitration |
| Whether the Non-Severability Clause affects enforceability of arbitration under state law | Non-Severability Clause ties arbitration to the state-law enforceability at contract formation | Clause permits applying current state law and FAA governs | Clause interpreted to permit applying current law and FAA; not limited by Van Ness |
Key Cases Cited
- Areellano v. T-Mobile USA, Inc., 131 S. Ct. 1740 (2011) (Concepcion dictates FAA preemption where state law outright bans arbitration of certain claims)
- Discover Bank v. Superior Court, 36 Cal.4th 148 (Cal. 2005) (California public policy favoring class actions previously used to bar arbitration)
- Three Valleys Mun. Water Dist. v. E.F. Hutton & Co., Inc., 925 F.2d 1136 (9th Cir. 1991) (language like 'would' can expand non-waiver scope of arbitration)
- Van Ness Townhouses v. Mar Indus. Corp., 862 F.2d 754 (9th Cir. 1988) (arbitration scope depends on contract language, not evolving law at hearing)
- Fisher v. A.G. Becker Paribas Inc., 791 F.2d 691 (9th Cir. 1986) (waiver of arbitration requires knowledge, inconsistency, and prejudice; strong burden)
- Pokorny v. Quixtar, Inc., 601 F.3d 987 (9th Cir. 2010) (substantive unconscionability requires one-sided terms and harshness)
- Cruz v. Pacifi-Care Health Sys., Inc., 30 Cal.4th 303 (Cal. 2003) (injunctive claims in public-right contexts may be nonarbitrable)
- Broughton v. Cigna Healthplans of Cal., 21 Cal.4th 1066 (Cal. 1999) (private attorney general injunctive relief not enforceable in arbitration)
- Lombardi v. Smithfield, 11 A.3d 1180 (Del. 1989) (irreparable harm is the most important factor for a preliminary injunction)
- Adler v. Fred Lind Manor, 153 Wash.2d 331 (Wash. 2004) (substantive unconscionability may render arbitration unenforceable)