ORDER GRANTING IN PART AND DENYING IN PART DIRECTV’S MOTION TO COMPEL ARBITRATION WITH CERTAIN PLAINTIFFS AND DISMISS PLAINTIFFS’ CLAIMS
In this Multidistrict Litigation (“MDL”) case concerning early cancellation fees, Defendant DirecTV filed a Motion to Dismiss Claims in Plaintiffs’ Second Amended Consolidated Class Action Complaint and to Compel Arbitration with the Arizona, Florida, Illinois, Louisiana, New York, Pennsylvania, South Carolina, and Virginia Plaintiffs (“Motion”). After considering all papers and arguments submitted, the Motion is GRANTED in part and DENIED in part.
To resolve the Motion to Compel and the Motion to Dismiss, this case requires a review of the consumer protection laws of eight states.
BACKGROUND
The following facts are taken from Plaintiffs’ Second Amended Consolidated Class Action Complaint (“SAC”) and the Court accepts them to be true, as it must for motions to dismiss under Federal Rule of Procedure 12(b)(6).
DirecTV provides satellite television programming throughout the United States. (SAC ¶¶ 10, 37.) To allow its customers to access that service, DirecTV provides receivers and other equipment. (SAC ¶ 10.) DirecTV is incorporated and has its headquarters in California. (SAC ¶ 10.)
DirecTV has one of the lowest levels of customer “churn” in its competitive industry. (SAC ¶ 43.) “Churn” is “the turn
After customers sign up for the DirecTV service, and after the receivers and other equipment are installed, DirecTV provides the customers with their terms and conditions. (SAC ¶¶ 49-52.) Customers are not told about the Cancellation Fee when they order the service. (SAC ¶¶ 52-53.)
After a DirecTV customer has initiated service, DirecTV provides the customer with a standardized consumer contract (“Customer Agreement”) that is sent to the customer with its first monthly bill. (SAC ¶ 60.) The Customer Agreement does not include the programming commitment and the Cancellation Fee. (SAC ¶ 62.) The Customer Agreement includes the following choice of law clause:
Applicable Law: The interpretation and enforcement of this Agreement shall be governed by the rules and regulations of the Federal Communications Commission, other applicable federal laws, and the laws of the state and local area where Service is provided to you. This agreement is subject to modification if required by such laws. Notwithstanding the foregoing, Section 9 shall be governed by the Federal Arbitration Act.
(SAC, Ex. 1, § 10(b) (“Choice of Law Clause”).) The Customer Agreement also includes a section called “Resolving Disputes.” (SAC, Ex. 1 § 9 (“Arbitration Clause”).) In the Arbitration Clause, the Customer Agreement states that:
[njeither you nor we shall be entitled to join or consolidate claims in arbitration by or against other individuals or entities, or arbitrate any claim as a representative member of a class or in a private attorney general capacity. Accordingly, you and we agree that the JAMS Class Action Procedures do not apply to our arbitration. If, however, the law of your state would find this agreement to dispense with class arbitration unenforceable, then this entire [Arbitration Clause] is unenforceable.
(Arbitration Clause, § 9(d)(ii) (“Class Action Waiver”).)
The Customer Agreement refers to a “separate programming commitment.” (SAC ¶ 63.) That “separate programming commitment” comes to the customer after installation in a document called the “Equipment Lease Addendum.” (SAC ¶ 63.) The Equipment Lease Addendum does not come to the customer with the Customer Agreement. (SAC ¶ 63.) Instead, the Equipment Lease Addendum is printed on the reverse side of a document titled “Installation/Service Satisfaction Checklist” (“Satisfaction Checklist”). (SAC ¶ 63, Ex. 2.) The Equipment Lease Addendum refers to the programming commitment and Cancellation Fee. (SAC ¶¶ 65-66, Ex. 2.)
DirecTV also imposes a commitment period on existing customers if they request a change in service, such as a different programming package or replacement equipment. (SAC ¶ 45.) If customers cancel during the new commitment period, they are assessed the Cancellation Fee. (SAC ¶ 45.) Customers are not told about the Cancellation Fee and commitment period before they change service or receive replacement equipment. (SAC ¶¶ 53, 63.) Often, these customers are not alerted to the existence of the Cancellation Fee until they attempt to cancel service. (SAC ¶ 54.) Other times, customers find out about the Cancellation Fee after they cancel the service and are billed or automatically charged for the service. (SAC ¶ 54.)
DirecTV solicits customers to identify a bank account or credit card at the time of activation, and will not activate services unless either the information is provided or the customer gives a deposit. (SAC ¶ 57.) Without disclosing its intention to do so, DirecTV automatically withdraws the Cancellation Fee from cancelling customers’ accounts. (SAC ¶ 57.) If the customer has not given DirecTV access to an account, DirecTV institutes collections efforts against the customer. (SAC ¶ 57.)
Based on these facts and others, Plaintiffs filed class action lawsuits. On October 9, 2009, the Joint Panel on Multidistrict Litigation (“JPML”) transferred all the cases to this Court. On February 2, 2010, the Plaintiffs in the transferred cases sought leave to file a consolidated complaint, and this Court granted leave to do so. The Court also vacated motions to dismiss that were pending on that date, and granted several Plaintiffs’ motion for reconsideration of this Court’s previous order compelling arbitration. The Court did this because the Ninth Circuit had recently released its opinion in
Masters v. DirecTV, Inc.,
Case Nos. 08-55825 and 08-55830, — Fed.Appx.-,
Because this is an MDL case, the case involves many Plaintiffs from many States. The Court now turns to a brief description of each Plaintiff.
Plaintiffs Annette Kahaly (“Kahaly”), John Mulea (“Mulea”), and Maureen Van Meter (“Van Meter”) (collectively, the “California Plaintiffs”) are all residents of California, ordered and received DirecTV service in California, and originally filed their lawsuits in California. (SAC ¶¶ Ills.)
Plaintiff Christine Slakans (“Slakans” or the “Arizona Plaintiff’) is a citizen of Arizona who ordered and received DirecTV service in Arizona. (SAC ¶ 14.) Plaintiff Slakans originally filed her lawsuit in Arizona.
Plaintiffs Joseph Lombardi (“Lombardi”), Kathleen O’Brien (“O’Brien”), Sandra Johannes (“Johannes”), and Ira Boshnack (“Boshnack”) (collectively, the “Florida Plaintiffs”) are all citizens of Florida who ordered and received DirecTV service in Florida. (SAC ¶¶ 15-18.) Plaintiffs Lombardi and Johannes originally filed their lawsuits in California. Plaintiffs Johannes and Boshnack originally filed in Florida.
Plaintiffs Renato Cappuccitti (“Cappucciti”) and David Ward (“Ward”) (collectively, the “Georgia Plaintiffs”) are citizens of Georgia who ordered and received DirecTV service in Georgia. (SAC ¶¶ 19-20.) The Georgia Plaintiffs originally filed in Georgia, and their cases are currently stayed pending the Eleventh Circuit’s resolution of an appeal of the transferring district court’s denial of DirecTV’s motion to compel arbitration.
Plaintiff Christine Schuessler (“Schuessler” or “the Illinois Plaintiff’) is a citizen of Illinois who ordered and received DirecTV service in Illinois. (SAC ¶21.) Plaintiff Schuessler originally filed in California.
Plaintiffs Valarie Thibodaux (“Thibodaux”), Rudolph Johnson (“Johnson”), Patrick Keller (“Keller”), Patricia Wilson (“Wilson”), and Dorothy Jones (“Jones”)
Plaintiffs Sean and Tara Murray (“the Murrays” or “the New Jersey Plaintiffs”) are married citizens of New Jersey who ordered and received DirecTV service in New Jersey. (SAC ¶27.) The Murrays originally filed in New Jersey.
Plaintiffs Paul Cannon (“Cannon”) and Joshua Folkerth (“Folkerth”) (collectively, the “New York Plaintiffs”) are residents of New York who ordered and received DirecTV service in New York. (SAC ¶¶ 28-29.) Plaintiff Cannon originally filed his lawsuit in California, while Plaintiff Folkerth originally filed in New York.
Plaintiffs Carolyn Forbes (“Forbes”) and Louis M. Wilson (“Wilson”) (“collectively, the Oregon Plaintiffs”) are married citizens of Oregon who ordered and received DirecTV service in Oregon. (SAC ¶ 30.) The Oregon Plaintiffs originally filed in Oregon.
Plaintiff Gary Smith (“Smith” or the “Pennsylvania Plaintiff’) is a citizen of Pennsylvania who ordered and received DirecTV service in Pennsylvania. (SAC ¶ 31.) Plaintiff Smith originally filed in Pennsylvania.
Plaintiff Hoyt McBroom (“McBroom” or the “South Carolina Plaintiff’) is a South Carolina citizen who ordered and received DirecTV service in South Carolina. (SAC ¶ 32.) Plaintiff McBroom originally filed his lawsuit in South Carolina.
Plaintiffs Roberta and Edward Pifer (the “Pifers” or the “Virginia Plaintiffs”) are Virginia citizens who ordered and received DirecTV service in Virginia. (SAC ¶ 33.) The Pifers originally filed their lawsuit in California.
Plaintiffs Keith and Jana Harper (the “Harpers”), Tracy Twyman (“Twyman”), and Paul and Karen Brice (the “Brices”) (collectively, the “Washington Plaintiffs”) are Washington citizens who ordered and received DirecTV service in Washington. (SAC ¶¶ 34-36.) The Washington Plaintiffs all originally filed in Washington.
In the SAC, Plaintiffs allege 20 claims. Claims One through Three are for violations of federal law (“Federal Claims”), and are brought on behalf of putative nationwide classes. The Federal Claims are numbered as follows: (1) Declaratory relief under 28 U.S.C. §§ 2201, et seq., brought by all Plaintiffs; (2) violation of the Electronic Funds Transfer Act (“EFTA”), 15 U.S.C. § 1693, brought by Plaintiffs Van Meter, O’Brien, and Johannes; and (3) violation of the Federal Communications Act (“FCA”), brought by all Plaintiffs.
Claims Four through Six are brought by all Plaintiffs on behalf of themselves and a putative nationwide class. These claims are based on violations of California consumer protection law (the “California Consumer Protection Claims”), and are numbered as follows: (4) Violation of California Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code §§ 17200, et seq.; (5) violation of the Consumers Legal Remedies Act (“CLRA”), Cal. Bus. & Prof. Code §§ 1750, et seq.; and (6) invalid liquidation damages in violation of Cal. Civil Code § 1671.
Plaintiffs assert claims Seven through Seventeen “in the alternative” and only “[t]o the extent that California law is ruled inapplicable to non-California resident Plaintiffs.” (SAC ¶ 143.) These claims are based on the consumer protection laws of each Plaintiffs’ home state, are brought based on a statewide putative class, and are numbered as follows: (7) Violation of Arizona’s Consumer Fraud Act, §§ 44-1521, et seq., brought by the Arizona Plaintiff; (8) violation of Florida’s Decep
Finally, claims Eighteen through Twenty are for violations of Common Law (the “Common Law Claims”). The Common Law Claims are brought on behalf of a putative nationwide class, and are numbered as follows: (18) Money had and received, brought by all Plaintiffs except Plaintiff Cappuccitti; (19) unjust enrichment, brought by all Plaintiffs except Plaintiff Cappuccitti; and (20) relief of unlawful penalties, brought by all Plaintiffs.
DirecTV now moves under 9 U.S.C. § 4 to compel arbitration of Plaintiffs Slakans, Lombardi, O’Brien, Boshnack, Johannes, Schuessler, P. Wilson, Keller, Johnson, Jones, Cannon, Folkerth, Smith, McBroom, and the Pifers. DirecTV also moves under Rule 12(b)(6) to: (1) Dismiss all California Consumer Protection Claims brought by the non-California Plaintiffs; (2) dismiss Plaintiffs’ claims premised on the early cancellation fee being an unlawful liquidated damages provision; (3) dismiss Plaintiffs’ EFTA claim; (4) dismiss Plaintiffs’ FCA claim; (5) Dismiss Plaintiffs’ common law claims for unjust enrichment and “Relief of Unlawful Penalties”; (6) dismiss the money had and received claims asserted by Plaintiffs McBroom, Slakans, Smith, Boshnack, and Twyman; (7) dismiss Plaintiff McBroom’s claim under the South Carolina Commercial Code; and (8) dismiss the Louisiana Plaintiffs’ LUTPA claim.
After DirecTV filed its Motion, Plaintiffs Keller, Johnson, Thibodaux, and Cannon voluntarily dismissed their claims. Accordingly, the Court will not address the Motion as to those Plaintiffs.
PRELIMINARY MATTERS
The parties submitted multiple evidentiary objections. In motions with numerous objections, “it is often unnecessary and impractical for a court to methodically scrutinize each objection and give a full analysis of each argument raised.”
Doe v. Starbucks, Inc.,
No. SACV 08-0582 AG (CWx),
ANALYSIS
Because federal courts are courts of limited jurisdiction, the Court first turns to the issue of whether this Court has subject matter jurisdiction here.
Steel Co. v. Citizens for a Better Env’t,
1. SUBJECT MATTER JURISDICTION
The Court finds that exercising subject matter jurisdiction here is proper under the Class Action Fairness Act of 2005 (“CAFA”). Recently, the Eleventh Circuit held that original jurisdiction over a class action under CAFA requires that at least one plaintiff allege an amount in controversy over $75,000.
Cappuccitti v. DirecTV, Inc.,
1.1 Mass and Class Actions under CAFA
CAFA “expands federal jurisdiction over class actions and facilitates their removal.”
Cappuccitti,
Two types of actions can be filed in (or removed to) federal courts under CAFA: mass actions and class actions. The CAFA jurisdiction rules are slightly different depending on which type of action applies. The distinction is important here because the Cappuccitti court extrapolated a new class action rule from the mass action rules.
A class action is “any civil action filed in a district court of the United States under rule 23 of the Federal Rules of Civil Procedure or any civil action that is removed to a district court of the United States that was originally filed under a State statute or rule of judicial procedure authorizing an action to be brought by 1 or more representatives as a class action.” 28 U.S.C. § 1711(2). A mass action is “any civil action (except a civil action within the scope of section 1711(2)) in which monetary relief claims of 100 or more persons are proposed to be tried jointly on the ground that the plaintiffs’ claims involve common questions of law or fact.” 28 U.S.C. § 1332(d)(ll)(B)(i). In other words, a class action is a representative action where a named plaintiff or plaintiffs represents a large number of similarly situated people who are not a part of the lawsuit, while a mass action is not representative because every plaintiff is named in the case.
CAFA provides three explicit statutory requirements for original jurisdiction over class actions. The first two requirements are found in 28 U.S.C. § 1332(d)(2) and deal with the minimum aggregate amount in controversy and minimal diversity:
The district courts shall have original jurisdiction of any civil action in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs, and is a class action in which—
(A) any member of a class of plaintiffs is a citizen of a State different from any defendant;
(B) any member of a class of plaintiffs is a foreign state or a citizen or subject ofa foreign state and any defendant is a citizen of a State; or
(C) any member of a class of plaintiffs is a citizen of a State and any defendant is a foreign state or a citizen or subject of a foreign state.
28 U.S.C. § 1332(d)(2). The third requirement is that there must be at least 100 members in the putative class. 28 U.S.C. § 1332(d)(5).
The requirements for mass actions are similar. A mass action must meet the same three requirements as a class action. But 28 U.S.C. § 1332(d)(ll)(B)(i) imposes an additional requirement on mass actions:
[t]he term “mass action” means any civil action ... in which monetary relief claims of 100 or more persons are proposed to be tried jointly on the ground that the plaintiffs’ claims involve common questions of law or fact, except that jurisdiction shall exist only over those plaintiffs whose claims in a mass action satisfy the jurisdictional amount requirements under subsection (a).
Id.
The reference to subsection (a) is important here. The “jurisdictional amount requirements under subsection (a)” states that “[t]he district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000.” 28 U.S.C. § 1332(a). So under the explicit terms of 28 U.S.C. § 1332, jurisdiction over a mass action doesn’t exist except “over those plaintiffs” whose amount in controversy is more than $75,000. Some courts have interpreted “only over those plaintiffs” to mean that at a minimum “at least one” of the plaintiffs must meet the $75,000 requirement for removal, but this distinction is not relevant to the issues here.
See Lowery v. Alabama Power Co.,
With this understanding of the CAFA requirements for jurisdiction over mass and class actions, the Court now turns to whether it is required to defer to the Eleventh Circuit’s opinion in Cappuccitti in determining whether it can exercise jurisdiction.
1.2 Whether Cappuccitti Is Binding on this Court
This Court has been awaiting a decision in
Cappuccitti v. DirecTV, Inc.,
one of the cases in this MDL, which was pending before the Court of Appeals for the Eleventh Circuit. The issue on appeal in
Cappuccitti
was whether the lower court correctly declined to compel arbitration. On July 19, 2010, an opinion was entered in
Cappuccitti.
Rather than addressing the arbitration issue on appeal, the Eleventh Circuit sua sponte dismissed the case for lack of subject matter jurisdiction. The Eleventh Circuit held that “in a CAFA action originally filed in federal court, at least one of the plaintiffs must allege an amount in controversy that satisfies the current congressional requirement for diversity jurisdiction provided in 28 U.S.C. § 1332(a),” which is $75,000.
Cappuccitti,
The Court recognizes that the damages claims in
Cappuccitti
are exactly the same as the other damages claims in this case. Specifically, the plaintiffs in
Cappuccitti
sued DirecTV “seeking the recovery ... of the fees DirecTV charged its subscribers for cancelling their subscriptions prior to the subscriptions’ expiration.”
Id.
at 1253. “The fees ranged from $175 to $480.”
Id.
Plaintiffs here seek the same relief, and the same maximum amount of individual damages are at issue. (SAC ¶ 44.) Thus, like the plaintiffs in
Cappuccitti,
no individual class member has alleged an
But this Court is not bound by
Cappuccitti.
“When a transferee court receives a case from the MDL Panel, the transferee court applies the law of the circuit in which it is located to issues of federal law.”
In re Gen. Am. Life Ins. Co. Sales Practices Litig.,
Applying divergent interpretations of the governing federal law to plaintiffs, depending solely upon where they initially filed suit, would surely reduce the efficiencies achievable through consolidated preparatory proceedings. Indeed, because there is ultimately a single proper interpretation of federal law, the attempt to ascertain and apply diverse circuit interpretations simultaneously is inherently self-contradictory. Our system contemplates differences between different states’ laws; thus a multidistrict judge asked to apply divergent state positions on a point of law would face a coherent, if sometimes difficult, task. But it is logically inconsistent to require one judge to apply simultaneously different and conflicting interpretations of what is supposed to be a unitary federal law.
Accordingly,
Cappuccitti
is persuasive authority to the extent that it does not conflict with Ninth Circuit precedent and to the extent that the Court finds its reasoning sound.
See In re Subpoena Served on Cal. Pub. Utils. Comm’n,
1.3 Whether this Court Should Follow Cappuccitti
As noted, the Court will only follow Cappuccitti to the extent that it does not conflict with Ninth Circuit precedent and that its reasoning is sound. For the reasons that follow, this Court will not follow the Cappuccitti rule.
The
Cappuccitti
court acknowledged that “[n]o court of appeals case of which we are aware has expressly held that at least one plaintiff must meet the [$75,000] requirement to maintain an original CAFA action.”
Cappuccitti,
But the Cappuccitti decision does directly conflict with the results of Ninth Circuit decisions. It is unlikely that the Ninth Circuit missed this issue in each and every CAFA case that has come before it in the last five years. A more likely scenario is that the Ninth Circuit didn’t address the issue because the plain words of the statute do not require any minimum amount in controversy as to individual plaintiffs in class actions. To resolve the conflicts between the results in Cappuccitti and the results in Ninth Circuit cases, the Court now turns to the Cappuccitti order to determine whether the reasoning is sound and whether the Court should follow it.
1.3.2 The dog that didn’t bark
“Is there any point to which you would wish to draw my attention?”
“To the curious incident of the dog in the night-time.”
“The dog did nothing in the night-time.”
“That was the curious incident,” remarked Sherlock Holmes.
Sir Arthur Conan Doyle, Silver Blaze, in The Complete Sherlock Holmes, Volume 2 399, 413 (Spark Educational Pub. Ed. 2003) (1892).
The curious incident here is the absence of an explicit requirement that an individual Plaintiff must meet any minimum amount in controversy for class actions. The incident is curious because Congress did explicitly require it for mass actions. 28 U.S.C. § 1332(d)(ll)(B)(i).
The confusion in Cappuccitti seems to arise from the conflation of mass actions and class actions. As noted in Section 1.1, Section 1332(d)(ll)(B)(i), combined with Section 1332(a), requires at least one plaintiff with more than $75,000 in controversy in mass actions. There are no corresponding sections for class actions.
The
Cappuccitti
court did not address the fact that Section 1332 explicitly requires a mass action plaintiff with more than $75,000 in controversy while remaining silent on whether the requirement applies to class actions. Instead, the court compared the requirements for mass and class actions, and found that “many of the requirements for an original CAFA action resemble those for a mass action removable under CAFA.”
The Cappuccitti court went on to note that:
“[T]he $75,000 requirement expressly applies in actions removed under CAFA, 28 U.S.C. § 1332(d)(ll)(B)(i), and we can think of no reason why Congress would have intended the requirement in the context of CAFA removal jurisdiction but not CAFA original jurisdiction. Holding otherwise would cause a nonsensical result: a case in which a plaintiff claimed less than $75,000 in controversy in state court could not enter federal court by removal ... but could, if the plaintiff chose, be brought in federal court under CAFA original jurisdiction.”
Cappuccitti, at 1257. If Section 1332(d)(ll)(B)(i) dealt with the removal of class actions, the result would be “nonsensical.” But it doesn’t. Section 1332(d)(ll)(B)(i) concerns only mass actions. And regardless of whether a class action is removed or originally filed, nothing in CAFA explicitly states that a class member must meet the minimum jurisdictional amount.
“[W]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.”
Nken v. Holder,
556 U.S. -, -,
This Court finds that the Cappuccitti decision was misguided in both the reasoning and result. Thus, the Court will not give weight to the rule set forth in Cappuccitti.
1.4 Conclusion
In sum, the Court disagrees with the reasoning and result in Cappuccitti. The only three requirements for CAFA jurisdiction over class actions are that: (1) the total amount in controversy is greater than $5 million; (2) the putative class contains at least 100 members; and (3) there is minimal diversity. There is no dispute that these three requirements are met here, so this Court may exercise subject matter jurisdiction.
2. MOTION TO COMPEL ARBITRATION
DirecTV brings its Motion to Compel Arbitration under 9 U.S.C. § 4 against Plaintiffs Slakans, Lombardi, O’Brien, Boshnack, Johannes, Schuessler, P. Wilson, Jones, Folkerth, Smith, McBroom, and the Pifers. Section 4 provides that “[a] party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court which, save for such agreement, would have jurisdiction ... for an order directing that such arbitration proceed in the manner provided for in such agreement.” DirecTV bases its Motion to Compel on the Arbitration Clause in the Customer Agreement. Plaintiffs argue that enforcement of the Arbitration Clause is against public policy and should not be enforced under various state laws.
To determine whether the Arbitration Clause is enforceable as to each Plaintiff, the Court must employ a two step analysis.
In the first step, this Court would normally apply the choice of law rules of California because this Court sits in the Central District of California. But here, the Court must apply the choice of law rules of the state where each Plaintiff originally filed before it was transferred here by the JPML.
In re Nucorp Energy Sec. Litig.,
The second step is to determine whether each forum would enforce the Arbitration Clause. In Section 2.1.2, the Court first examines the enforceability of the Arbitration Clause as to the Plaintiffs who originally filed in California, and finds that the Arbitration Clause is not enforceable as to those Plaintiffs. Next, in Section 2.2, for Plaintiffs who originally filed in other states, the Court examines the choice of law rules in each of their states, and finds that the Arbitration Clause is enforceable as to the Louisiana Plaintiffs, the South Carolina Plaintiff, and New York Plaintiff Folkerth, but not enforceable as to the remaining Plaintiffs.
2.1 Whether Plaintiffs Who Originally Filed In California Are Subject To The Arbitration Clause
Of the Plaintiffs against whom DirecTV seeks to compel arbitration, Florida Plaintiffs O’Brien and Lombardi, Illinois Plaintiff Schuessler, and Virginia Plaintiffs the Pifers all originally filed their lawsuits in California. Accordingly, the Court applies California choice of law rules to decide whether California law applies in the determination of whether these Plaintiffs should be compelled to arbitrate. The Court finds that under California law, the Arbitration Clause at issue here would not be enforceable.
2.1.1 California choice of law rules for enforcing arbitration clauses
On November 19, 2009, the Ninth Circuit released its opinion in
Masters v. DirecTV, Inc.,
Case Nos. 08-55825 and 08-55830, — Fed.Appx. -,
A federal court sitting in diversity must apply the issue preclusion law of the state where it sits, so California issue preclusion law will apply to these Plaintiffs.
Jacobs v. CBS Broad., Inc.,
Under federal law, offensive non-mutual issue preclusion applies if: “(1) there was a full and fair opportunity to litigate the identical issue in the prior action; (2) the issue was actually litigated in the prior action; (3) the issue was decided in a final judgment; and (4) the party against whom issue preclusion is asserted was a party or in privity with a party to the prior action.”
Syverson v. IBM,
(1) “the plaintiff had the incentive to adopt a ‘wait and see’ attitude in the hope that the first action by another plaintiff would result in a favorable judgment” which might then be used against the losing defendant; (2) the defendant had the incentive to defend the first suit with full vigor, especially when future suits are not foreseeable; (3) one or more judgments entered before the one invoked as preclusive are inconsistent with the latter or each other, suggesting that reliance on a single adverse judgment would be unfair; and, (4) the defendant might be afforded procedural opportunities in the later action that were unavailable in the first “and that could readily cause a different result.”
Syverson,
Here, first, DirecTV had a “full and fair opportunity to litigate the identical issue” in
Masters. Syverson,
DirecTV argues that because plaintiffs in
Masters
were from Montana and Georgia, as opposed to the other states represented by Plaintiffs here, the issues were not “identical.” But the Ninth Circuit was clear that California has a decidedly strong interest in litigation against DirecTV and in the enforceability of class action waivers, and that all other states in a nationwide class action “in which putative class members reside” had lesser and indistinguishable interests.
Masters,
at-, at *1. There is nothing in the
Masters
opinion indicating that Montana and Georgia were
DirecTV also argues that the plaintiffs in Masters only brought California claims, while the Plaintiffs here bring additional consumer protection claims based on the law of their own home states. But Plaintiffs plead California Consumer Protection Claims first, and plead their own home state laws only “in the alternative,” and only “[t]o the extent that California law is ruled inapplicable to non-California resident Plaintiffs.” (SAC ¶ 143.) So long as California law is applicable, which it is here, the claims based on Plaintiffs’ home state laws are rendered moot. Thus, this argument fails as well, and Plaintiffs have established the first element of claim preclusion.
The second element is whether the “issue was actually litigated” in
Masters. Syverson,
As to the third element, the issue here “was decided in a final judgment.” Id. at 1078. This element requires only that “the court’s decision on the issue as to which preclusion is sought is final.” Id. at 1079. An appellate order affirming the district court order strengthens the basis for issue preclusion because preclusive effect is given to “issues ... resolved by appeal prior to final judgment.” Id. at 1079 (citing 18A Wright, Miller & Cooper, Federal Practice and Procedure § 4434 (2002)).
The fourth element is whether DirecTV was “a party to the prior action.”
Syverson,
Finally, there are no “indices of unfairness” that advise against granting preclusive effect to the Ninth Circuit’s Order.
Id.
Plaintiffs promptly raised the issue, even before the
Masters
decision was decided, so they did not adopt a “wait and see” attitude. Second, DirecTV had every incentive to defend against
Masters
with “full vigor.”
Syverson,
Thus, all four elements of the offensive nonmutual issue preclusion analysis are met, and there are no countervailing factors that would counsel against granting preclusive effect to Masters. Accordingly, California law applies to the Arbitration Clause interpretation as to those Plaintiffs that filed their lawsuits in California.
Further, even if, as DirecTV argues, the issues were not “identical” because the
Masters
plaintiffs came from different states than the Plaintiffs here, the analysis
Accordingly, the Court applies California law in determining the enforceability of the Arbitration Clause and Class Action Waiver as to the non-California Plaintiffs that filed their lawsuits in California.
2.1.2 Enforceability of the Arbitration Clause as to Plaintiffs who filed in California
California courts consistently invalidate arbitration clauses that would shield the party with superior bargaining strength from liability under California’s robust consumer protection laws.
See, e.g., Szetela v. Discover Bank,
(1) whether the agreement is a “consumer contract of adhesion” drafted by a party that has superior bargaining power; (2) whether the agreement occurs “in a setting in which disputes between the contracting parties predictably involve small amounts of damages”; and (3) whether “it is alleged that the party with the superior bargaining power has carried out a scheme to deliberately cheat large numbers of consumers out of individually small sums of money.”
Shroyer,
Both the California Court of Appeal in
Cohen
and Judge Cooper in
Masters/Murphy
held that the application of the three factors establishes unconscionability as to the precise Arbitration Clause at issue here.
Cohen,
The Court agrees that the Arbitration Clause and Class Action Waiver would be unconscionable under the three-prong California unconscionability analysis. Accordingly, DirecTV’s Motion to Compel is DENIED as to Florida Plaintiffs O’Brien and Lombardi, Illinois Plaintiff Schuessler, and Virginia Plaintiffs the Pifers, who all originally filed their lawsuits in California.
2.2 Whether Plaintiffs Should Be Compelled To Arbitrate Under The Law Of The State Where They Each Originally Filed Their Lawsuits
Because the parties agree that the home state’s laws should be applied to those Plaintiffs who filed in states other than California, the Court need not make a choice of law determination as to those Plaintiffs. Accordingly, the Court next determines whether the Arbitration Clause would be enforced against Plaintiffs under the laws of their home states.
2.2.1 Arizona Plaintiff Slakans
In Arizona, procedural uneonseionability is concerned with “unfair surprise,[ ] fine print clauses, mistakes or ignorance of important facts or other things that means bargaining did not proceed as it should[,]” while substantive unconscionability concerns “the actual terms of the contract and examines the relative fairness of the obligations assumed.”
Maxwell v.
Contract terms are substantively unconscionable when they are “so one-sided as to oppress or unfairly surprise an innocent party,” when there is “an overall imbalance in the obligations and rights imposed by the bargain,” or when there is “significant cost-price disparity.”
Maxwell v. Fidelity Financial Services, Inc.,
DirecTV’s class action waiver is one-sided because “[although styled as a mutual prohibition on representative or class actions, it is difficult to envision the circumstances under which ... [DirecTV] ... might ... sue their customers in class action lawsuits.”
Szetela v. Discover Bank,
Further, the Class Action Waiver directly contravenes the public policy in Arizona’s Consumer Fraud Act: “to counteract the disproportionate bargaining power often present in consumer transactions,”
Waste Mfg. & Leasing Corp. v. Hambicki,
Accordingly, the Court finds that an Arizona court would likely find that this particular Arbitration Clause and Class Action Waiver are unenforceable. Accordingly, DirecTV’s Motion to Compel is DENIED as to Arizona Plaintiff Slokens.
Under Florida law, “neither the statutes validating arbitration clauses nor the policy favoring such provisions should be used as a shield to block a party’s access to a judicial forum in every case.”
Global Travel Mktg., Inc. v. Shea,
Under Florida law, procedural unconscionability exists when the complaining party lacked a “meaningful choice” about whether or not to enter into the agreement.
Gainesville,
Several factors here point to a finding that the Customer Agreement’s Arbitration Clause and Class Action Waiver are procedurally unconscionable under Florida law. First, the relationship between DirecTV and its customers is governed by its boiler plate, “take it or leave it,” customer agreement. (See Declaration of Valarie W. McCarthy supporting DirecTV’s Motion (“McCarthy Deck”) ¶ 5.) Second, DirecTV’s policy of executing its customer agreement by sending it with the customers’ first bill, (McCarthy Deck ¶ 5), results in customers not being aware of material terms of the agreement, including the Arbitration Clause and Class Action Waiver, until after their service has been activated. (SAC ¶ 61; see also Declaration of Kristen E. Law (“Law Deck”), Exs. 4-6 (Boshnack, Johannes, and O’Brien Declarations).) Third, DirecTV reserves the right to change any of the terms of the agreement, including the arbitration agreement, any time it chooses, but does not give customers the same right. (SAC, Ex. 1, § 4.)
Finally, “an adhesion contract is defined as a standardized contract form offered to consumers of goods and services on essentially a ‘take it or leave it’ basis without affording [the] consumer a realistic opportunity to bargain.”
Powertel, Inc. v. Bexley,
DirecTV’s arbitration clause fails to give consumers a meaningful choice, is not presented to customers until after they are subject to the Cancellation Fee, does not give consumers any bargaining power and includes terms far more favorable to DirecTV. Looking at all of these factors, DirecTV’s arbitration clause satisfies the test for procedural unconscionability under Florida law.
See Powertel, Inc.,
Under Florida law, a contract term is substantively unconscionable when the terms are unreasonable and unfair.
Powertel,
In sum, the Arbitration Clause and Class Action Waiver are both procedurally and substantively unconscionable under Florida law. Accordingly, DirecTV’s Motion to Compel is DENIED as to Florida Plaintiffs Johannes and Boshnack.
2.2.3 Louisiana Plaintiffs Wilson and Jones
Under Louisiana law, a contract term will be deemed unconscionable if it possesses features of both adhesive formation and unduly harsh substance.
Iberia Credit Bureau, Inc. v. Cingular Wireless LLC,
Here, the Court does not reach the question of whether the formation of the Customer Agreement was adhesive because the Court finds that Louisiana courts would not deem the Arbitration Clause and Class Action Waiver to be unduly harsh. In
Iberia Credit,
for example, the Fifth Circuit upheld an arbitration provision that barred class action procedures.
Iberia Credit,
Further, Louisiana’s consumer protection statute, LUTPA, does not permit consumers to bring class actions, a fact that “significantly diminish[es]” the argument that class waivers are unconscionable under Louisiana law.
Iberia Credit,
Because Louisiana would likely enforce the Arbitration Clause and Class Action Waiver, DirecTV’s Motion is GRANTED as to Louisiana Plaintiffs Wilson and Jones.
2.2.4 New York Plaintiff Folkerth
New York courts apply a two-part test to determine unconscionability of a contract.
Gillman v. Chase Manhattan Bank, N.A.,
New York courts have found on facts similar to facts before this Court that plaintiffs did not demonstrate substantive or procedural unconscionability.
E.g., Ranieri v. Bell Atlantic Mobile,
Plaintiff Folkerth concedes that if New York law applies, it is likely that the arbitration clause and class waiver would be enforced, despite the fact that New York consumers are unlikely to seek redress on an individual basis. Because Plaintiffs also concede that the law of the state where the lawsuit was filed applies to the enforcement of the Arbitration Clause and Class Action waiver, DirecTV’s Motion to Compel is GRANTED as to New York Plaintiff Folkerth.
2.2.5 Pennsylvania Plaintiff Smith
Under Pennsylvania law, “a contract or term is unconscionable, and therefore avoidable,” if the party opposing enforcement proves that the contract is both procedurally and substantively unconscionable.
Salley v. Option One Mort. Corp.,
A “lack of meaningful choice,” or “procedural unconscionability,” is generally found “where there is a contract of adhesion — a contract prepared by a party with excessive bargaining power and presented to the other party on a ‘take it or leave it basis.’ ”
Hopkins v. New Day Financial,
Here, the arbitration provisions are drafted by DirecTV, and contained in a pre-printed, standard form agreement that does not require review or signature of the customer. A customer cannot negotiate its terms, and it is presented in a “take it or leave it” manner.
See Alexander v. Anthony Int’l, L.P.,
“Substantive uneonscionability” refers to whether the contractual terms are unreasonably favorable to one side and to which the disfavored party does not assent.
Huegel v. Mifflin Const. Co.,
Here, the Arbitration Clause does not bind DirecTV in the same way it does consumers. The contract permits DirecTV to pursue litigation and “selfhelp” remedies that customers may not. For example, DirecTV may sue customers who allegedly violate commercial viewing restrictions. (SAC, Ex. 4, at § 1(h); § 9(d).) DirecTV also reserves the right to deduct money over disputed bills from consumers’ bank accounts. (SAC, Ex. 4, § 5(e).) Meanwhile, customers who dispute charges must resort to individual arbitration to get their money back.
DirecTV argues that under
Salley,
In sum, the Court finds that a Pennsylvania court would likely hold that the Arbitration Clause and Class Action waiver are both procedurally and substantively unconscionable. Accordingly, DirecTV’s Motion to Compel is DENIED as to Pennsylvania Plaintiff Smith.
2.2.6 South Carolina Plaintiff McBroom
Like Louisiana, South Carolina’s legislature has made a policy decision that it does not consider unconscionable a consumer’s inability to bring a class action. See S.C.Code Ann. § 39-5-140(a) (Under South Carolina’s Unfair Trade Practices Act, “[a]ny person who suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment by another person of an unfair or deceptive method, act or practice declared unlawful [under the unfair competition law] may bring an action individually, but not in a representative capacity, to recover actual damages.”). The Court finds that South Carolina would likely enforce the Arbitration Clause and Class Action Waiver, so DirecTV’s Motion is GRANTED as to South Carolina Plaintiff McBroom.
2.3 Conclusion
California policy favors applying California law when the plaintiff files a nationwide putative consumer class action against a California defendant. Further, California law disfavors class action waivers, and by the terms of the Arbitration Clause, it is not enforceable if the class action waiver is not enforceable. Accord
Because the Arbitration Clause and Class Action Waiver would not be enforced in the home states where Arizona Plaintiff Slakans, Florida Plaintiffs Boshnack and Johannes, Louisiana Plaintiffs Wilson and Jones, New York Plaintiff Folkerth, and Pennsylvania Plaintiff Smith filed their lawsuits, DirecTV’s Motion to Compel as to those Plaintiffs is DENIED.
Finally, because New York Plaintiff Folkerth, South Carolina Plaintiff McBroom, and Louisiana Plaintiffs Wilson and Jones filed their lawsuits in states that would enforce the Arbitration Clause and Class Action Waiver, DirecTV’s Motion to Compel as to those Plaintiffs is GRANTED.
3. MOTION TO DISMISS CLAIMS UNDER 12(b)(6)
3.1 Legal Standard Under 12(b)(6)
A court should dismiss a complaint when its allegations fail to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). A complaint need only include “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). “‘[Detailed factual allegations’ are not required.”
Ashcroft v. Iqbal,
— U.S.-,
But the complaint must allege “sufficient factual matter, accepted as true, to ‘state a claim that is plausible on its face.’ ”
Iqbal,
3.2 Non-California Plaintiffs’ Fourth Through Sixth Claims, For Violations Of California Consumer Protection Laws
Plaintiffs’ fourth through sixth claims are for violations of California Consumer Protection Laws. DirecTV moves to dismiss these claims as to all Plaintiffs except the California Plaintiffs (“the Non-California Plaintiffs”). DirecTV argues that because the Customer Agreement included the Choice of Law Clause specifying that the law of the Plaintiffs’ home states should apply, the Non-California Plaintiffs cannot sue under California law. The Court disagrees, and finds that California has the greatest interest in having its laws apply here, regardless of which states’ choice of law rules apply.
Florida Plaintiffs O’Brien and Lombardi, Illinois Plaintiff Schuessler, New Jersey Plaintiffs the Murrays, Oregon Plaintiffs Forbes and Wilson, and Virginia Plaintiffs the Pifers all originally filed their lawsuits in California. The parties agree that California’s choice of law rules apply to these Plaintiffs.
See also In re Nucorp Energy Sec. Litig.,
In deciding whether to enforce a contractual choice of law provision, California courts follow
Restatement (Second) of Conflict of Latos
§ 187(2) (1971) (“Section 187(2)”). Under Section 187(2), the court must first determine “whether the chosen state has a substantial relationship to the parties or their transaction, or ... whether there is any other reasonable basis for the parties’ choice of law.”
Nedlloyd Lines B.V. v. Sup. Ct.,
The parties agree that all Plaintiffs have a substantial relationship with their home states. Because the first requirement is satisfied, the second inquiry is whether the “chosen state’s law is contrary to & fundamental policy of California.” Id. (emphasis in original). If so, “the court must then determine whether California has a ‘materially greater interest than the chosen state in the determination of the particular issue....’” Id. (citation omitted). The Court finds that the Non-California Plaintiffs have established that their home state laws conflict with fundamental policies of California and that California has a materially greater interest here.
While there is no bright line definition of what constitutes a fundamental policy, a fundamental policy may be “embodied in a statute which makes one or more kinds of contracts illegal or which is designed to protect a person against the oppressive use of superior bargaining power.”
Restatement
§ 187 comment g. Here, California Civil Code § 1671(d), which also underlies Plaintiffs’ UCL and CLRA claims, reflects California’s fundamental policy to protect consumers against the oppressive use of liquidated damages clauses by parties with superior bargaining power. Under Civil Code § 1671, a liquidated damages clause in a retail purchase or rental contract for personal, family or household purposes is void unless it is “impracticable or extremely difficult to fix the actual damage.” Civil Code § 1671(c), (d);
see also Ballard v. Equifax Check Serv.,
California Civil Code § 1671(d) is based on the December 1973 recommendation by the California Law Revision Commission (the “Commission”).
Recommendation and Study Relating to Liquidated Damages,
11 Cal. L. Revision Comm’n Reports 1201 (1973);
Guthman v. Moss,
There is the risk that a liquidated damages provision will be used oppressively by a party able to dictate the terms of the agreement. And there is the risk that such a provision may be used unfairly against a party who does not fully appreciate the effect of the provision. The Commission believes that the use of liquidated damages provisions is beneficial and should be encouraged, subject to limitations to protect against the oppressive use of such provisions.
11 Cal. L.Rev. Comm’n at 1209.
The Court finds that the policy embedded in California Civil Code § 1671(d), including the policy of shifting the burden of proof to the proponent of the liquidated
Florida, Illinois, New Jersey, Oregon, and Virginia do not have statutes protecting consumers from liquidated damages clauses that are comparable to California Civil Code § 1671(d). Further, these states clearly place the burden of proving the invalidity of liquidated damages on the challenger, regardless of whether the contract is for personal services or property.
Hutchison v. Tompkins,
The next step in the choice of law analysis is to “determine whether California has a ‘materially greater interest than the chosen state in the determination of the particular issue
Nedlloyd,
In sum, the home state laws of the Florida, Illinois, New Jersey, Oregon, and Virginia Plaintiffs conflict with a fundamental policy embedded in California law,
3.2.2 Arizona, Pennsylvania, and Washington choice of law analysis
Like California courts, Arizona, Pennsylvania, and Washington courts follow the Restatement § 187(2) to determine whether a contractual choice of law clause should be enforced.
See Cardon v. Cotton Lane Holdings, Inc.,
Enforcing DirecTV’s choice of law clause as to the Arizona, Pennsylvania, and Washington would be contrary to fundamental policies of California. Unlike California law, liquidated damages clauses are presumed to be valid in Arizona, Washington, and Pennsylvania. In determining whether a liquidated damages clause is enforceable, all three states have enacted identical liquidated damages statutes which follow the Uniform Commercial Code § 2-718 and the Restatement (Second) of Contracts § 356. Under this approach, damages for a breach may be liquidated, “but only at an amount that is reasonable in light of the anticipated or actual loss caused by the breach, the difficulties of proof of loss, and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy. A term fixing unreasonably large liquidated damages is unenforceable on grounds of public policy as a penalty.”
See Ariz.
Rev. Stat. § 47-2718(A); Wash. Rev. Code § 62A.2-718; 13 Pa. Cons. Stat. Ann. § 2718. Under this test, liquidated damages clauses are presumed valid, regardless of whether the parties had unequal bargaining power.
See, e.g., Perry v. Moran,
The Court finds that the materially greater interest analysis does not change when the plaintiff originally filed in a different state. When the sole defendant is a California corporation and has its headquarters in California, and a plaintiff asserts claims on behalf of a nationwide putative class, California has a greater interest than any other state. See Section 2.1.1.
Because Arizona, Washington, and Pennsylvania law conflicts with California’s fundamental policy, and because California has the materially greater interest, California law applies to these Plaintiffs.
3.2.3 Florida choice of law analysis
Florida uses a choice of law analysis similar to Section 187. In Florida, courts consider whether a choice of law clause would violate the public policy of the state with the materially greater interest.
See Merriman v. Convergent Business Systems, Inc.,
No. 90-30138-LAC,
Again, when the sole defendant is a California corporation and has its headquarters in California, and a plaintiff asserts claims on behalf of a nationwide putative class, California has a greater interest than any other state. See Section 2.1.1. Accordingly, under the Florida choice of law analysis, the Court must determine whether the Choice of Law Clause violates the public policy of California. The Court finds that it does.
Application of Florida law would violate California’s public policies because Florida does not have statutes protecting consumers similar to that of Section 1671(d), and instead places the burden of proof on the challenger of a liquidated damages clause.
See Hutchison,
Because California has the materially greater interest, and because the choice of law clause would violate California public policy, Florida and South Carolina courts would not enforce the Choice of Law Clause.
3.2.4 Conclusion
After examining the choice of law analysis in all states where remaining Plaintiffs filed lawsuits, the Court finds that the home states’ laws conflict with fundamental California policies and that California has the greatest interest in having its laws applied to these cases. Accordingly, DirecTV’s Motion to Dismiss is DENIED as to the California Consumer Protection Claims as pled by the Non-California Plaintiffs.
3.3 Plaintiffs’ Sixth Claim, For Invalid Liquidation Damages In Violation Of Cal. Civil Code § 1671.
Plaintiffs’ sixth claim is for invalid liquidation damages in violation of California Civil Code § 1671. To state a claim that a liquidated damages provision is void under California Civil Code § 1671(d), the plaintiff must allege that the imposition of the liquidated damages provision arises from a breach of contract and that the liquidated damages amount is a fixed and certain sum.
Ruwe v. Cellco P’ship,
Defendant argues that the Cancellation Fee is not a liquidated damages provision, but merely an alternative means of performing the contract, and that the claim should therefore be dismissed. The Court disagrees. The facts pled in the SAC are sufficient to state a claim for unlawful liquidated damages.
Plaintiffs specifically allege: (1) a Cancellation Fee was charged to Plaintiffs when they, and other consumers like them, cancelled their service (SAC ¶¶ 11-36, 44); (2) it “is neither impractical nor extremely difficult for DirecTV to determine the actual amount of damages occasioned by” the cancellation (SAC ¶ 138); (3) the Cancellation Fee “bear[s] no reasonable relationship to the actual costs incurred by DirecTV when customers cancel their service” (SAC ¶ 139); and (4) “the Cancellation Fee is intended as a penalty to dissuade Class members from cancel-ling DirecTV’s services” (SAC ¶ 139). Although the Court may decide whether the Cancellation Fee is a liquidated damages provision or merely an alternative means of performance, the Court finds that this decision is best left to summary judgment or trial, after the facts are more fully developed.
Thus, DirecTV’s Motion to Dismiss is DENIED as to Plaintiffs’ liquidated damages claims.
Plaintiffs’ second claim is for violation of the EFTA. Plaintiffs Van Meter, O’Brien, and Johannes allege that DirecTV violated Section 1693e of the EFTA by charging early cancellation fees to these Plaintiffs’ debit cards without obtaining their signatures or providing statutory notice.
Section 1693e only requires a signed writing and notice for “preauthorized electronic fund transferís].” 15 U.S.C. §§ 1693e(a), (b). But “the term ‘preauthorized electronic fund transfer’ means an electronic fund transfer authorized in advance to recur at substantially regular intervals.” 15 U.S.C. § 1693a(9). To qualify as a preauthorized transfer and trigger the requirements of the EFTA, the transfer must be one that is authorized to “recur.” The authorization DirecTV obtains for a one-time charge of the Cancellation Fee does not fit within that definition, and a signed writing is thus not required. See, e.g., Oh. Consumer L. § 23:37 (2009) (EFTA provisions relating to preauthorized transfers “do not apply to payday loans where there will only be one payment”).
In the Opposition, Plaintiffs argue that they “are entitled to seek discovery concerning DirecTV’s use of customers’ debit cards” because “recurring and automatic payment methods clearly fall within the preauthorized transfer provision of 15 U.S.C. § 1693.” (Opp’n 71-72.) But this argument does not defeat the fact that on the face of the SAC, there are no allegations of recurring automatic payments in violation of EFTA.
Accordingly, DirecTV’s Motion is GRANTED as to Plaintiffs’ EFTA claim.
3.5 Plaintiffs’ Third Claim, For Violation Of The FCA
Plaintiffs’ third claim is for violation of the FCA. Plaintiffs concede that their claim under the FCA should be dismissed. (Opp’n 49, n. 27.) Accordingly, DirecTVs Motion is GRANTED as to Plaintiffs’ third claim.
3.6 Plaintiffs’ Nineteenth Claim, For Unjust Enrichment
Plaintiffs’ nineteenth claim is for unjust enrichment. DirecTV moves to dismiss the unjust enrichment claim on the ground that California does not recognize a claim for unjust enrichment. The Court agrees.
There is some disagreement among California courts about whether unjust enrichment is an independent claim.
See Falk v. Gen. Motors Corp.,
3.7 Plaintiffs’ Eighteenth Claim, For Money Had And Received
DirecTV moves to dismiss Plaintiffs’ Eighteenth claim, for money had and received, as to Plaintiffs McBroom, Slakans, Boshnack, and Twyman. Under California law, “[a] cause of action is stated for money had and received if the defendant is indebted to the plaintiff in a certain sum ‘for money had and received by the defendant for the use of the plaintiff.’ ”
Schultz v. Harney,
DirecTV is correct that Plaintiffs McBroom, Slakans, and Twyman have not alleged that DirecTV received the Cancellation Fee from them. Plaintiff Boshnack, on the other hand, alleged that he “pays a higher monthly service charge than he agreed to pay at the time he subscribed.” (SAC ¶ 18.) Plaintiff Boshnack’s allegations are sufficient to state a claim for money had and received. The Motion to Dismiss is GRANTED with leave to amend as to Plaintiffs McBroom, Slakans, and Twyman, and DENIED as to Plaintiff Boshnack.
3.8 Plaintiffs’ Seventh Through Seventeenth Claims, For Violation Of Consumer Protection Laws Of Each Plaintiffs’ Home State, And Twentieth Claim, For Relief Of Unlawful Penalties
Plaintiffs assert claims Seven through Seventeen “in the alternative” and only “[t]o the extent that California law is ruled inapplicable to non-California resident Plaintiffs.” (SAC ¶ 143.) Because the Court finds that the remaining Plaintiffs may assert the California Consumer Protection Claims, the Court GRANTS DirecTV’s Motion as to claims Seven through Seventeen and DISMISSES these claims.
Likewise, Plaintiffs allege the twentieth claim, for relief of unlawful penalties, “for the purpose of protecting and preserving non-California resident class members’ claims under the laws of their home states.” (Opp’n 73:27-28.) Because the home state laws do not apply, the Court GRANTS DirecTV’s Motion to Dismiss as to the twentieth claim.
3.9 Leave To Amend
The Court finds that Plaintiffs’ claims for violation of the EFTA and for money had and received could possibly be cured by amendment, so Plaintiffs may amend as to those claims.
See Jackson,
3.10 Extension Of Time To Answer Complaint
Under Federal Rule of Civil Procedure 15(a)(3), unless a court orders otherwise, an answer to an amended complaint must be made either “within the time remaining to respond to the original pleading or within 14 days after service of the amended pleading, whichever is later.” The Court recognizes that this case is complicated and the complaint is lengthy. The Court anticipates that the parties will either move or stipulate to extend the time to answer. To save the parties from having to file such motions and stipulations, on its own motion, the Court ORDERS that DirecTV’s answer is due October 4, 2010.
DISPOSITION
DirecTV’s Motion to Compel Arbitration is GRANTED as to Plaintiffs Folkerth, McBroom, Wilson, and Jones. The Motion
DirecTV’s Motion to Dismiss under Rule 12(b)(6) is GRANTED as to Plaintiffs’ second, third, and seventh through twentieth claims, and DENIED as to the remaining claims.
IT IS SO ORDERED.