Court denies motion to compel arbitration in DirecTV case

Posted on: September 22nd, 2011 by Steve Larson

Subscribers of DirecTV that were assessed fees ranging from $100 to $500 for the early cancellation of their service filed a class action against DirecTV.  The class action lawsuit alleges that these fees were illegal because DirecTV failed to inform subscribers that they were under any contractual obligation to maintain service for a given period of time (usually 18 months to two years) when they signed up for the service.

DirecTV filed a motion to have the court send the case to arbitration, because within DirecTV’s customer agreement is a section providing for the arbitration of most claims.  In November 2010, the District Court stayed the multi-district litigation pending the U.S. Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011).

As reported previously in this blog, in AT&T v. Concepcion, by a 5 to 4 vote, the Supreme Court enforced a clause in an arbitration agreement prohibiting consumers from seeking to vindicate their rights through class actions.  Lower courts had rejected AT&T Mobility’s request, holding that the class action ban was unconscionable under California law because it would exculpate the company from accountability for wrongdoing.  After the Supreme Court ruled in Concepcion, the District Court in the DirecTV matter lifted the stay, and DirecTV moved to compel arbitration.

In an order issued September 8, 2011, U.S. District Court Judge Andrew J. Guilford held that while he was bound by AT&T v. Concepcion to reject plaintiffs’ argument that the arbitration clause was unconscionable (and on that basis compelled arbitration of plaintiff’s claims for monetary damages), DirecTV’s motion to compel arbitration must be denied with respect to plaintiffs’ claims for injunctive relief under two California statutes: the Consumer Legal Remedy Act (“CLRA”) and the Unfair Competition Law (“UCL”).

The holding is the first of its kind by a California federal judge since Concepcion came down this past spring, and an important step in limiting the reach of AT&T v. Concepcion. The District Court found that “Plaintiffs bring their UCL and CLRA claims as private attorneys general, seeking to vindicate a public right.  These claims are not intended to remedy a primarily private right or rights merely incidental to the public benefit.”