Law360, Los Angeles (March 19, 2014, 9:32 PM ET) — DirecTV Inc. on Wednesday urged a California appeals court to send a consumer class action alleging inadequate disclosure of early termination fees to arbitration, saying that the U.S. Supreme Court’s AT&T Mobility v. Concepcion decision makes it clear that the arbitration agreement can't be waived.
DirecTV asked the California Court of Appeal to overturn a lower court's denial of their motion to compel arbitration, which was filed shortly after the Concepcion decision in April 2011, a high court ruling that said companies could insert class action waivers in consumer arbitration agreements.
During oral arguments in Los Angeles, Melissa D. Ingalls of Kirkland & Ellis LLP, representing DirecTV, told a three-judge panel that Ninth Circuit's 2013 ruling in Murphy v. DirecTV Inc., which cited Concepcion in sending a putative class action to arbitration, highlighted the applicability of the precedent in this case.
“You don't apply a state law if it's going to operate to make an arbitration agreement unenforceable,” she said. “The Federal Arbitration Act governs agreements whether the parties want to contract out of it or not.”
Los Angeles Superior Court Judge Rita Miller, sitting on the panel, asked Ingalls why an agreement couldn't stipulate that state law be applied instead.
“So you're not going to give me a case that says you can't agree to state law rather than the FAA?” she asked.
The appeals court's ruling will decide whether five-year-old allegations that DirecTV ripped off California consumers will move forward as a massive class action in the courts or else be decided on a case-by-case basis by arbitrators.
Amy Imburgia and Marlene Mecca filed suit against DirecTV in September 2008, claiming the satellite provider entered into contracts with its customers over the phone or in-person after satellite installation but did not disclose the stiff termination fees associated with canceling the service before the end of the contract.
The lawsuit, which seeks injunctive relief and damages for customers affected by DirecTV termination fees, also claims the company locks customers into strict 18- and 24-month contracts, with considerable penalties for customers who cannot continue the service.
DirectTV, an El Segundo, Calif.-based international satellite provider, has more than 17.1 million digital television customers in the United States and is the second-largest multichannel video programming provider in the U.S.
A class was certified in April 2011. A month later, DirecTV moved to decertify the class and either dismiss or stay the case, so it could be sent to arbitration.
Los Angeles Superior Court Judge Emilie H. Elias denied that motion, ruling that Concepcion did not apply in this case, according to DirecTV's opening brief to the appeals court.
On Wednesday, Ingalls countered plaintiff's arguments that DirecTV waived its right to arbitration by waiting two years after the case was filed to request it by saying the company had no right to arbitration when the case was filed due to a previous California decision invalidating arbitration provisions that contained class waivers — a decision that Concepcion overrules, she said.
The plaintiffs are represented by Paul D. Stevens of Milstein Adelman LLP.
DirectTV is represented by Melissa D. Ingalls of Kirkland & Ellis LLP.
The case is Imburgia et al. v. DirectTV Inc., case number B239361, in the California Court of Appeal, Second Appellate District.
–Additional reporting by Jeff Sistrunk and Zach Winnick. Editing by Christine Chun.