DirecTV’s Bid To Nix Cancel Fee Action Put On Hold

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Law360, Los Angeles (August 31, 2011) — A California state judge on Wednesday delayed DirecTV Inc.’s bid to toss a class action alleging inadequate disclosure of early termination fees, waiting on the appeal of a ruling in a similar suit whose claims were found to be immune to waivers.

Judge Emilie H. Elias told attorneys she wanted to see if the California Supreme Court took up an appeal in Brown v. Ralphs Grocery Co. et al., a July decision by a state appellate court that said a former Ralphs employee could pursue a claim under the state's Private Attorney General Act despite having waived the right in a contract. The immediate suit contains PAGA claims.

“This is really on the cusp or on the edge, and I think it’s important to see what is done, and what the Supreme Court does in Brown,” she said. “We’ll see what happens. If they deny review of it, we’ve got a whole different ballgame.”

Wednesday’s move delayed a decision over whether three-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.

“When accepting orders for new service, DirecTV’s policy and practice is to not inform customers of the term commitment or early termination fee,” the complaint said.

A class was certified in April. In May, DirecTV moved to decertify the class and either dismiss or stay the case so it could be sent to arbitration.

DirecTV argued that a previous California decision invalidating arbitration provisions that contained class waivers had been overruled by the U.S. Supreme Court in the April 2011 decision AT&T Mobility v. Concepcion.

“Because the plaintiffs entered into valid arbitration agreements with DirecTV, this court has no option but to compel arbitration and dismiss or stay all further proceedings in this court,” the company argued in its motion to compel arbitration.

The plaintiffs opposed the motion on several grounds, including an argument that arbitration was barred by the Brown case, which evaluated Concepcion and found that the decision did not bar former Ralph’s security guard Terri Brown from proceeding in her PAGA employment claim against the grocery chain.

At the hearing Wednesday, DirecTV attorney Robyn Bladow of Kirkland & Ellis LLP argued against delaying a decision to send the case to arbitration.

“Brown does not apply here,” she argued. “This is not a private attorney general action.”

But Judge Elias declined to rule, saying that a decision in Brown could affect the consumer claims against DirecTV. She said the state supreme court would make a decision about whether to consider the Brown appeal by the end of October.

"If Brown continues and is upheld, it would … void that section of our agreement, which is the arbitration agreement,” plaintiffs' attorney Paul Stevens said Tuesday. “What happened is [Judge Elias] recognized there’s an issue here, and she had to see what was going to occur with Brown, when it becomes final or not.”

Representatives for DirecTV did not immediately respond to requests for comment.

DirectTV, an El-Segundo, Ca.-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.

The plaintiffs are represented by Paul Stevens and Shireen Mohsenzadegan of Milstein Adelman LLP, by Harvey Rosenfield, Pamela Pressley and Todd Foreman of Consumer Watchdog, by Ingrid Maria Evans of The Evans Law Firm, and by F. Edie Mermelstein of the Law Offices of F. Edie Mermelstein.

DirecTV is represented by Melissa Ingalls, Robyn Bladow and Shaun Paisley of Kirkland & Ellis LLP.

The case is Amy Imburgia et al. v. DirecTV Inc., case number BC398295, in the Superior Court for the State of California, County of Los Angeles.

–Editing by Eydie Cubarrubia.

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