SAN FRANCISCO – The California Court of Appeal issued a
decision on May 9 remanding a class-action lawsuit filed against DirecTV to
trial court for a ruling on whether the company waived its right to enforce an
arbitration agreement that the U.S. Supreme Court recently upheld as enforceable
in DirecTV Inc. v.
“If (the waiver) is decided in favor of consumers, the class
will proceed in Los Angeles Superior Court, and consumers will get their
constitutional right to a jury trial,” Linda Evans of Evans Law Firm Inc. told
the Northern California Record.
Evans is class counsel representing Imburgia.
She said the next step in the litigation is for the trial
court to make factual findings about the waiver.
In 2008, DirecTV customers filed a consumer class-action
lawsuit in Los Angeles Superior Court based on allegedly unlawful early termination
fees of up to $480. The plaintiffs alleged that DirecTV charged the early
termination fee “to trap consumers, prevent competition and line its pockets,” according
to a release from Evans.
Following a 2011 Supreme Court decision setting a low bar to
the enforcement of arbitration agreements, DirecTV attempted to enforce an
arbitration agreement that Evans claimed was hidden in the fine print of its
contract to prevent the case from going forward as a class action. DirecTV
sought to force every consumer to arbitrate against it on an individual basis,
or to drop their claims and let DirecTV keep the profits.
On Dec. 14, the Supreme Court reversed a decision by the California
Court of Appeal that DirecTV’s arbitration agreement was unenforceable as
written; however, the Consumer Financial Protection Bureau (CFPB) ruled on May
4 that banks can no longer use forced arbitration clauses to ban consumers from
joining together in class-action lawsuits. Evans said this new rule restored bank
customers’ access to justice, the same access to justice that DirecTV’s customers
According to the class-action complaint, DirecTV imposes a
mandatory service term of 18 to 24 months, but few customers are aware of this
condition before signing up. The complaint states that the company routinely
extends this contractual obligation, often without notice, by another year or
two if malfunctioning equipment needs to be replaced, or the customer decides
to make a change to programming or other services.
In addition, the complaint states that customers who terminate
service are charged an early cancellation fee of up to $480, regardless of the
reason, plus a deactivation fee. The complaint alleges that customers are forced
to pay these penalties even if their equipment could not be installed, if they
moved and DirecTV service isn’t available in the new location, or if the equipment
simply stopped working.
The complaint also states that DirecTV often charges these
cancellation fees directly to their customers’ credit cards, or even takes the
funds out of their checking accounts, without the knowledge or approval of the
Evans said similar suits were filed in federal courts
throughout the country, but those cases were dismissed in December 2013 after
the 9th Circuit Court of Appeal ordered that plaintiffs in those cases had to
comply with DirecTV’s arbitration clause. Evans said DirecTV acknowledged in
California state court that its arbitration clause was not enforceable in
California, and the state Superior Court certified the case as a class action
in May 2011.
DirecTV then asked the court to dismiss the case and order
consumers to resolve their complaints individually through a private arbitration.
The Los Angeles Superior Court denied DirecTV's request, and the company
appealed. The 2nd District California Court of Appeal rejected DirecTV's arguments
in April 2014. The company then petitioned the U.S. Supreme Court.
“This is an important case for consumers, and they deserve
to get their day in court,” Evans said.
Evans said the Supreme Court ruling in DirecTV v. Imburgia is the latest in a series of highly
controversial decisions “in which the court has given corporations virtually
carte blanche to require consumers to give up their right to their day in court
to challenge corporate wrongdoing.”
“An arbitrator makes final decisions that are nearly impossible
to challenge, even if they are obviously wrong and unfair,” Evans said. “Companies
have the right to choose arbitrators that they think will unfairly favor the
company. Companies have the right to refuse to hire an arbitrator if they think
the arbitrator will be fair to consumers.”