Lieff Cabraser Heimann & Bernstein, LLP

Court Denies DirecTV's Motion to Compel Arbitration of Injunctive Relief Claims

Lieff Cabraser represents subscribers of DirecTV who were assessed fees ranging from $100 to $500 for the early cancellation of their service. 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 or two years) when they signed up for the service. 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). In 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 on Concepcion, the District Court in the DirecTV matter lifted the stay, and DirecTV moved to compel arbitration.

In an order issued today, U.S. District Court Judge Andrew J. Guilford held that while he was bound by Concepcion to reject plaintiffs' argument that the arbitration clause was unconscionable (and on that basis compelled arbitration of plaintiffs' 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”). That 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 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."

"California law vigorously protects consumers by insisting, regardless of what is stated in the one-sided contracts consumers are forced to sign, that judges, not private arbitrators, are entrusted with deciding whether broad public rights have been violated," stated Lieff Cabraser attorney Jonathan D. Selbin, who argued the motion for plaintiffs. "Today's order affirms that this case law remains operative following Concepcion and provides a powerful legal tool to hold accountable corporations that commit fraud and deceive consumers."

Lieff Cabraser serves on the Plaintiffs' Executive Committee in the litigation, entitled In Re DirecTV Early Cancellation Fee Marketing and Sales Practices Litigation, MDL No. 09-2093.