Without issuing further comment, the U.S. Supreme Court agreed Monday to review legal claims brought by DirecTV against the decision of the California state appeals court to allow a class action lawsuit to proceed against the direct satellite service provider. The suit challenges DirecTV’s practice of imposing early termination fees (ETFs) on customers who prematurely cancel their service contracts with the company.
The case at hand, DirecTV Inc. v. Imburgia, began in 2008 when a pair of DirecTV customers filed a complaint alleging that DirecTV violated California state law by imposing ETFs on customers. Although DirecTV pointed to clauses in its customer contract requiring arbitration in such disputes, a Los Angeles trial court granted the petitioners’ motion for class action status based on California consumer protection laws that prohibit contract clauses deemed to be “unconscionable.” DirecTV later sought relief before the California Court of Appeals, arguing that the Los Angeles court decree conflicts with a 2013 ruling of the U.S. Court of Appeals for the Ninth Circuit, which concluded that the Federal Arbitration Act (FAA) preempts California state law against unconscionable contracts. The state appeals court, however, ultimately ruled for the class action litigants, observing, “if the customer agreement expressly provided that the enforceability of the class action waiver ‘shall be determined under the (non-federal) law of your state without considering the preemptive effect, if any, of the FAA,’ then that choice of law would be enforceable.” Arguing that the Ninth Circuit case in question “cites no authority to the contrary,” the state appeals panel determined that the Los Angeles court “properly denied the motion to compel arbitration.”
Requesting Supreme Court review, DirecTV cited previous case precedents in favor of arbitration that include the high court’s 2011 decision in Conception v. AT&T Corp. In that case, the justices struck down a California state appeals court ruling invalidating provisions in the AT&T wireless subscriber contract that required customers to resolve grievances through binding arbitration. The Supreme Court will take up the DirecTV matter during its upcoming term in October.