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DirecTV Arbitration Squabble Heads to D.C.

WASHINGTON (CN) - DirecTV persuaded the Supreme Court on Monday to decide whether customers must arbitrate their claims over early termination fees.

The satellite television provider claims that arbitration is compelled by the landmark Supreme Court decision, Concepcion v. AT&T Corp., but both the trial judge in Los Angeles and California's Second Appellate District disagreed.

Amy Imburgia and Kathy Greiner are the lead plaintiffs in the would-be class action, which has proceeded in state court at the same pace as federal multidistrict litigation.

In addition to refusing to kick the Imburgia case to arbitration, the trial court refused to stay the litigation pending the outcome of the federal case.

The court's class-certification order in Imburgia came just a week before the Supreme Court decided Concepcion on April 27, 2011.

Though that finding said that the Federal Arbitration Act (FAA) pre-empts California's law on unconscionable contracts, DirecTV had not previously tried to compel arbitration.

In rejecting DirecTV's arguments last year, the California appeals court noted that it did not find a similar case from the 9th Circuit, Murphy v. DirecTV, persuasive.

"If the customer agreement expressly provided that the enforceability of the class action waiver 'shall be determined under the (nonfederal) law of your state without considering the preemptive effect, if any, of the FAA,' then that choice of law would be enforceable; Murphy cites no authority to the contrary," the decision states (parentheses in original).

The court summarized its finding as thus: "Section 9 of the 2007 customer agreement provides that 'if ... the law of your state would find this agreement to dispense with class arbitration procedures unenforceable, then this entire Section 9 is unenforceable.' The class action waiver is unenforceable under California law, so the entire arbitration agreement is unenforceable. The superior court therefore properly denied the motion to compel arbitration."

Per its custom, the U.S. Supreme Court did not issue any comment in taking up the case Monday.

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