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In re DirecTV Early Cancellation Fee Litigation

September 9, 2009

IN RE: DIRECTV EARLY CANCELLATION FEE LITIGATION


The opinion of the court was delivered by: Andrew J. Guilford United States District Judge

STAYED

ORDER GRANTING MOTION TO COMPEL ARBITRATION

This class action challenges a television service provider's assessment of early cancellation fees. Defendant DirecTV, Inc. ("Defendant") has filed a motion ("Motion") to compel arbitration of claims brought by Plaintiffs Roberta Pifer, Edward Pifer, Joseph Lombardi, and Kathleen O'Brien. After considering all papers and arguments submitted, the Court GRANTS the Motion.

BACKGROUND

Defendant provides satellite-based television services to consumers nationwide. As part of its services, Defendant leases receiver boxes and other necessary equipment to its customers. This putative nationwide class action, brought on behalf of current and former customers of Defendant, challenges Defendant's practice of assessing an early cancellation fee to customers who cancel their service before their commitment periods have ended. Plaintiffs assert that Defendant unlawfully fails to disclose or inadequately discloses that by subscribing to DirecTV services or modifying existing DirecTV service contracts, customers are automatically enrolled into programming commitment periods of 18 or 24 months that are subject to early cancellation fees of up to $480. Even if DirecTV adequately disclosed those terms, Plaintiffs allege, the early cancellation fee is an invalid liquidated damages clause. The following facts are taken from the pleadings in this case. The essential facts relevant to this Motion are not in dispute.

Plaintiff Joseph Lombardi ("Lombardi") is a Florida citizen. (First Amended Consolidated Class Action Complaint ("FAC") ¶ 12.) In December 2007, Lombardi subscribed to Defendant's satellite services. (Id.) Defendant failed to disclose or inadequately disclosed that Lombardi's service contract was subject to a commitment period or early cancellation fee. (Id.) Lombardi never signed any document presented as an agreement to a commitment period or an early cancellation fee. (Id.) In September 2008, Lombardi cancelled his service. (Id.) Defendant charged an early cancellation fee of $160 to his credit card. (Id.)

Plaintiff Kathleen O'Brien is a Florida citizen. (FAC ¶ 14.) In 2004, O'Brien subscribed to Defendant's satellite services. (Id.) Defendant failed to disclose or inadequately disclosed that O'Brien's service contract was subject to a commitment period or early cancellation fee. (Id.) O'Brien never signed any document presented as an agreement to a commitment period or early cancellation fee. (Id.) In December 2007, Plaintiff's husband requested a programming upgrade to include high definition channels. (Id.) Defendant failed to disclose or inadequately disclosed to Plaintiff and her husband that because they had requested a programming upgrade, their service contract was subject to a new commitment period and early cancellation fee. (Id.) O'Brien did not receive any document purporting to be an agreement with Defendant. (Id.) Approximately one week later, O'Brien cancelled her service. (Id.) Defendant charged an early cancellation fee of $440 to her debit card. (Id.)

Plaintiffs Roberta and Edward Pifer (the "Pifers") are Virginia citizens. (FAC ¶ 15.) In 1999, the Pifers subscribed to Defendant's satellite services. (Id.) Defendant failed to disclose or inadequately disclosed that the Pifers' service contract was subject to a commitment period or early cancellation fee. (Id.) The Pifers never signed any document presented as an agreement to a commitment period or early cancellation fee. (Id.) In May 2008, the Pifers requested a replacement box for one that had malfunctioned. (Id.) Defendant failed to disclose or inadequately disclosed to the Pifers that because they had requested a replacement box, their service contract was subject to a new commitment period and early cancellation fee. (Id.) The Pifers did not sign any document purporting to be an agreement with Defendant. (Id.) In August 2008, the Pifers cancelled their service. (Id.) Defendant charged an early cancellation fee of $400 to their credit card. (Id.)

Plaintiffs' relationships with Defendant were governed by a standardized Customer Agreement. That Customer Agreement was mailed to each Plaintiff with the first bill for services, and every time the Customer Agreement was updated, an updated version was provided to Plaintiffs. (See McCarthy Decl. ¶¶ 6, 7, 11, 13, 14.) Plaintiffs' Customer Agreements contained an arbitration provision. The provision appears in its own paragraph under a bold-print, capital-letter "RESOLVING DISPUTES" heading, and provides that all disputes "relating to" the Customer Agreement, any addendum, or to DirecTV services, and not resolved informally, are subject to binding arbitration:

In order to expedite and control the cost of disputes, you and we agree that any legal or equitable claim relating to this Agreement, any addendum, or your Service (referred to as a "Claim") will be resolved as follows: . . .

[I]f we cannot resolve a Claim informally, any Claim either of us asserts will be resolved only by binding arbitration. The arbitration will be conducted under the rules of JAMS that are in effect at the time the arbitration is initiated . . . and under the rules set forth in this Agreement.

(Customer Agreement § 9(b).) The "RESOLVING DISPUTES" section of the Customer Agreement also contains a class action waiver, providing that "[n]either you nor we shall be entitled to join or consolidate claims in arbitration by or against other individuals or entities, or arbitrate any claim as a representative member of a class or in a private attorney general capacity." (Customer Agreement § 9(c).) The Customer Agreement further provides that the law of Plaintiffs' home states governs "interpretation and enforcement" of the agreement. (Customer Agreement § 10(b).)

Based on these facts and others, Plaintiffs Lombardi, O'Brien, Roberta Pifer, and Edward Pifer, together with other named plaintiffs, have brought five claims against Defendant: (1) violation of California's Unfair Competition Law, Cal. Bus. & Prof. Code § 17200, et seq.; (2) violation of California's Consumer Legal Remedies Act, Cal. Civ. Code § 1750, et seq.; (3) money had and received; (4) unjust enrichment; and (5) declaratory relief. Plaintiffs Lombardi and O'Brien have brought one claim under Florida law: a claim for violation of Florida's Deceptive and Unfair Trade Practices Act ("FDUTPA"), Fla. Stat. § 501.201, et seq. And Plaintiffs Roberta and Edward Pifer have brought a claim under Virginia law: a claim for violation of Virginia's Consumer Protection Act ("VCPA"), Va. Code § 50.1-196, et seq.

Defendant now moves to compel arbitration of all claims brought by Plaintiffs Lombardi, ...


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