Imburgia v. DirecTV, Inc.
| Decision Date | 07 April 2014 |
| Docket Number | B239361 |
| Citation | 225 Cal.App.4th 338,170 Cal.Rptr.3d 190 |
| Court | California Court of Appeals Court of Appeals |
| Parties | Amy IMBURGIA et al., Plaintiffs and Respondents, v. DIRECTV, INC., Defendant and Appellant. |
Kirkland & Ellis LLP, Melissa D. Ingalls, Robyn E. Bladow, and Shaun Paisley for Defendant and Appellant.
Milstein Adelman LLP, Paul D. Stevens, Mayo L. Makarczyk, and Shireen Mohsenzadegan ; Consumer Watchdog, Harvey Rosenfield, and Pamela Pressley ; The Evans Law Firm and Ingrid Maria Evans ; Law Offices of F. Edie Mermelstein and F. Edie Mermelstein for Plaintiffs and Respondents.
ROTHSCHILD, Acting P.J. DIRECTV, Inc., moved to dismiss or stay this class action litigation and to compel arbitration. The superior court denied the motion. DIRECTV argues that the motion should have been granted under the United States Supreme Court's decision in AT & T Mobility LLC v. Concepcion (2011) ––– U.S. ––––, 131 S.Ct. 1740, 179 L.Ed.2d 742 ( Concepcion ). We conclude that under the terms of the parties' arbitration agreement, the motion was correctly denied. We therefore affirm.
BACKGROUND
On September 17, 2008, Amy Imburgia filed a class action complaint against DIRECTV, alleging claims for unjust enrichment, declaratory relief, false advertising, and violation of the Consumers Legal Remedies Act (CLRA) ( Civ.Code, § 1750 et seq. ), the unfair competition law (UCL) ( Bus. & Prof.Code, § 17200 et seq. ), and Civil Code section 1671, subdivision (d). Imburgia's claims were based on allegations that DIRECTV has improperly charged early termination fees to its customers. Kathy Greiner filed a similar class action complaint one day after Imburgia, and Imburgia and Greiner (hereafter plaintiffs) jointly filed a first amended complaint on March 16, 2009. Plaintiffs' lawsuit proceeded at the same time as a multidistrict litigation proceeding in federal court involving similar claims. DIRECTV moved to stay plaintiffs' state court action pending the outcome of the multidistrict litigation, but the superior court denied the motion.
Plaintiffs subsequently moved for class certification. On April 20, 2011, the superior court granted the motion in part and denied it in part, certifying a class as to one of plaintiffs' theories but denying certification as to others.
On April 27, 2011, the United States Supreme Court decided Concepcion, which held that the Federal Arbitration Act (FAA) ( 9 U.S.C. § 1 et seq. ) preempts the rule of Discover Bank v. Superior Court (2005) 36 Cal.4th 148, 30 Cal.Rptr.3d 76, 113 P.3d 1100 ( Discover Bank ). Discover Bank held that under certain circumstances, class action waivers in consumer contracts are unconscionable and hence unenforceable. ( Id. at pp. 162–163, 30 Cal.Rptr.3d 76, 113 P.3d 1100.)
On May 17, 2011, less than one month after the court decided Concepcion, DIRECTV moved to stay or dismiss plaintiffs' action, decertify the class, and compel arbitration of plaintiffs' claims. DIRECTV explained that it had not moved to compel arbitration earlier because, in an unrelated case several years before plaintiffs filed this litigation, the Court of Appeal had held that the arbitration provision in DIRECTV's customer agreement was unenforceable under Discover Bank . (See Cohen v. DirecTV, Inc. (2006) 142 Cal.App.4th 1442, 1455, 48 Cal.Rptr.3d 813.) Until Concepcion held that the FAA preempts the rule of Discover Bank, DIRECTV consequently believed that a motion to compel arbitration would be futile.
The relevant arbitration provision is contained in section 9 of DIRECTV's 2007 customer agreement. Section 9 provides that "any legal or equitable claim relating to this Agreement, any addendum, or your Service" will first be addressed through an informal process and then, if the claim is not resolved informally, "any Claim either of us asserts will be resolved only by binding arbitration" under JAMS rules. Under the heading "Special Rules," section 9 of the agreement provides as follows:
Section 10 of the 2007 customer agreement contains provisions addressing several miscellaneous matters, including the following provision concerning "Applicable Law":
Plaintiffs opposed the motion to compel arbitration on numerous grounds. The superior court denied the motion, and DIRECTV timely appealed.
STANDARD OF REVIEW
( Baker v. Osborne Development Corp. (2008) 159 Cal.App.4th 884, 892, 71 Cal.Rptr.3d 854.) We review the superior court's ruling, not its reasoning, and we consequently may affirm on the basis of any valid legal theory, regardless of whether the superior court relied on it. (See, e.g., Perlin v. Fountain View Management, Inc. (2008) 163 Cal.App.4th 657, 663–664, 77 Cal.Rptr.3d 743.)
DISCUSSION
In addition to stating that the parties waive their rights to bring class claims, section 9 of the 2007 customer agreement states 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." Plaintiffs argue that the law of California would find the class action waiver unenforceable because, for example, the CLRA expressly precludes waiver of the right to bring a class action under the CLRA. ( Civ.Code, §§ 1751, 1781, subd. (a).) Plaintiffs conclude that the parties' entire arbitration agreement is unenforceable, pursuant to the agreement's express terms, because the law of plaintiffs' state would find the class action waiver unenforceable. We agree.
As all parties point out, the FAA "requires courts to enforce privately negotiated agreements to arbitrate, like other contracts, in accordance with their terms." ( Volt Info. Sciences v. Leland Stanford Jr. U. (1989) 489 U.S. 468, 478, 109 S.Ct. 1248, 103 L.Ed.2d 488 ( Volt ).) The FAA's broad policy of enforcement of arbitration agreements according to their terms applies even to "agreements to arbitrate under different rules than those set forth in the [FAA] itself." ( Id. at p. 479, 109 S.Ct. 1248.) Thus, if "parties have agreed to abide by state rules of arbitration, enforcing those rules according to the terms of the agreement is fully consistent with the goals of the FAA," even if application of the state rules would yield a different result from application of the FAA. ( Ibid. ; see also Cable Connection, Inc. v. DIRECTV, Inc. (2008) 44 Cal.4th 1334, 1352–1353, 82 Cal.Rptr.3d 229, 190 P.3d 586 ( Cable Connection ); Best Interiors, Inc. v. Millie & Severson, Inc. (2008) 161 Cal.App.4th 1320, 1326, 75 Cal.Rptr.3d 1 [].) Consequently, although it is impossible for parties to " ‘opt out’ of FAA coverage in its entirety because it is the FAA itself that authorizes parties to choose different rules in the first place," it is in other respects permissible for the parties to "opt out of the FAA's default rules." ( Ario v. The Underwriting Members of Syndicate 53 at Lloyds for the 1998 Year of Account (3d Cir.2010) 618 F.3d 277, 288 ( Ario ).) In particular, a choice of law provision in an arbitration agreement is, in general, enforceable to the same extent as a choice of law provision in any other contract. (See generally Nedlloyd Lines B.V. v. Superior Court (1992) 3 Cal.4th 459, 464–466, 11 Cal.Rptr.2d 330, 834 P.2d 1148 [].) We have previously held that the parties to a contract may choose the law under which the enforceability of a class action waiver is to be determined. ( Discover Bank v. Superior Court (2005) 134 Cal.App.4th 886, 889, 36 Cal.Rptr.3d 456.)
Under the foregoing principles, if section 9 of DIRECTV's 2007 customer agreement had said that the enforceability of the class action waiver "shall be determined under the law of your state to the extent that it is not preempted by the FAA," then that provision would have been enforceable. Likewise, if section 9 had said that the enforceability of the class action waiver "shall be determined under the law of your state without considering the preemptive effect, if any, of the FAA," then that provision would have been enforceable as well. No party argues to the contrary.1
Section 9 of the 2007 customer agreement is not, however, as explicit as either of those hypothetical examples. The question before us, then, is how to interpret section 9's choice of law concerning enforceability of the class action waiver. Where section 9 requires us to consider whether "the law of your state would find this agreement to dispense with class arbitration procedures unenforceable...," does it mean "the law of your state to the extent it is not preempted...
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