Perez v. Directv Grp. Holdings, LLC

• Decision Date: 01 May 2017
• Docket Number: CASE NO. 8:16-cv-1440-JLS-DFMx.
• Citation: 251 F.Supp.3d 1328
• Court: U.S. District Court — Central District of California
• Parties: Doneyda PEREZ, Plaintiff, v. DIRECTV GROUP HOLDINGS, LLC ; Lonstein Law Offices, P.C.; and Julie Cohen Lonstein, Defendants.

251 F.Supp.3d 1328

Doneyda PEREZ, Plaintiff,

v.DIRECTV GROUP HOLDINGS, LLC ; Lonstein Law Offices, P.C.; and Julie Cohen Lonstein, Defendants.

CASE NO. 8:16-cv-1440-JLS-DFMx.

United States District Court, C.D. California.

Signed May 1, 2017

Plaintiff Kevin Mahoney, Atoy Hari Wilson, Katherine J. Odenbreit, Mahoney Law Group APC, Long Beach, CA, for Plaintiff.

Archis A. Parasharami, Andrea M. Weiss, Mayer Brown LLP, Washington, DC, Mary K. Wyman, Connie M. Anderson, Lewis Brisbois Bisgaard and Smith LLP, San Diego, CA, for Defendants.

ORDER DENYING DEFENDANTS' MOTIONS TO COMPEL ARBITRATION (Docs. 18, 20)

JOSEPHINE L. STATON, UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

Plaintiff Doneyda Perez brings this action alleging that DirecTV and the other Defendants engaged in a scheme to defraud small, minority-owned businesses by selling them commercial satellite cable television service, only to later claim that the businesses were not authorized to display DirecTV in a commercial establishment, and then threaten the business owners with litigation to extract a settlement payment. Defendants DirecTV Group Holdings, LLC, Lonstein Law Offices, P.C., and Julie Cohen Lonstein move to compel Perez to arbitrate her claims.

II. BACKGROUND

The manner in which the transaction took place between DirecTV and Perez is significant in determining whether the parties entered into an agreement to arbitrate, and whether that agreement is valid; therefore, the Court describes below Perez's allegations as to the nature of the transaction, a description which, for the purposes of this motion, DirecTV does not materially contest.¹

A. DirecTV Solicits Perez's Business

Perez owns Oneida's Beauty and Barber Salon in Garden Grove, California. (Perez Decl. ¶ 2, Doc. 26–3.) On June 5, 2013, a DirecTV representative came to Perez's beauty salon to offer her a promotional deal that would provide her business with satellite cable television for $35.00 per month for two years. (Id. ¶¶ 3–4.) Perez's conversation with DirecTV's representative was entirely in Spanish. (Id. ¶ 6.) Although Perez had no prior interest in purchasing satellite cable television services from DirecTV, she agreed to the promotional deal for her business based on the representative's representations regarding the terms of the deal, including access to Spanish-language channels. (Id. ¶ 4.) After Perez agreed to the promotional deal, the DirecTV representative installed the necessary equipment in her salon that very same day. (Id. ¶ 5.) During the installation, the DirecTV representative requested Perez's personal information, including her business bank account information. (Id. ¶ 6.) After the installation was complete, the representative asked Perez to sign a single document, the Equipment Lease Agreement ("ELA"), which was in English. (Id. ; see Robson Decl., Ex. 5, Doc. 18–12.) Pertinent to Perez's claims here, the ELA does not inform the customer that the service cannot be used in commercial establishments. (See Robson Decl., Ex. 5; see also Robson Decl., Ex. 4 at 1, Doc. 18–11.)

B. The Equipment Lease Agreement

The ELA is typed in small print. It includes a paragraph titled "Programming Agreement and Term" and tells the consumer that if she cancels before the end of a two-year term, she will be charged an early cancellation fee of up to $480. (Robson Decl., Ex. 5.) Towards the bottom of the page, the ELA states as follows:

(Id. )

The ELA also states near the top of the page² :

(Id. ) Although the ELA states that Perez already received the DIRECTV Customer Agreement, DirecTV has acknowledged that Perez would not have been provided with either the Customer Agreement or an Order Confirmation at the time that her equipment was installed and she signed the ELA. (Robson Decl. ¶ 11, Doc. 18–7.) It was only after Perez agreed to purchase DirecTV's services, and after DirecTV installed the necessary equipment and activated service, that DirecTV mailed her a copy of an English-language version of the Customer Agreement in effect at that time. (Robson Decl. ¶¶ 11–12; Robson Decl., Ex. 2, Doc. 18–9; Robson Decl., Ex. 3, Doc. 18–10.) This was in accordance with DirecTV's practice of sending Customer Agreements to new customers only after they order service. (Robson Decl. ¶¶ 4–5.)

Because Perez has difficulty reading and writing English, she could not understand the contents of the ELA. (Perez Decl. ¶ 6.) Although she had been speaking with the DirecTV representative in Spanish, the representative did not translate the ELA into Spanish for her. (Id. ) Nor did the representative provide her with a Spanish-language version of the ELA, even though DirecTV has Spanish-language versions of the ELA available. (Id. ; Robson Decl., Ex. 4 at 2.) Perez gave the signed ELA to the DirecTV representative but did not receive a copy of her own. (Perez Decl. ¶ 6.)

According to DirecTV, the ELA provided to Perez at the time she signed up for the service was simply an "addendum" to the Customer Agreement. (Robson Decl. ¶ 8.)

C. DirecTV's Later Communications

1. The Order Confirmation

After the installation was complete, DirecTV mailed Perez a document DirecTV calls an Order Confirmation. (Robson Decl., Ex. 2.) It is addressed to Perez and titled "THANK YOU FOR YOUR ORDER." (Id. ) In a bolded text box, the Order Confirmation tells Perez "This is Not a Bill" and provides an "estimated first bill." (Id. ) The Order Confirmation incorrectly assumes that no installation has yet taken place and tells her to "call [her] local DirecTV dealer to schedule [her] installation." (Id. ) It also tells her to update her email address and to review her customer agreements. (Id. ) It reminds her that she agreed to a "24-MONTH SERVICE AGREEMENT," and if she fails to maintain the agreed-upon level of programming, DirecTV may charge her an early cancellation fee. (Id. )

2. The Customer Agreement

According to DirecTV, Perez would have received the Customer Agreement in the mail with the Order Confirmation after the equipment was installed. (Robson Decl. ¶ 11.)

Near the top of the first page, the Customer Agreement states:

THIS DESCRIBES THE TERMS AND CONDITIONS OF YOUR RECEIPT OF AND PAYMENT FOR DIRECTV* SERVICE AND IS SUBJECT TO ARBITRATION (SECTION 9) AND DISCLAIMER OF WARRANTIES (SECTION 8). IF YOU DO NOT ACCEPT THESE TERMS, PLEASE NOTIFY US IMMEDIATELY AND WE WILL CANCEL YOUR ORDER OR SERVICE. IF YOU INSTEAD DECIDE TO RECEIVE OUR SERVICE, IT WILL MEAN THAT YOU ACCEPT THESE TERMS AND THEY WILL BE LEGALLY BINDING. IF YOU OBTAINED RECEIVING

(Robson Decl., Ex. 3.) Section 9, titled "RESOLVING DISPUTES " begins with the following statement:

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:

(Id. ) Subsection (a) then sets forth the procedure for informal resolution, and subsection (b) provides that if informal resolution fails, "any Claim either of us asserts will be resolved only by binding arbitration." (Id. )

However, subsection (d) identifies two exceptions to the binding arbitration requirement:

(d) Exceptions. Notwithstanding the foregoing: (i) any Claim based on Section 1(h) above, and (ii) any dispute invoiving a violation of the Communications Act of 1934, 47 U.S.C. § 605, the Digital Millennlum Copyright Act. 17 U.S.C. § 1201, the Electronic Communications Privacy Act. 18 U.S.C. §§ 2510-2521 or any other statement or law governing theft of service, may be decided only by a court of competent jurisdiction. You may also assert an individual action in small claims court in lieu of arbitration.

(Id. ) Section 1(h) is the third paragraph of the fourth column on the first page of the Customer Agreement. (Id. ) It states:

(h) Private Viewing. We provide Service only for your private noncommercial use, enjoyment and home viewing. The programming may not be viewed in areas open to the public or in commercial establishments. You may not rebroadcast, transmit or perform the programming, charge admission for its viewing or transmit or distribute running accounts of it. You may not use any of our trademarks. Notwithstanding the provisions of Section 9, we or any programming provider may prosecute violations of the foregoing against you and other responsible parties in any court of competent jurisdiction, under the rules and regulations of the Federal Communications Commission and other applicable laws.

(Id. )

From at least September 2014 until August 2015, when Perez cancelled her DirecTV service, Perez received monthly invoices in Spanish stating that the Customer Agreement describes the terms and conditions of service, and telling Perez to consult that Customer Agreement for complete information about billing and payment. (Kellogg Decl., Ex. 1, Doc. 18–3.) DirecTV also mailed Perez a copy of the Customer Agreement each time the Agreement was updated. (Robson Decl. ¶ 14.)

D. Threatened Litigation and Settlement

In May 2015, Perez received a call from DirecTV advising her that the Lonstein Law Office had been retained by DirecTV regarding "the unauthorized reception and commercial display of DIRECTV programming" at her business. (Compl. ¶ 27, Doc. 1.) In that call, DirecTV alleged that on April 8, 2015, an "independent auditor" had observed and recorded Perez's unauthorized use of DirecTV's services. (Id. ) Based on these allegations, DirecTV threatened litigation if Perez did not contact the Lonstein Law Office within seven days to resolve the matter. (Id. ) On June 26, 2015, Perez received a letter from the Lonstein Law Office with a proposed settlement agreement. (Id. ¶ 28.) The proposed settlement made it clear that the business where the purported unauthorized reception and display took place was the very same location where the DirecTV representative had installed the equipment. (Compl., Ex. B, "Settlement Agreement" at 1, Doc. 1–2.) Under the terms of the proposed settlement,...