Revitch v. DirecTV, LLC

Decision Date30 September 2020
Docket NumberNo. 18-16823,18-16823
Citation977 F.3d 713
Parties Jeremy REVITCH, on behalf of himself and all others similarly situated, Plaintiff-Appellee, v. DIRECTV, LLC, Defendant-Appellant.
CourtU.S. Court of Appeals — Ninth Circuit
OPINION

O'SCANNLAIN, Circuit Judge:

An arbitration clause in a wireless services agreement purports to include all affiliates of the wireless services company. We must decide whether a satellite television company, which became an affiliate years after the agreement was signed, may use the wireless services agreement to compel arbitration in a suit brought against it under the Telephone Consumer Protection Act.

I

In 2018, Jeremy Revitch brought this putative class action against DIRECTV, LLC ("DIRECTV") under the Telephone Consumer Protection Act, 47 U.S.C. § 227 ("TCPA"). He alleges that DIRECTV, a satellite television services company, initiated multiple telephone calls to his cell phone using a prerecorded message. Each time, the message allegedly said:

This is an important announcement from [DIRECTV]. We are now offering our most popular viewing package for only $19.99 per month. For a limited time, new customers also receive a free flat-screen television, just for signing up. Press 1 to speak with a representative, or press 9 to be removed from future offers.

Revitch avers that he had no previous contact with DIRECTV, never provided DIRECTV with his telephone number, and certainly did not give DIRECTV permission to flood his cell phone with robocalls.

According to Revitch's complaint, DIRECTV has a history of conducting unsolicited telemarketing campaigns, for which it has been sued numerous times and has paid millions of dollars in fines to the Federal Trade Commission. Apparently frustrated with such spam calls, Revitch decided to make use of the TCPA's private right of action under 47 U.S.C. § 227(b)(3). He brings this class action against DIRECTV on behalf of all persons in the United States who have received prerecorded messages from the company over the last four years without prior express written consent.

A

Faced with this lawsuit, DIRECTV somehow uncovered the fact that Revitch also happens to be a customer of AT&T Mobility LLC ("AT&T Mobility"), a wireless services provider, with which he signed a contract when he upgraded his mobile device in 2011, seven years before. That contract for mobile phone wireless services included an arbitration clause extending to "all disputes and claims between" Revitch and AT&T Mobility, "includ[ing], but ... not limited to ... claims arising out of or relating to any aspect of the relationship between" them. As defined in Revitch's wireless services contract, any references to AT&T Mobility also include its "affiliates."

So how did this class action morph into a compulsory arbitration appeal? It turns out that DIRECTV was acquired in 2015 by AT&T, Inc., which is now the parent company of both DIRECTV and AT&T Mobility. Thus, DIRECTV contends that it has become an "affiliate" of AT&T Mobility within the meaning of the wireless services agreement and should therefore be able to piggyback onto the arbitration clause, notwithstanding that it was not an affiliate at the time Revitch signed the wireless services contract with AT&T Mobility four years earlier. Soon after Revitch filed his complaint, DIRECTV filed a motion to compel arbitration of Revitch's putative class action pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1 – 16 ("FAA" or "the Act").

B

In a twenty-seven-page order entered on behalf of the district court, Chief Magistrate Judge Joseph C. Spero denied DIRECTV's motion, concluding that the contract between Revitch and AT&T Mobility did not reflect an intent to arbitrate the claim that Revitch asserts against DIRECTV.

DIRECTV now appeals the order denying its motion to compel arbitration.

II

When a motion to compel arbitration is filed, a "court shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue ... shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement." 9 U.S.C. § 4. Because "the Act leaves no place for the exercise of discretion by a district court," Dean Witter Reynolds, Inc. v. Byrd , 470 U.S. 213, 218, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985), a federal court's role is "limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue," Chiron Corp. v. Ortho Diagnostic Sys., Inc. , 207 F.3d 1126, 1130 (9th Cir. 2000). If the answer to both questions is yes, then the FAA requires a court "to enforce the arbitration agreement in accordance with its terms." Id. ; see also Granite Rock Co. v. Int'l Bhd. of Teamsters , 561 U.S. 287, 299, 130 S.Ct. 2847, 177 L.Ed.2d 567 (2010) ("[C]ourts should order arbitration of a dispute only where the court is satisfied that neither the formation of the parties’ arbitration agreement nor (absent a valid provision specifically committing such disputes to an arbitrator) its enforceability or applicability to the dispute is in issue." (emphasis in original)).1

A

Does a valid agreement to arbitrate exist between Revitch and DIRECTV?2

To answer the question, we look to state contract law. Wolsey, Ltd. v. Foodmaker, Inc. , 144 F.3d 1205, 1210 (9th Cir. 1998). Because the wireless services agreement's choice-of-law provision states that the contract is governed by the law of the state in which the customer's billing address is located, we apply the law of Revitch's home state of California.

In California, "[a] contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting." Cal. Civ. Code § 1636. We normally determine the mutual intention of the parties "from the written terms [of the contract] alone," so long as the "contract language is clear and explicit and does not lead to absurd results." Kashmiri v. Regents of Univ. of Cal. , 156 Cal.App.4th 809, 67 Cal. Rptr. 3d 635, 652 (2007) ; see also Cal. Civ. Code §§ 1638 ("The language of a contract is to govern its interpretation, if the language is clear and explicit, and does not involve an absurdity."), 1639 ("When a contract is reduced to writing, the intention of the parties is to be ascertained from the writing alone, if possible ...."). The relevant words of the wireless services agreement are: "References to ‘AT&T,’ ‘you’ and us include our respective ... affiliates ...."

We must thus decide whether DIRECTV qualifies as an "affiliate" of AT&T Mobility, as the term is used in the wireless services agreement. Because the word is not elsewhere defined in the contract, we rely on the ordinary definition. See Cal. Civ. Code § 1644 ("The words of a contract are to be understood in their ordinary and popular sense, rather than according to their strict legal meaning ...."). An affiliate is normally understood as "a company effectively controlled by another or associated with others under common ownership or control." Satterfield v. Simon & Schuster, Inc. , 569 F.3d 946, 955 (9th Cir. 2009) (quoting Webster's Third New International Dictionary 35 (2002)); see also Cal. Corp. Code § 150 ("A corporation is an ‘affiliate’ of ... another specified corporation if it ... is under common control with the other specified corporation."). Because DIRECTV and AT&T Mobility are under common ownership by AT&T, Inc. today, they are affiliates.

DIRECTV would have us end the inquiry right here. It does not matter, DIRECTV argues, that it was not an affiliate at the time Revitch and AT&T Mobility entered into their contract and that it became an affiliate years later following a corporate acquisition that had nothing to do with Revitch or his wireless services agreement. However, as we already mentioned, we rely on the "written terms alone" when the "contract language is clear and explicit and does not lead to absurd results ." Kashmiri , 67 Cal. Rptr. 3d at 652 (emphasis added). Here, absurd results follow from DIRECTV's preferred interpretation: Under this reading, Revitch would be forced to arbitrate any dispute with any corporate entity that happens to be acquired by AT&T, Inc., even if neither the entity nor the dispute has anything to do with providing wireless services to Revitch—and even if the entity becomes an affiliate years or even decades in the future. The Eastern District of New York, addressing a similar set of facts in Wexler v. AT&T Corp. , 211 F. Supp. 3d 500, 504 (E.D.N.Y. 2016), concluded that "no reasonable person would think that checking a box accepting the ‘terms and conditions’ necessary to obtain cell phone service would obligate them [sic] to arbitrate literally every possible dispute he or she might have with the service provider, let alone all of the affiliates under AT&T Inc.’s corporate umbrella—including those who provide services unrelated to cell phone coverage." We agree.

"[W]e look to the reasonable expectation of the parties at the time of contract." Kashmiri , 67 Cal. Rptr. 3d at 652. We also may explain a contract "by reference to the circumstances under which it was made, and the matter to which it relates." Cal. Civ. Code § 1647. Here, when Revitch signed his wireless services agreement with AT&T Mobility so that he could obtain cell phone services, he could not reasonably have expected that he would be forced to arbitrate an unrelated dispute with DIRECTV, a satellite television provider that would not become affiliated with AT&T until years later. Accordingly, we are satisfied that a valid agreement to arbitrate between Revitch and DIRECTV does not exist.

Had the wireless services agreement stated that "AT&T" refers to "any affiliates, both present and future," we might arrive at a different conclusion. However, absent this or similar forward-looking language, we are convinced...

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