Stachurski v. Directv, Inc.

• Decision Date: 13 July 2009
• Docket Number: Case No.: 1:08 CV 2850.
• Citation: 642 F.Supp.2d 758
• Parties: Dolores STACHURSKI, et. al., Plaintiffs v. DIRECTV, INC., Defendant.
• Court: U.S. District Court — Northern District of Ohio

642 F.Supp.2d 758

Dolores STACHURSKI, et. al., Plaintiffs v. DIRECTV, INC., Defendant.

Case No.: 1:08 CV 2850.

United States District Court, N.D. Ohio, Eastern Division.

July 13, 2009.

COPYRIGHT MATERIAL OMITTED

Daniel C. Bryden, Deanna D. Dailey, Sprenger & Lang, Minneapolis, MN, Garrett W. Wotkyns, Joshua G. Konecky, Todd M. Schneider, Schneider Wallace Cottrell Brayton Konecky, Ingrid M. Evans, Waters Krauss, San Francisco, CA, William M. Sweetnam, Sprenger & Lang, Chicago, IL, Jack Landskroner, Landskroner Grieco Madden, Cleveland, OH, for Plaintiffs.

Melissa D. Ingalls, Robyn E. Bladow, Kirkland & Ellis, Los Angeles, CA, Fritz E. Berckmueller, Calfee, Halter & Griswold, Cleveland, OH, James F. Lang, Calfee, Halter & Griswold, Columbus, OH, for Defendant.

ORDER

SOLOMON OLIVER, JR., District Judge.

DirecTV, Inc. ("DirecTV" or "Defendant") is a California corporation that provides direct-to-home satellite television services to subscribers nationwide, including Geagua County, Ohio. (Compl. ¶¶ 5-6, ECF No. 1.) DirecTV is the largest direct-to-home satellite television provider in the United States. (Id. ¶ 5.) Plaintiffs Dolores Stachurski ("Stachurski") and Robert Kravos, Jr. ("Kravos") (collectively, "Plaintiffs"), who are residents of Chardon, Ohio, were DirecTV customers from approximately March 2, 2004, through July 2008. (Id. ¶ 4.)

On December 4, 2008, Plaintiffs filed a Class Action Complaint against Defendant on behalf of themselves, current DirecTV subscribers, and former DirecTV subscribers that incurred DirecTV's early cancellation fee, alleging violations of the Ohio Deceptive Trade Practices Act ("ODTPA"), the Ohio Consumer Sales Practices Act ("CSPA"), unjust enrichment, and liquidated damages. Pending before the court are the following Motions: (1) Defendant's Motion to Dismiss or Stay Proceedings Pending Arbitration and to Compel Arbitration, or, in the Alternative, to Dismiss Plaintiffs' Claims for Declaratory Judgment and Breach of Contract ("Def.'s Mot. Compel," ECF No. 17); and (2) Plaintiffs' Motion to Appoint Interim Co-Lead Counsel ("Pls.' Mot. Appoint Counsel," ECF No. 28). For the following reasons, the court grants in part and denies in part Defendant's Motion to Dismiss Proceedings and to Compel Arbitration, or, in the Alternative, to Dismiss Plaintiffs' Claims for Declaratory Judgment and Breach of Contract and denies Plaintiffs' Motion to Appoint Interim Co-Lead Counsel as moot.

I. FACTS

A. Plaintiffs' Dealings with Defendant

On January 20, 2004, Plaintiffs called DirecTV's toll free number and ordered DirecTV services. (Compl. ¶ 13.) On March 2, 2004, a DirecTV installer set up service at Plaintiffs' home. (Id.) According to Defendant, the installer, who is usually not a DirecTV employee, provides subscribers with Defendant's "Lease Addendum," which contains its term commitment and early termination fee policy on the back of the form, when its equipment is installed, when malfunctioning equipment leased from Defendant is replaced, and when subscribers change their service. (Compl. ¶¶ 10, 21.) Plaintiffs allege that the installers are not instructed or authorized to discuss or call attention to the terms on this form. (Id. ¶ 21.)

The top of the Lease Addendum provides in capital letters that it:

Must be read together with the DirecTV Customer Agreement (a copy of which is provided to you with your first bill and is available at www.directv.com) for all of the terms and conditions regarding the provision of the services and your right to use the DirecTV equipment.

(Id. ¶ 22.)

In early January 2008, Plaintiffs experienced a technical problem with their DirecTV service. (Id. ¶ 14.) After a technician was unable to correct the issue, Plaintiffs placed an order for new, upgraded receivers with no charge by Defendant. (Valerie McCarthy Decl. ¶ 7, ECF No. 19.) Defendant contends that on or about February 11, 2008, it sent an order confirmation letter regarding the new receivers to Plaintiffs, which explained that the order required Plaintiffs to enter into a new term commitment and that an early cancellation fee may be incurred if this commitment is not fulfilled. (McCarthy Decl. ¶ 7; Ex. E.) Almost one month later, Plaintiffs activated the new receivers. (Id. ¶ 7.) However, the problem continued and Plaintiffs subsequently cancelled their DirecTV service. (Compl. ¶ 15.) As a result of their cancellation, Plaintiffs were charged an early cancellation fee of $280. (Id. ¶ 16.)

After learning of this cancellation fee, Plaintiff Kravos contacted Defendant about the fee and was told that he and Plaintiff Stachurski agreed to a two-year contract when they ordered the new receivers. (Id. ¶ 17.) Plaintiff Kravos requested that Defendant send him a copy of the alleged signed agreement, but instead received a pamphlet containing Defendant's Customer Agreement that Plaintiff Kravos had not seen previously. (Id. ¶ 19.) Plaintiffs contend that Defendant did not inform them at any time that they were renewing their contract when they ordered the new receivers. (Id. ¶ 18.) Also, Plaintiffs never signed or read any document that informed them of the contract or the early cancellation fee. (Id.)

Defendant contends that Plaintiffs accepted the terms and conditions of the Customer Agreement by not cancelling its service after receiving the agreement. (Def.'s Mem. Supp. Mot. to Compel at 1, ECF No. 18.) The first paragraph of the Customer Agreement provides in bolded, capitalized letters: "If you do not accept these terms, please notify us immediately and we will cancel your service. If you instead decide to receive our service, it will mean that you accept these terms and accordingly, they will be legally binding on you." (McCarthy Decl. Ex. A.) Plaintiffs received the 2001 Customer Agreement with their first billing statement on or about January 21, 2004. (Id. ¶ 5; Ex. A.) After receiving this copy of the Customer Agreement, Plaintiffs did not contact Defendant to dispute any of the terms or conditions or cancel Defendant's services. (Id.)

The Customer Agreement further provides that the agreement may be updated with subsequent Customer Agreements and that Plaintiffs would accept the updated terms by continuing to accept service. (Id. § 4.) Plaintiffs received updated Customer Agreements in October 2004 and May 2006 with their October 21, 2004 and May 21, 2006 billing statements. (Id. ¶ 6; Ex. B; Ex. C.) In May 2007, Plaintiffs received an updated Customer Agreement with their billing statement, which explained in bolded, capitalized letters how Plaintiffs could accept the updated agreement:

This document describes the terms and conditions of your receipt and payment of DirecTV service and is subject to arbitration (Section 9). If you do not accept these terms, please notify us immediately and we will cancel your service. If you instead decide to receive our service, it will mean that you accept these terms and they will be legally binding.

(Id. Ex. D.) After receiving the 2004, 2006 and 2007 Customer Agreements, Plaintiffs did not dispute any of the terms or conditions or cancel Defendant's services. (Id. ¶ 6.)

The original Customer Agreement and updated Customer Agreements all contain similar arbitration clauses. (Id. Ex. B, § 9; Ex. C, § 9; Ex. D, § 9.) The 2001 Customer Agreement arbitration clause states:

[Y]ou 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 ... ARBITRATION MEANS THAT YOU WAIVE YOUR RIGHT TO A JURY TRIAL ... If you initiate the arbitration, you agree to pay a fee of $125 ... We agree to pay any additional fee or deposit ... in excess of your filing fee.

(Id. Ex. A, § 8.) The 2007 Customer Agreement also provides:

Neither 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 ... If, however, the law of your state would find this agreement to dispense with class arbitration procedures unenforceable, then this entire Section 9 is unenforceable.

(Id. Ex. D, § 9(c).) Section 10(b) of this Customer Agreement further provides that "Section 9 [the arbitration clause] shall be governed by the Federal Arbitration Act."

B. The Instant Suit

Plaintiffs filed a Class Action Complaint before this court on behalf of themselves and all current DirecTV subscribers and past DirecTV subscribers who paid DirecTV's early cancellation fee. Plaintiffs' Complaint asserts the following claims against Defendant: (1) Defendant violated ODTPA by failing to disclose to Plaintiffs and class members the term commitment and early cancellation fee that they would be charged if they did not continue to subscribe during the term (Id. ¶¶ 34-41); (2) Defendant violated the CSPA by imposing an early cancellation fee unbeknownst to Plaintiffs and other consumers and by including other unconscionable provisions (Id. ¶¶ 42-48); (3) Declaratory relief regarding whether Defendant entered into enforceable agreements with Plaintiffs and some or all class members as to the term commitment, early cancellation fee, and self-help provision because Plaintiffs and class members did not sign or accept any agreement and because the terms and conditions of the Lease Addendum and Customer Agreement are unconscionable (Id. ¶¶ 49-51); (4) Defendant was unjustly enriched by imposing and collecting early cancellation fees from Plaintiffs and other class members (Id. ¶¶ 52-55); (5) Defendant breached the parties' contract (Id. ¶¶ 56-60); (6) Defendant's early cancellation fee is an unlawful liquidated damages provision and is a penalty for discontinuing service (Id. ¶¶ 61-64); and (7) Defendant's arbitration clause is...