Court Opinion

ID: 2644548
Source: CourtListenerOpinion
Date Created: 2013-12-03 01:01:05.736919+00
Date Added: 2024-06-11T12:53:51.475839
License: Public Domain

FILED
                           NOT FOR PUBLICATION                             DEC 02 2013

                                                                       MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U.S. COURT OF APPEALS

                           FOR THE NINTH CIRCUIT

JOSEPH LOMBARDI; KATHLEEN                        No. 10-56602
O’BRIEN; ROBERTA PIFER; EDWARD
PIFER; CHRISTINE SCHUESSLER;                     D.C. No. 8:09-ml-02093-AG-AN
CHRISTINE SLAKANS; GARY SMITH;
SANDRA JOHANNES; IRA
BOSHNACK,                                        MEMORANDUM*

              Plaintiffs-counter-defendants
              - Appellees,

       and

TRACY TWYMAN; ANNETTE
KAHALY; JOHN MULEA; MAUREEN
VAN METER; CAROLYN FORBES;
LOUIS M. WILSON; PAUL CANNON;
SEAN MURRAY; HOYT MCBROOM;
PATRICIA WILSON; DOROTHY
JONES; JOSHUA FOLKERTH;
RENATO CAPPUCCITTI; DAVID
WARD; KEITH HARPER; JANA
HARPER; PAUL BRICE; KAREN
BRICE; ALICE M. BRODE, individually
and on behalf of all others similarly
situated; JACK E. BRODE, individually
and on behalf of all others similarly
situated; EBEN PAGUIRIGAN,
individually and on behalf of all others

        *
        This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
similarly situated; TARA MURRAY,

              Plaintiffs-counter-defendants,

       v.

DIRECTV, INC.,

              Defendant-counter-claimant -
              Appellant.

                   Appeal from the United States District Court
                      for the Central District of California
                   Andrew J. Guilford, District Judge, Presiding

                     Argued and Submitted November 5, 2013
                              Pasadena, California

Before: GOODWIN, FISHER and CLIFTON, Circuit Judges.

      DirecTV appeals the district court’s order denying its motion to compel

arbitration. We have jurisdiction under 9 U.S.C. § 16(a)(1)(B), and we reverse.

      The district court denied DirecTV’s motion because of the arbitration

agreement’s class action waiver, which the court concluded was unconscionable

under California, Arizona, Florida and Pennsylvania law. After DirecTV noticed

this appeal, the Supreme Court held that the Federal Arbitration Act (FAA)

“prohibits States from conditioning the enforceability of certain arbitration

agreements on the availability of classwide arbitration procedures.” AT&T

Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1744, 1753 (2011). The plaintiffs

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argue that the district court should nonetheless be affirmed on alternative grounds,

though they concede that intervening binding authority has eliminated all of their

arguments except one, that the arbitration agreement is unconscionable and

unenforceable. See Am. Express Co. v. Italian Colors Rest., 133 S. Ct. 2304, 2311-

12 (2013); Murphy v. DirecTV, Inc., 724 F.3d 1218, 1225-28 (9th Cir. 2013).

      A threshold issue is which states’ laws should be used to evaluate various

plaintiffs’ unconscionability argument. The district court applied California law to

residents of other states who originally sued DirecTV in California based on

California’s “fundamental policy against the enforceability of class-action

waivers.” Masters v. DirecTV, Inc., Nos. 08-55825, 08-55830, 2009 WL 4885132,

at *1 (9th Cir. Nov. 19, 2009). That policy is no longer cognizable in arbitration

agreements governed by the FAA. See Concepcion, 131 S. Ct. at 1753.

Accordingly, the choice of law provision in the Customer Agreement must be

enforced because the plaintiffs have identified no other conflict between the laws

of their home states and a fundamental policy of California. See Nedlloyd Lines

B.V. v. Superior Court, 834 P.2d 1148, 1152 (Cal. 1992); see also Wash. Mut.

Bank, FA v. Superior Court, 15 P.3d 1071, 1079 (Cal. 2001).

      Under applicable state law, the plaintiffs’ argument that the arbitration

agreement is substantively unconscionable because it imposes a nonmutual

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obligation to arbitrate fails. First, the arbitration agreement is enforceable under

Arizona and Illinois law because it is supported by adequate consideration,

including DirecTV’s reciprocal promise to arbitrate any claims outside of the

exceptions for theft of service. See, e.g., Bishop v. We Care Hair Dev. Corp., 738
N.E.2d 610, 622-23 (Ill. App. Ct. 2000); Stevens/Leinweber/Sullens, Inc. v. Holm

Dev. & Mgmt., Inc., 795 P.2d 1308, 1313 (Ariz. Ct. App. 1990). Second, because

the arbitration agreement does not require customers to surrender any claims or

damages they could seek in court, it is not substantively unconscionable under

Florida law. See, e.g., Avid Eng’g, Inc. v. Orlando Marketplace, Ltd., 809 So. 2d 1,

5 (Fla. Dist. Ct. App. 2001). Third, under Pennsylvania law, the party seeking to

invalidate an arbitration agreement bears the burden of proving that it is

unconscionable and the unilateral reservation of judicial remedies for some claims

but not others does not create a presumption of unconscionability. See Salley v.

Option One Mortg. Corp., 925 A.2d 115, 129 (Pa. 2007). The plaintiffs have

failed to meet this burden because their argument rests solely on the relative

availability of litigation and arbitration; they have identified no arbitral terms that

unreasonably benefit DirecTV or that prevent them from fully presenting their

claims in arbitration. See, e.g., Ellin v. Empire Today, LLC, Civil Action No. 11-

2312, 2011 WL 3792754, at *5-6 (E.D. Pa. Aug. 24, 2011). Finally, the plaintiffs

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have not argued that the arbitration agreement is unconscionable under Virginia

law.

       Of the relevant states, only Illinois recognizes circumstances in which a

contractual provision is unenforceable due to procedural unconscionability alone.

See Kinkel v. Cingular Wireless LLC, 857 N.E.2d 250, 263 (Ill. 2006). There is no

evidence supporting the plaintiffs’ contention that DirecTV charges an early

cancellation fee when a customer rejects the arbitration agreement. In fact,

DirecTV’s confirmation letter explains that disputes are subject to arbitration,

provides a URL for the Customer Agreement and informs the customer that it will

issue a full refund if service is cancelled before installation. Although the

arbitration agreement is an adhesion contract and “there are circumstances . . . that

evidence a degree of procedural unconscionability,” that degree “is insufficient to

render the arbitration provision unenforceable.” Bess v. DirecTV, Inc., 885 N.E.2d
488, 497-98 (Ill. App. Ct. 2008).

       REVERSED AND REMANDED.

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