Directv, Inc. v. Imburgia

25 Fla. L. Weekly Fed. S 567, 136 S. Ct. 463, 193 L. Ed. 2d 365, 577 U.S. 47, 63 Communications Reg. (P&F) 1442, 84 U.S.L.W. 4018, 2015 U.S. LEXIS 7999
Supreme Court of the United States·Decided December 14, 2015·No. No. 14–462.·Published·Cited by 183 cases

Opinions

Justice BREYER delivered the opinion of the Court.

The Federal Arbitration Act states that a "written provision" in a contract providing for "settle[ment] by arbitration" of "a controversy ... arising out of" that "contract ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation *466of any contract." 9 U.S.C. § 2. We here consider a California court's refusal to enforce an arbitration provision in a contract. In our view, that decision does not rest "upon such grounds as exist ... for the revocation of any contract," and we consequently set that judgment aside.

I

DIRECTV, Inc., the petitioner, entered into a service agreement with its customers, including respondents Amy Imburgia and Kathy Greiner. Section 9 of that contract provides that "any Claim either of us asserts will be resolved only by binding arbitration." App. 128. It then sets forth a waiver of class arbitration, stating that "[n]either you nor we shall be entitled to join or consolidate claims in arbitration." Id., at 128-129. It adds that if the "law of your state" makes the waiver of class arbitration unenforceable, then the entire arbitration provision "is unenforceable." Id., at 129. Section 10 of the contract states that § 9, the arbitration provision, "shall be governed by the Federal Arbitration Act." Ibid.

In 2008, the two respondents brought this lawsuit against DIRECTV in a California state court. They seek damages for early termination fees that they believe violate California law. After various proceedings not here relevant, DIRECTV, pointing to the arbitration provision, asked the court to send the matter to arbitration. The state trial court denied that request, and DIRECTV appealed.

The California Court of Appeal thought that the critical legal question concerned the meaning of the contractual phrase "law of your state," in this case the law of California. Does the law of California make the contract's class-arbitration waiver unenforceable? If so, as the contract provides, the entire arbitration provision is unenforceable. Or does California law permit the parties to agree to waive the right to proceed as a class in arbitration? If so, the arbitration provision is enforceable.

At one point, the law of California would have made the contract's class-arbitration waiver unenforceable. In 2005, the California Supreme Court held in Discover Bank v. Superior Court, 36 Cal.4th 148, 162-163, 30 Cal.Rptr.3d 76, 113 P.3d 1100, 1110, that a "waiver" of class arbitration in a "consumer contract of adhesion" that "predictably involve[s] small amounts of damages" and meets certain other criteria not contested here is "unconscionable under California law and should not be enforced." See Cohen v. DirecTV, Inc., 142 Cal.App.4th 1442, 1446-1447, 48 Cal.Rptr.3d 813, 815-816 (2006) (holding a class-action waiver similar to the one at issue here unenforceable pursuant to Discover Bank ); see also Consumers Legal Remedies Act, Cal. Civ.Code Ann. §§ 1751, 1781(a) (West 2009) (invalidating class-action waivers for claims brought under that statute). But in 2011, this Court held that California's Discover Bank rule " 'stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress' " embodied in the Federal Arbitration Act. AT & T Mobility LLC v. Concepcion, 563 U.S. 333, 352, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011) (quoting Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 85 L.Ed. 581 (1941) ); see Sanchez v. Valencia Holding Co., LLC, 61 Cal.4th 899, 923-924, 190 Cal.Rptr.3d 812, 353 P.3d 741, 757 (2015) (holding that Concepcion applies to the Consumers Legal Remedies Act to the extent that it would have the same effect as Discover Bank ). The Federal Arbitration Act therefore pre-empts and invalidates that rule. 563 U.S., at 352, 131 S.Ct. 1740 ; see U.S. Const., Art. VI, cl. 2.

*467The California Court of Appeal subsequently held in this case that, despite this Court's holding in Concepcion, "the law of California would find the class action waiver unenforceable." 225 Cal.App.4th 338, 342, 170 Cal.Rptr.3d 190, 194 (2014). The court noted that Discover Bank had held agreements to dispense with class-arbitration procedures unenforceable under circumstances such as these. 225 Cal.App.4th, at 341

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Directv, Inc. v. Imburgia, 25 Fla. L. Weekly Fed. S 567, 136 S. Ct. 463, 193 L. Ed. 2d 365, 577 U.S. 47, 63 Communications Reg. (P&F) 1442, 84 U.S.L.W. 4018, 2015 U.S. LEXIS 7999 (U.S. 2015).

25 Fla. L. Weekly Fed. S 567 (Directv, Inc. v. Imburgia) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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