DIRECTV Consumer Class Action Against Overcharges May Go Forward, California Court Of Appeal Says; Discredited "Arbitration Clause" At Center of Controversy, Says Consumer Watchdog

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May 09, 2016, 05:17 ET

LOS ANGELES, May 9, 2016 /PRNewswire-USNewswire/ -- A class action lawsuit against DIRECTV in 2008 in Los Angeles Superior Court by California consumers who were forced to pay unlawful early termination fees of up to $480 may proceed, the California Court of Appeal has decided.

The Court ordered the case back to Superior Court to determine whether DIRECTV waived its right to enforce its fine-print arbitration agreement barring class action lawsuits. It's the same arbitration agreement that the United States Supreme Court upheld last December as enforceable in DIRECTV, Inc. v. Imburgia. If DIRECTV in fact waived its right to enforce the agreement, as consumer advocates say, DIRECTV customers will be able to go forward with their claims on a class action basis.

"DIRECTV took advantage of the civil justice system when it suited the company, but then wants to kick consumers out of the courts. It can't have it both ways," said Harvey Rosenfield. "This is an issue that the US Supreme Court did not decide, but it's a crucial point. And we are proud to say that our battle to protect California consumers will continue."

The decision comes as the Consumer Financial Protection Bureau (CFPB), an independent agency of the United States government, today ruled that banks can no longer use forced arbitration clauses to ban consumers from joining together in class action lawsuits. The CFPB recognized, after a long period of careful study, that forced arbitration by financial companies such as banks have had a profoundly negative impact on customers' rights, in that they effectively extinguished consumers' ability to seek meaningful relief and isolated wrongdoers from liability by blocking class claims, leaving consumers with no forum to seek justice. This new rule restores bank customers' access to justice, the same access to justice that DIRECTV's customers are seeking.

Controversial Arbitration Agreement At Center of Controversy Over Unlawful Fees

The eight-year battle to win justice for California consumers who DIRECTV overcharged – sometimes by withdrawing the unlawful fees directly out of consumers' checking accounts with no notice – was on its way to a trial in 2010.

At the time, DIRECTV's arbitration clause stated that it was "unenforceable" if "the law of your state" forbids customers from joining together in a class action even in arbitration. In California state court, DIRECTV acknowledged that under California state consumer protection laws, its arbitration clause was not enforceable, and the state Superior Court certified the case as a class action in May, 2011.

But DIRECTV reversed its position after the United States Supreme Court's Concepcion decision in April 2011 required courts to enforce the highly-controversial arbitration agreements, even those clearly unfair to consumers and employees. DIRECTV asked the courts to stop the pending trial and enforce its arbitration clause to prevent the case from going forward as a class action. DIRECTV sought to force every consumer to arbitrate against it on an individual basis—or to drop their claims, and let DIRECTV keep the unlawful profits. The California Court of Appeal declined to allow DIRECTV to do so. The company appealed to the US Supreme Court.

On December 14, 2015, the United States Supreme Court handed a victory to DIRECTV, reversing the California Court of Appeal's decision on a 6 to 3 vote.

As Justice Ginsburg explains in her dissent, "It has become routine, in a large part due to this Court's decisions, for powerful economic enterprises to write into their form contracts with consumers and employees no- class-action arbitration clauses.… Acknowledging the precedent so far set by the Court, I would take no further step to disarm consumers, leaving them without effective access to justice."

To this day, DIRECTV continues to employ the illegal practices. Its arbitration clause no longer contains an exception based on state law.

Arbitration clauses are becoming increasingly controversial. Today, the Consumer Financial Protection Bureau (CFPB) ruled that banks can no longer use forced arbitration clauses to ban consumers from joining together in class action lawsuits. This new rule restores bank customers' access to justice, the same access to justice that DIRECTV's customers are seeking.

Consumer Fight Began in 2008

DIRECTV, now part of AT&T, is the largest satellite TV provider in the U.S. with over 16 million customers.

The Imburgia case comprises two consolidated class action cases filed in state courts in California in 2008.

According to the class action complaint:

DIRECTV imposes a mandatory service term of eighteen to twenty four months; few customers are aware of this condition prior to signing up. The company routinely extends this "contractual obligation," often without notice, by another year or two if malfunctioning equipment needs to be replaced, or the customer decides to make a change to programming or other services.
Customers who terminate service are charged an "early cancellation fee" of up to $480, regardless of the reason, plus a "deactivation fee." Customers are forced to pay these penalties even if their equipment could not be installed, they moved and DIRECTV service isn't available in the new location, or the equipment simply stopped working.
DIRECTV often charges these cancellation fees directly to their customers' credit cards, or even takes the funds out of their checking accounts, without the knowledge or approval of the customer. Many customers who were victimized by this practice incurred substantial additional bank fees as a result. Many others could not afford the fee and were locked into poor or no service for years as a result.

Similar suits were filed in federal courts throughout the country. But the federal cases were dismissed in December 2013 after the Ninth Circuit Court of Appeal ordered that plaintiffs in those cases had to comply with DIRECTV's arbitration clause.

About the Legal Team

Consumer Watchdog is a non-profit, non-partisan public interest organization established in California in 1985. The organization fights to protect consumer rights in the courts, in the legislature, and through public education. It has offices in Los Angeles and Washington, D.C. More information: (310) 392-0522 or http://www.consumerwatchdog.org.

Evans Law Firm, Inc. is a San Francisco-based plaintiff's firm that has a special interest and focus in litigating class action and consumer fraud lawsuits, as well as elder abuse (financial and physical), and Qui Tam/false claims actions. Founding Attorney Ingrid M. Evans has successfully represented thousands of fraud victims in class actions against large corporations and has been named as a finalist for CA Consumer Attorney of the Year in 2009, 2012, and 2015. Ms. Evans commented, "This decision represents another denial of justice by the recent pro-business US Supreme Court. It will hurt consumers and will allow corporations to continue overcharging and imposing illegal and undisclosed penalties and charges upon its customers, while evading liability and accountability."
More information: call (415) 441-8669, or visit http://www.evanslaw.com

FEM Law Group (formerly the Law Offices of F. Edie Mermelstein), based in Southern California, is a boutique firm focusing on consumer fraud, financial elder abuse, civil litigation, and appellate law. Ms. Mermelstein has built a reputation as a tenacious advocate representing the vulnerable and under-served in an effort to level the playing field in pursuit of justice. The firm is led by F. Edie Mermelstein, who said, "Class actions have gotten a lot of bad press. Most people do not understand that the class action vehicle is a way to level the playing field for the little guy when big businesses such as DIRECTV hatch schemes to make hundreds of millions of dollars a few bucks at a time with little or no fear of being stopped. That's what happened in this case -- the legalization of theft." More information; call (213) 986-4300, or visit http://www.femlawgroup.com/

Paul Stevens, of Stevens, LC, argued the case at the California trial court and California Court of Appeal. He has served as lead counsel on behalf of consumers in more than 50 certified class action cases. More information: (310) 597-5107 or www.stevenslc.com

More information about the litigation, and links to the legal briefs in the case, can be found at: http://www.consumerwatchdog.org/case/fighting-unfair-directv-cancellation-policies-imburgia-and-greiner-v-directv

SOURCE Consumer Watchdog