Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—ArkSCt: Arbitration Denial, Class Certification Upheld in DIRECTV Early Cancellation Fee Dispute, (Oct 31, 2012)

By William Zale, J.D.

In an action asserting that DIRECTV’s enforcement and collection of its early cancellation fee was deceptive and unconscionable in violation of the Arkansas Deceptive Trade Practices Act (ADTPA), the Arkansas Supreme Court upheld orders denying of DIRECTV’s motion to compel arbitration and granting class action certification (DIRECTV, Inc. v. Murray, October 4, 2012, Corbin, D.).

Arbitration

The customer agreement containing the arbitration provision at issue states that the arbitration provision is governed by the Federal Arbitration Act (FAA). DIRECTV customer Jo Murray did not dispute that interstate commerce is involved. State and federal courts have concurrent jurisdiction to enforce an arbitration agreement pursuant to the terms of the FAA.

Although an arbitration provision is subject to the FAA, the court looked to state contract law to decide whether the parties’ agreement to arbitrate is valid. The court affirmed the circuit court’s ruling that “Murray terminated DIRECTV’s service so quickly after she could have possibly received the first billing statement, that the arbitration clause could not have been accepted by her continued use of DIRECTV’s services.”

Class Certification

DIRECTV contended that Murray could not satisfy the typicality and predominance requirements for a class challenge to a programming commitment agreement that she never was a party to. The short answer to this argument, according to the court, was that neither Murray nor the class presented a challenge to the programming commitment agreement. The ADTPA deceptive trade practice claim does not depend upon the existence of the programming commitment agreement, or any other agreement or contract, the court said. Instead, Murray’s claim derives from the DIRECTV’s conduct in exacting the fee, is typical of the class claim, and predominates over other individual issues that may arise in this case, according to the court.

As to numerosity, the court rejected DIRECTV’s argument that “even if Murray’s claims are somehow suited to class treatment, class certification would still be inappropriate because the class members uniformly agreed to arbitrate their disputes with DIRECTV.” Because DIRECTV’s motion to compel arbitration was filed with respect to Murray only and not to the putative class members, consideration of whether any putative class members agreed to arbitrate their claims would be inappropriate and advisory at this stage, according to the court.

DIRECTV argued that the class action requirement of superiority was not satisfied because the Arkansas Attorney General had already negotiated for the class the same relief sought in this case for the same conduct. The court found ruled that it was precluded from reaching this argument because to do so would require it to make findings of fact that the circuit court simply did not make, such as whether the classes are indeed the same and whether the relief granted is the same as the relief here sought. The argument presumes that the Attorney General’s settlement obtained the same relief for the same class as sought by Murray in this case, but there have been no such findings of fact entered by the circuit court. As the appellant, DIRECTV had the burden to obtain a ruling on this specific argument, and its failure to do so precluded review of this argument on appeal, the court concluded.

The case is No. 11-1061.

Robert S. Shafer (Friday, Eldredge & Clark, LLP) for DIRECTV, Inc. Scott E. Poynter (Emerson Poynter LLP) for Jo Murray.

Cases: StateUnfairTradePractices ArkansasNews