In Imburgia v. DirecTV, Inc., ___ Cal.App.4th ___ (April 7, 2014), the California Court of Appeal (Second Appellate District, Division One) affirmed the order of the Los Angeles County Superior Court (Judge Wiley) denying defendant’s motion to dismiss or stay a class action and instead compel arbitration of the class representatives’ claims on an individual basis.
Plaintiffs filed a class action complaint against defendant asserting claims for violations of the Consumer Legal Remedies Act and unfair competition law, Bus. & Prof. Code, § 17200 et seq., alleging that defendant had improperly charged early termination fees to its customers. In April 2011, the trial court certified the class as to one of plaintiffs’ theories. A week later, the United States Supreme Court issued its decision in AT&T Mobility LLC v. Concepcion, 563 U.S. __ (2011), holding that the Federal Arbitration Act (“FAA”) preempts state rules holding class action waivers in arbitration agreements to be unconscionable and, therefore, unenforceable. Because plaintiffs had signed arbitration agreements containing such waivers, defendant soon after moved to stay or dismiss plaintiffs’ action, decertify the class, and compel arbitration of plaintiffs’ claims. The trial court refused and defendant appealed.
The appellate court affirmed, finding that language in the arbitration agreements at issue required the court to disregard the FAA when ruling on enforceability. Specifically, the agreements stated that “[i]f . . . the law of your state would find this agreement to dispense with class arbitration procedures unenforceable, then this [waiver] is unenforceable.” According to the court, this language was reasonably interpreted to mean that state laws barring class action waivers – such as those in California – will be enforced, even the waivers would otherwise be enforceable due to the preemptive effect of the FAA.