Opinion
Argued and Submitted, Pasadena, California November 5, 2013
NOT FOR PUBLICATION. (See Federal Rule of Appellate Procedure Rule 32.1)
Appeal from the United States District Court for the Central District of California. D.C. No. 8:09-ml-02093-AG-AN. Andrew J. Guilford, District Judge, Presiding.
For JOSEPH LOMBARDI, KATHLEEN O'BRIEN, ROBERTA PIFER, EDWARD PIFER, CHRISTINE SCHUESSLER, GARY SMITH, Plaintiffs-counter-defendants - Appellees: Blake Muir Harper, Attorney, Hulett Harper Stewart LLP, San Diego, CA; Jahan C. Sagafi, Outten & Golden LLP, New York, NY; Kristen Law Sagafi, Lieff Cabraser Heimann & Bernstein LLP, San Francisco, CA; Jonathan D. Selbin, Attorney, Lieff Cabraser Heimann & Bernstein, LLP, New York, NY.
For CHRISTINE SLAKANS, Plaintiff-counter-defendant - Appellee: Robert S. Green, Attorney, Nicole D. Reynolds, Esquire, Attorney, Green & Noblin, P.C., Larkspur, CA; Blake Muir Harper, Attorney, Hulett Harper Stewart LLP, San Diego, CA; Kristen Law Sagafi, Lieff Cabraser Heimann & Bernstein LLP, San Francisco, CA; Jahan C. Sagafi, Outten & Golden LLP, New York, NY; Jonathan D. Selbin, Attorney, Lieff Cabraser Heimann & Bernstein, LLP, New York, NY.
For TRACY TWYMAN, RENATO CAPPUCCITTI, DAVID WARD, KEITH HARPER, JANA HARPER, Plaintiffs-counter-defendants: Ingrid M. Evans, Attorney, The Evans Law Firm, San Francisco, CA; Blake Muir Harper, Attorney, Hulett Harper Stewart LLP, San Diego, CA.
For ANNETTE KAHALY, JOHN MULEA, MAUREEN VAN METER, CAROLYN FORBES, LOUIS M. WILSON, SEAN MURRAY, PATRICIA WILSON, DOROTHY JONES, JOSHUA FOLKERTH, PAUL BRICE, KAREN BRICE, EBEN PAGUIRIGAN, individually and on behalf of all others similarly situated, TARA MURRAY, Plaintiffs-counter-defendants: Blake Muir Harper, Attorney, Hulett Harper Stewart LLP, San Diego, CA.
For PAUL CANNON, Plaintiff-counter-defendant: Blake Muir Harper, Attorney, Hulett Harper Stewart LLP, San Diego, CA; Kristen Law Sagafi, Lieff Cabraser Heimann & Bernstein LLP, San Francisco, CA.
For HOYT MCBROOM, Plaintiff-counter-defendant: Blake Muir Harper, Attorney, Hulett Harper Stewart LLP, San Diego, CA; Vincent Ian Parrett, Attorney, MOTLEY RICE LLC, Mt. Pleasant, SC; Kristen Law Sagafi, Lieff Cabraser Heimann & Bernstein LLP, San Francisco, CA.
For SANDRA JOHANNES, IRA BOSHNACK, Plaintiffs-counter-defendants - Appellees: Ingrid M. Evans, Attorney, The Evans Law Firm, San Francisco, CA; Blake Muir Harper, Attorney, Hulett Harper Stewart LLP, San Diego, CA; Kristen Law Sagafi, Lieff Cabraser Heimann & Bernstein LLP, San Francisco, CA; Jahan C. Sagafi, Outten & Golden LLP, New York, NY; Jonathan D. Selbin, Attorney, Lieff Cabraser Heimann & Bernstein, LLP, New York, NY.
For ALICE M. BRODE, individually and on behalf of all othes similarly situated, JACK E. BRODE, individually and on behalf of all others similarly situated, Plaintiffs-counter-defendants; William E. Applegate, IV, Esquire, Attorney, YARBOROUGH APPLEGATE LLP, Mt. Pleasant, SC; Lindsay J. Foster, Esquire, Blake Muir Harper, Attorney, Hulett Harper Stewart LLP, San Diego, CA; William Stephen Norton, Attorney, Vincent Ian Parrett, Attorney, Joseph F. Rice, Motley Rice LLC, Mount Pleasant, SC.
For DIRECTV, INC., Defendant-counter-claimant - Appellant: Robyn Eileen Bladow, Attorney, Melissa Dawn Ingalls, Attorney, Shaun Paisley, Kirkland & Ellis LLP, Los Angeles, CA.
Before: GOODWIN, FISHER and CLIFTON, Circuit Judges.
This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3.
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, 179 L.Ed.2d 742 (2011). The plaintiffs 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, 186 L.Ed.2d 417 (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, 3 Cal.4th 459, 11 Cal.Rptr.2d 330, 834 P.2d 1148, 1152 (Cal. 1992); see also Wash. Mut. Bank, FA v. Superior Court, 24 Cal.4th 906, 103 Cal.Rptr.2d 320, 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 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., 316 Ill.App.3d 1182, 738 N.E.2d 610, 622-23, 250 Ill.Dec. 394 (Ill.App.Ct. 2000); Stevens/Leinweber/Sullens, Inc. v. Holm Dev. & Mgmt., Inc., 165 Ariz. 25, 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., 592 Pa. 323, 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 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, 223 Ill.2d 1, 857 N.E.2d 250, 263, 306 Ill.Dec. 157 (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., 381 Ill.App.3d 229, 885 N.E.2d 488, 497-98, 319 Ill.Dec. 217 (Ill.App.Ct. 2008).
REVERSED AND REMANDED.