High court says DirectTV can cut off class action lawsuit

The U.S. Supreme Court on Monday shot down a consumer class action over DirecTV’s early termination fees, reversing a California court ruling and signaling to states hostile to arbitration that there is no getting around the federal preference for it.

The justices by a 6-3 vote overturned a state ruling and threw out a class-action lawsuit against DirecTV over its termination fees for customers who canceled its service.

The court agreed to hear the case after a California appeals state court ruled that a clause in the satellite operator’s subscriber contract made arbitration unenforceable. It said that the Federal Arbitration Act (FAA) preempts state rules that keep class-arbitration bans from being enforced.“The fact that Concepcion was a closely divided case, resulting in a decision from which four justices dissented, ” has no bearing on the obligation of lower courts to follow its holding, Breyer wrote. At issue was language in the customer agreement that said contract disputes would be settled through arbitration unless “the law of your state” prevents it. Business groups and conservative legal organizations said the decision was another lesson for state courts.“The Supreme Court has once again reiterated its refusal to tolerate state-court hostility to arbitration, ” said Cory Andrews of the Washington Legal Foundation. Ginsburg is correct to say that the line of 5-4 arbitration cases has left us “disarmed”, because giant corporations are increasingly empowered to change the relationship between buyer and seller into one between predator and prey. Justice Clarence Thomas restated his view that that the Federal Arbitration Act applies only in federal court, and not to disputes in a state court.

“These decisions have predictably resulted in the deprivation of consumers’ rights to seek redress for losses”, Justice Ginsburg wrote in a dissent joined by Justice Sonia Sotomayor. In California state court, DIRECTV acknowledged that its arbitration clause was not enforceable in California, and the state Superior Court certified the case as a class action in May, 2011. “The Supreme Court has taken away Americans’ only right to obtain justice: their day in court”.

Breyer wrote the majority opinion (PDF) in DirecTV v. Imburgia. The Los Angeles Superior Court denied DIRECTV’s request and the company appealed.

Because the California judges did not “give due regard to the federal policy favoring arbitration”, their decision is reversed, he said.

We deserve better from our nation’s Supreme Court.