On June 26, 2013, in Brown v. DirecTV, LLC, et al., Case No. 2:12-cv-08382, Judge Gee, sitting in the Central District of California, granted DirecTV’s motion to compel arbitration, rejecting two efforts by the Plaintiff to keep the matter in federal court: (1) that TCPA claims did not “arise under or relate to” the agreement or service provided; and (2) an exception clause should be read to preclude claims under both the Communications Act of 1934 and a separate portion identified in that section, 47 U.S.C. 605.
Plaintiff ordered his DirecTV satellite service online, requiring him to review and accept the terms and conditions of service. Id. at * 2. One of the terms of the contract contained an arbitration provision stating that “You and DIRECTV agree that any dispute arising under or relating to your agreement or service with DIRECTV, which cannot be resolved informally, will be resolved through binding arbitration as fully set forth in the DIRECTV Customer Agreement (a copy is sent with your first bill but may also be viewed at DIRECTV.com). Arbitration means you waive your right to a jury trial.” Id. at * 3. He also signed a form during installation related to the DIRECTV Equipment Lease containing a similar arbitration provision. Id. at *4. Finally, the Customer Agreement also contained a clause that excluded certain statutory claims, stating: “Notwithstanding the foregoing… any dispute involving a violation of the Communications Act of 1934, 47 U.S.C. 605, the Digital Millennium Copyright Act, 17 U.S.C. 1201, the Electronic Communications Privacy Act, 18 U.S.C. 2510-2521 or any other statement or law governing theft of service, may be decided only a court of competent jurisdiction.” Id. at * 5. After failing to make payments on the contract, DirecTV, through a third party, began making collection calls to Brown. In turn, Brown brought suit under the Telephone Consumer Protection Act (“TCPA”) and the California UCL.
The Court’s Decision
In addition to other typical arguments raised related to arbitration clauses (lack of knowledge, unconscionability), Brown also argued that the TCPA claims should not be covered because they do not arise under or relate to the Agreement or services and/or the matter was excepted, as the clause should be read to exclude claims under both the Communications Act of 1934 and 47 U.S.C. 605. In rejecting the first argument, the court noted that under Ninth Circuit law, a court should interpret “arising under” narrowly, while interpreting “relating to” more broadly. The court held that the “relating to” language was narrowly tailored, and further observed that the contract specifically contemplated collection calls as part of the contract. Id. at * 9-11. In rejecting the second argument, the court opined that taking Plaintiff’s interpretation would render the exceptions “nonsensical,” as it would read as a highly broad exclusion, followed by an extremely narrow exclusion contained within the previously broad exclusion. Id. at *11.
As the law continues to evolve related to arbitration clauses in consumer contracts, companies should take time to review the language of their agreements in light of decisions such as Brown. Specifically, they should review whether their consumer contracts contain appropriate limiting language and whether any exclusions noted could be read broadly enough, in a sensible way, to exclude TCPA claims.