DIRECTV, Inc. v. Imburgia

DIRECTV, Inc. (plaintiff) entered into a service agreement with customers Amy Imburgia and Kathy Greiner (defendants). The contract contained an arbitration provision that waived class arbitration, providing that if the “law of your state” made the class waiver unenforceable, then the entire arbitration provision was unenforceable. The contract also provided that the arbitration provision was governed by the Federal Arbitration Act. Imburgia and Greiner brought an action against DIRECTV for damages for early-termination fees, which they claimed violated California law. DIRECTV sought to enforce the arbitration clause, but the state trial court denied the request, and DIRECTV appealed. The state appellate court believed that the validity of the arbitration clause hinged on the phrase “the law of your state.” In Discover Bank v. Superior Court, the California Supreme Court had held that waivers of class arbitration in consumer contracts of adhesion were unconscionable and unenforceable. However, in AT&T Mobility LLC v. Concepcion, the court invalidated Discover Bank, holding that it impeded the purpose of the Federal Arbitration Act and that the act preempted the Discover Bank rule. Despite the Concepcion holding, the state appellate court found that California law under Discover Bank would not have enforced the class-action waiver and refused to enforce the entire arbitration provision. DIRECTV appealed.