FILED
NOT FOR PUBLICATION DEC 02 2013
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
JOSEPH LOMBARDI; KATHLEEN No. 10-56602
O’BRIEN; ROBERTA PIFER; EDWARD
PIFER; CHRISTINE SCHUESSLER; D.C. No. 8:09-ml-02093-AG-AN
CHRISTINE SLAKANS; GARY SMITH;
SANDRA JOHANNES; IRA
BOSHNACK, MEMORANDUM*
Plaintiffs-counter-defendants
- Appellees,
and
TRACY TWYMAN; ANNETTE
KAHALY; JOHN MULEA; MAUREEN
VAN METER; CAROLYN FORBES;
LOUIS M. WILSON; PAUL CANNON;
SEAN MURRAY; HOYT MCBROOM;
PATRICIA WILSON; DOROTHY
JONES; JOSHUA FOLKERTH;
RENATO CAPPUCCITTI; DAVID
WARD; KEITH HARPER; JANA
HARPER; PAUL BRICE; KAREN
BRICE; ALICE M. BRODE, individually
and on behalf of all others similarly
situated; JACK E. BRODE, individually
and on behalf of all others similarly
situated; EBEN PAGUIRIGAN,
individually and on behalf of all others
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
similarly situated; TARA MURRAY,
Plaintiffs-counter-defendants,
v.
DIRECTV, INC.,
Defendant-counter-claimant -
Appellant.
Appeal from the United States District Court
for the Central District of California
Andrew J. Guilford, District Judge, Presiding
Argued and Submitted November 5, 2013
Pasadena, California
Before: GOODWIN, FISHER and CLIFTON, Circuit Judges.
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 (2011). The plaintiffs
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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 (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, 834 P.2d 1148, 1152 (Cal. 1992); see also Wash. Mut.
Bank, FA v. Superior Court, 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
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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., 738
N.E.2d 610, 622-23 (Ill. App. Ct. 2000); Stevens/Leinweber/Sullens, Inc. v. Holm
Dev. & Mgmt., Inc., 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., 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
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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, 857 N.E.2d 250, 263 (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., 885 N.E.2d
488, 497-98 (Ill. App. Ct. 2008).
REVERSED AND REMANDED.
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