Antitrust Law Daily Arbitration clause in AT&T contract applied to DIRECTV
Monday, August 10, 2020

Arbitration clause in AT&T contract applied to DIRECTV

By Jody Coultas, J.D.

A district court erred in holding that an arbitration agreement included in a contract between DIRECTV and a customer did not cover the customer’s Telephone Consumer Protection Act claims.

The U.S. Court of Appeals in Richmond held that a mandatory arbitration clause in a subscriber’s cellular phone service contract with DIRECTV’s AT&T Mobility LLC affiliate covers disputes over DIRECTV marketing calls to a subscriber’s phone number listed on the National Do Not Call Registry. After a subscriber filed suit against DIRECTV for violating the Telephone Consumer Protection Act (TCPA), DIRECTV moved to arbitrate the claims under a customer agreement. A Wheeling, West Virginia district court found that the claims were outside the scope of the agreement. However, the appellate court disagreed based on the text of the agreement, the categories of claims included in the contract, and the instruction to interpret its provisions broadly. Therefore, the district court order denying the motion to compel arbitration was vacated and the case was remanded (Mey v. DirecTV, LLC, August 7, 2020, Rushing, A.).

In 2015, AT&T, Inc. acquired DIRECTV. In December 2017, the subscriber filed suit against DIRECTV, alleging that DIRECTV’s agents unlawfully made automated and prerecorded telemarketing calls to her AT&T Mobility phone number earlier that year when her number was listed on the National Do Not Call Registry. The district court denied DIRECTV’s motion to arbitrate the claims because the TCPA claims were not covered by the arbitration agreement. Specifically, a telephone call from DIRECTV was not an immediate, foreseeable result of the performance of the parties’ contractual duties or AT&T Mobility’s services. DIRECTV appealed.

The arbitration agreement in the customer agreement forbade class proceedings, required AT&T to pay at least $10,000 and double attorney fees for any claim found in the subscriber’s favor if the award is greater than the value of AT&T’s last written settlement offer, and required AT&T to pay all arbitration costs for any non-frivolous claim under $75,000, and preserving both parties’ right to bring a claim in small claims court as an alternative to arbitration.

Signing the wireless customer agreement and an acknowledgement expressly agreeing to the arbitration provision was sufficient to form an agreement to arbitrate, according to the court. The acknowledgement signed by the subscriber was sufficient to demonstrate assent to the arbitration agreement. It did not matter that the account was in the subscriber’s husband’s name and the court rejected the subscriber’s argument that she was merely an authorized user who purportedly signed on his behalf.

The consumer formed an agreement to arbitrate with DIRECTV, according to the court. The contract defined AT&T as including "subsidiaries, affiliates, agents, employees, predecessors in interest, successors, and assigns." The subscriber argued that the term "affiliate" should be limited to affiliates of AT&T Mobility existing at the time the arbitration agreement was executed. However, the contractual context suggested the opposite. The court concluded that DIRECTV is currently an affiliate of AT&T Mobility based on the ordinary meaning of the term. An affiliate is "a company effectively controlled by another or associated with others under common ownership or control." Because AT&T, Inc. has owned both AT&T Mobility and DIRECTV through other corporate entities, they are affiliates under common ownership or control. Also, in light of the forward-looking nature of the agreement, the court found it unlikely the parties intended to restrict the covered entities to those existing at the time the agreement was signed.

The TCPA claims regarding DIRECTV’s advertising calls fell within the scope of the arbitration agreement based on the text of the agreement, the categories of claims included in the contract, and the instruction to interpret its provisions broadly, according to the appellate court. The district court resolved the motion to compel by asking whether the arbitration agreement could be interpreted not to cover this dispute. However, precedent required the court to ask the opposite: whether the arbitration agreement is "‘susceptible of an interpretation that covers the asserted dispute.’" The arbitration agreement at issue in this case required arbitration of "all disputes and claim" including "claims arising out of or relating to any aspect of the relationship between us, whether based in contract, tort, statute, fraud, misrepresentation or any other legal theory." One "aspect of the relationship" between the subscriber and AT&T Mobility and its affiliates under was communication about matters of interest other than AT&T’s services, such as advertising affiliates’ products and services.

Finally, DIRECTV argued that the subscriber waived an unconscionability challenge to the arbitration agreement by failing to raise it in the district court, and that the agreement was neither procedurally nor substantively unconscionable. Because the district court did not address waiver or analyze unconscionability under West Virginia law, the appellate court noted that this issue was left for the parties and the district court to address on remand.

Dissent. Circuit Judge Pamela Harris dissented. "In my view, a reasonable person procuring cellphone service from AT&T Mobility and entering into the accompanying arbitration agreement would have no reason to believe she was signing away her right to sue any and all corporate entities that might later come under the same corporate umbrella as AT&T Mobility, regardless of whether they were connected in any way to the provision of her cell-phone service," she wrote.

This case is No. 18-1534.

Attorneys: John William Barrett (Bailey & Glasser, LLP) for Diana Mey. Daniel E. Jones (Mayer Brown, LLP) for DirecTV, LLC.

Companies: DirecTV, LLC; AT&T Inc.

MainStory: TopStory ConsumerProtection MarylandNews NorthCarolinaNews SouthCarolinaNews VirginiaNews WestVirginiaNews

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