Plaintiffs v DirecTV
Class Action Lawsuit Against DirecTV Regarding "Leased Receiver" Fees Allowed to Proceed : Motion to Compel Arbitration Denied
Court denies DirecTV's Motion to Compel Arbitration thereby allowing putative class action that alleges DirecTV improperly assessed "Leased Receiver" fees and collected excessive "taxes" to move forward.
In an order dated October 28, 2009, United States District Court Judge Charles A. Pannell, Jr. denied a motion by DirecTV to compel arbitration in the case of Jones v. DirecTV, Inc. (Case Number 1:09-CV-1036-CAP). The class action lawsuit claims that DirecTV and The DirecTV Group, which are headquartered in El Segundo, California, have improperly assessed monthly "Leased Receiver" fees upon customers who obtained their receiver from an authorized DirecTV dealer. Judge Pannell also denied DirecTV's motion to stay the case, thereby allowing the plaintiffs to proceed with discovery.
The lawsuit has been pursued on behalf of named plaintiff Andrea Jones, one of DirecTV's over 18 million subscribers. According to the terms of DirecTV's contract with customers such as Ms. Jones, a lease fee in the amount of $4.99 per month is assessed for each DirecTV receiver being used by the customer. According to the contract, however, customers are supposed to receive a $4.99 monthly credit to their account for the first (primary) receiver. Ms. Jones' lawsuit alleges that DirecTV has failed to provide the monthly credit according to the terms of the contract.
In addition, the Complaint alleges that DirecTV also improperly charged its customers sales tax on these improper "Leased Receiver" fees. The suit claims that DirecTV also collects excessive amounts of sales tax on the leasing fees by charging customers for taxes on the credited amount and collecting a greater percentage rate of tax than allowed under state law. The plaintiffs allege that DirecTV is liable for all damages that have resulted from its conduct. Moreover, the Complaint seeks injunctive relief to prevent DirecTV from continuing to assess these improper charges.
DirecTV responded to the lawsuit by moving the Court to compel arbitration in accordance with DirecTV's customer agreement. Had this motion been granted, the case would have been removed from the judicial system and litigated in a forum more favorable to DirecTV. Enforcement of the arbitration provision of the customer agreement also would have prevented the pursuit of the case as a class action on behalf of all of the customers harmed. Judge Pannell found that the class action waiver contained within the customer agreement rendered the arbitration clause substantively unconscionable and therefore unenforceable.
The case is pending in the United States District Court for the Northern District of Georgia.
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