Conn. federal judge sides with DirecTV, says class action over surcharges should be arbitrated

By Jessica Karmasek | Feb 5, 2016

NEW HAVEN, Conn. (Legal Newsline) - Last month, a Connecticut federal judge sided with DirecTV in a class action filed against the satellite television provider for allegedly misrepresenting the cost of its services.

Judge Janet C. Hall for the U.S. District Court for the District of Connecticut, in her Jan. 12 ruling, said plaintiff Jonathan Ferrie’s claims fall within the scope of the mandatory arbitration provision to which he agreed.

Ferrie, a resident of Prospect, Conn., and class representative, filed his complaint in the federal court last March.

In July 2013, he purchased satellite television equipment and services from DirecTV. He claims that without his knowledge, he was subjected to the company’s “unfair and deceptive” practice of imposing a surcharge on its Connecticut customers.

“Ferrie was tricked into believing that the surcharge was an additional tax imposed by the State of Connecticut,” the March 19, 2015 complaint stated.

According to his lawsuit, Connecticut imposes a tax on companies that provide one-way transmission of video programming by satellite to subscribers in the state.

In particular, Connecticut law obligated DirecTV to pay a quarterly tax of 5 percent upon “gross earnings” from the transmission of video programming by satellite to subscribers in the state.

“Rather than absorb this tax as one of the many costs of doing business, DirecTV elected to impose this cost on Connecticut customers as a surcharge in an unfair and deceptive manner,” Ferrie wrote.

According to his lawsuit, the class included “thousands” who have purchased satellite television goods or services from DirecTV from March 19, 2012 to present.

The class action sought actual and punitive damages, attorneys’ fees, costs, prejudgment interest, equitable relief and injunctive relief.

In response, DirecTV filed a motion to dismiss and compel arbitration. Ferrie, in turn, sought a motion to amend his complaint, alleging that DirecTV violated state law by illegally recording a phone call between him and the company.

DirecTV opposed the motion to amend, arguing that the new claim also is subject to mandatory arbitration.

Hall, in her 33-page ruling last month, granted the company’s motion.

The judge explained that the company’s customer agreement contains clear language stating that, in the event that it and a customer cannot resolve a dispute informally, “any legal or equitable claim… will be resolved only in binding arbitration.”

“The undisputed evidence supports the conclusion that a reasonable person in Ferrie’s position would have known about the arbitration provision and what conduct would have constituted assent to provision,” Hall wrote.

“Even though DirecTV never explicitly told Ferrie during their initial telephone call that it would be emailing Ferrie the Customer Agreement, and that the Customer Agreement contained additional contractual terms, Ferrie was nevertheless placed on inquiry notice.

“Ferrie was on actual notice that he would be receiving the Order Confirmation Email, and the Order Confirmation Email explicitly refers to the existence of additional terms, as well as to the Customer Agreement. Further, the Customer Agreement itself explicitly calls to the customer’s attention the existence of the arbitration provision.”

Hall, in her ruling, seemed surprised that Ferrie did not pay closer to attention to his email -- even after being told not to ignore messages sent to him by DirecTV.

“Given how important price was to Ferrie, and the fact that the price agreed to over the phone was not the final price, but rather only the base price before the imposition of taxes and fees, a reasonable person in Ferrie’s position would not think it reasonable to ignore all emails he received from DirecTV,” she wrote.

“Because Ferrie did not take the steps necessary to reject the arbitration provision, but rather took the steps that DirecTV told him would constitute assent, the court concludes that Ferrie assented to the arbitration agreement.”

Ferrie’s claims, including that the customer agreement itself is unconscionable, are subject to arbitration and not judicial resolution, Hall said.

In a Jan. 21 order, she entered judgment in favor of DirecTV, closing the case.

Ferrie filed a notice of appeal with the court Thursday. In it, he said he plans to appeal to the U.S. Court of Appeals for the Second Circuit.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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