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Trump Judge Requires Individual Arbitration of Complaint Against Corporation for Making Illegal Telemarketing Calls and Prevents Class Action: Confirmed Judges, Confirmed Fears

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Trump Judge Requires Individual Arbitration of Complaint Against Corporation for Making Illegal Telemarketing Calls and Prevents Class Action: Confirmed Judges, Confirmed Fears

Confirmed Judges, Confirmed Fears” is a blog series documenting the harmful impact of President Trump’s judges on Americans’ rights and liberties. Cases in the series can be found by issue and by judge at this link.

Trump Fourth Circuit judge Allison Rushing wrote a 2-1 decision reversing a district court and requiring a consumer to arbitrate a complaint against DIRECTV for making unwanted and illegal telemarketing calls, even though she had never signed an arbitration agreement with that company. The August 2020 case, which also stopped the consumer from pursuing a class action to obtain broader relief, is Mey v. DIRECTV, LLC.

In 2017, Diana Mey filed a lawsuit against DIRECTV, contending that it had violated federal law by calling her cell phone to push DIRECTV and related products, even though her phone was registered on the national “do not call” list. She filed the suit as a class action to try to get relief on behalf of herself and many others who suffered the same problem.

DIRECTV claimed, however, that Mey could not file a class action and had to submit to arbitration of her individual claims because of an arbitration agreement she signed with AT&T Mobility when she entered into a cell-phone service contract with it in 2012. Although DIRECTV had nothing to do with AT&T Mobility in 2012, AT&T Inc. acquired DIRECTV in 2015, and now controls both DIRECTV and AT&T Mobility. DIRECTV claimed that the agreement Mey signed to arbitrate all claims and not file a class action concerning disputes with AT&T Mobility and its “affiliates” now also covers DIRECTV.

A district court rejected DIRECTV’s argument, finding that the dispute with that corporation “does not fall within the ambit of the arbitration agreement.” DIRECTV appealed.

In a 2-1 decision written by Trump judge Rushing, the Fourth Circuit reversed the district court and ruled that Mey could not file a class action and must instead arbitrate her individual claims against DIRECTV.  Rushing claimed that the provision in the arbitration agreement that covered “affiliates” also encompassed DIRECTV, even though there was no affiliation until three years after the agreement was signed and even though the services provided by the two companies are completely different. Based on the broad language of the contract, the general “presumption” that disputes should be arbitrated, and cases ruling that a company can become an “affiliate” of another company for arbitration agreement purposes after the agreement is signed, Rushing ruled that Mey must arbitrate her dispute with DIRECTV and could not file a class action lawsuit.

Judge Pamela Harris strongly dissented. DIRECTV provides satellite television services, she pointed out, “not cell-phone service.”  Although she agreed that a later affiliate could come under an arbitration agreement like this one, she explained that under “standard principles of contract law,” such a later affiliate must have some connection to the cell-phone service covered by the contract. A person signing the agreement, she went on “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.” The agreement language is clear enough, Harris continued, that “no presumption could override it.” Harris pointed out that the “only other case” to have addressed this specific issue, a district court case in California, reached “precisely” the conclusion that she and the district court did.

Judge Harris also noted the extraordinarily broad reach and consequences of Rushing’s opinion. AT&T Mobility has over 165 million subscribers who have signed arbitration agreements. That means that, according to the majority, “half the country is bound to arbitrate any dispute, occurring at any time, with any entity that ever is subsumed under the massive AT&T Inc. corporate umbrella.” And no AT&T Mobility customer can file a lawsuit against “any one” of such entities, which include Warner Brothers, HBO, and Turner, “for any reason,” in a class action or otherwise.

Trump judge Rushing’s troubling opinion thus does much more than harm Diana Mey and others who have received illegal DIRECTV telemarketing calls. It also accelerates the trend, begun by the Roberts Court, of harming consumers by forcing individual arbitration of complaints about corporate misconduct and preventing effective methods like class actions to seek relief.