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Trump Judge Tries to Require Individual Arbitration of Class Action Claims that Corporation Made Illegal Telemarketing Calls: Confirmed Judges, Confirmed Fears

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Trump Judge Tries to Require Individual Arbitration of Class Action Claims that Corporation Made Illegal Telemarketing Calls: 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 Ninth Circuit judge Mark Bennett tried to reverse a district court and rule that claims that DIRECTV made illegal telemarketing calls had to be arbitrated individually and could not form the basis of a class action against the corporation. Bennett’s dissent relied on  a 2-1 ruling to that effect by Trump judge Rushing in the Fourth Circuit. The majority, including a judge nominated by President Reagan, rejected Bennett’s view and affirmed the district court in its September 2020 decision in Revitch v DIRECTV.

In 2018, Jeremy Revitch filed a class action suit against DIRECTV, contending that the company had violated federal law by subjecting him and many others to “multiple telephone calls” to their cellphones trying to push them to subscribe. Revitch contended that he had no previous contact with the company and “certainly did not give DIRECTV permission to flood his cell phone with robocalls.”

Seven years earlier, Revitch had become an AT&T Mobility cellphone customer. The contract he signed included a clause agreeing to arbitrate all claims with AT&T Mobility and its “affiliates.”  Four years after the contract was signed, DIRECTV was acquired by AT&T Mobility’s parent company, AT&T Inc., so DIRECTV filed a motion to compel Revitch to arbitrate his individual claim, and to dismiss the class action complaint, because it had become an AT&T “affiliate.”

In a 27-page opinion, the district court rejected DIRECTV’s motion, concluding that the Revitch-AT&T Mobility contract clearly “did not reflect an intent to arbitrate the claim” against DIRECTV, which was not an AT&T affiliate until four years after the contract was signed. The case was appealed to the Ninth Circuit,

In a 2-1 opinion by Reagan nominee Diarmuid O’Scannlain, the appellate court affirmed the district court’s ruling. The majority explained that under California law, looking to the “reasonable expectations” of the parties at the time of the contract, there was no valid agreement to arbitrate between DIRECTV and Revitch since DIRECTV was not an affiliate of AT&T Mobility at the time the agreement was signed.  The majority specifically rejected the contrary opinion by Trump judge Rushing of the Fourth Circuit, noting that Rushing’s opinion would improperly require consumers to arbitrate “any and all disputes with (yet-unknown) corporate entities that might later become affiliated with the service provider,” and that this would be so even where neither the later-affiliated entity (in this case DIRECTV) nor the dispute “bear any relation to the services provided under the initial agreement.” Judge O’Scannlain also pointed out that DIRECTV’s motion should be denied under the express language of the Federal Arbitration Act (FAA), because the dispute did not “arise out of” the original contract with AT&T Mobility, as required by the FAA.

Trump judge Bennett dissented. He relied on arguments similar to those in Trump judge Rushing’s decision and his interpretation of the language of the arbitration clause itself. He claimed that the Supreme Court’s decision in the Lamps Plus case dictated that if there were any ambiguities about the scope of arbitration, they must be resolved “in favor of arbitration,” and that the district court’s decision should be reversed.

As the majority explained, however, Lamps Plus was a limited ruling, holding only that ambiguous terns in a contract should be interpreted in favor of arbitration when the ambiguity is used to “impose class arbitration in the absence of the parties’ consent.” In contrast, the majority went on, the court was simply determining that the “mutual intent” of the parties based on their “reasonable expectations at the time of the contract” did not support the conclusion that all disputes between Revitch and all future affiliates of AT&T were intended to be arbitrated, even if the subject had nothing to do with the original contract.

The majority recognized that its decision created a “circuit split” on the issue of the scope of the arbitration cause in contracts like the AT&T Mobility agreement, which the Supreme Court may well decide to resolve. It is unfortunately all too possible that the Court, which now includes three Trump justices, will adopt the same pro-corporate,   anti-consumer interpretation that Trump judges Bennett and Rushing have urged. For now, at least, Bennett’s views are in the minority in the Ninth Circuit, and Revitch can proceed with his class action to obtain broad relief against the illegal telemarketing by DIRECTV.