Many “Imaginative Arguments” Rejected To Get To Simple Conclusion
I’ve had the unpleasant experience of purchasing electronic equipment, only to discover later that the seller had booked the sale as a lease. Therefore, our next case, Murphy v. DirectTV, Inc., No. 11-57163 (9th Cir. July 30, 2013) (Wardlaw, J. author 3:0) (published) struck a familiar chord (except that I solved my problem without a lawsuit).
Plaintiffs bought DirectTV service equipment through Best Buy, and sued because transactions plaintiffs understood to be sales were treated by defendants as lease transactions, rather than as outright sales. Plaintiffs sued for state law violations, claiming a scheme to deceive customers, and defendants sought to arbitrate. DirectTV’s Customer Agreement required arbitration, but Best Buy was not a party to that agreement. The district court ordered plaintiffs to arbitrate with DirectTV and with Best Buy. Plaintiffs appealed.
The case includes discussion of the retroactivity of AT&T Mobility v. Concepcion, 131 S.Ct. 1740 (2011) (holding the Federal Arbitration Act preempts California’s rule rendering unenforceable, as unconscionable, arbitration provisions in consumer contracts that waive class action proceedings) as well as equitable estoppel, agency, and third-party beneficiary arguments typically raised by nonsignatories to arbitration agreements, such as Best Buy, who want to arbitrate.
The bottom line? “Notwithstanding the parties’ many imaginative legal arguments, in this case they remain bound by the agreements they made and not by any they did not make.” The district court’s order compelling arbitration with DirectTV was affirmed, and the order compelling arbitration with Best Buy – the nonsignatory – was reversed.