Fifth Appellate Court justices have reversed St. Clair County Circuit Court Judge Robert LeChien in an eight-year-old DirecTV class action case that has been appealed twice since the late fee dispute was filed in 2000.
The court remanded Bess v. DirecTV with an order granting DirecTV's motion to compel arbitration and an order directing DirecTV to pay all related fees and costs over $125 charged by the American Arbitration Association individually or as a class.
Plaintiff Charlotte Bess, represented by Bradley Sylwester of David Danis Law Firm in St. Louis, originally claimed that DirecTV overcharged her and other customers for failing to pay their bills on time. DirecTV charged a $5 administrative fee for late payments.
Bess claimed this exceeded the company's actual costs and therefore constituted unjust enrichment in violation of the Illinois Consumer Fraud and Deceptive Business Practices Act.
"...[T]his court issued an opinion (July 10, 2007) in this case affirming the circuit court's judgment," Donovan wrote.
"After considering the merits of DirecTV's petition for rehearing, we now reverse."
In December 2000, DirecTV filed a motion to stay the case and compel arbitration. St. Clair County Circuit Judge Jan Fiss denied DirecTV's motion on March 27, 2003, concluding that the arbitration agreement was unconscionable and unenforceable because it did not provide for class arbitration.
DirecTV appealed. In an opinion issued Aug. 24, 2004, the appellate court reversed the circuit court's denial of DirecTV's motion to stay the proceedings and to compel arbitration, and it held that an arbitrator must determine whether the arbitration clause permits a class arbitration. The case was remanded to St. Clair County.
In its order of June 1, 2005, Judge LeChien found that Bess had abandoned the issue regarding waiver of her right to a jury trial and the court determined that the arbitration provision was procedurally and substantively unconscionable, and it denied DirecTV's motion to compel arbitration.
DirecTV appealed on grounds that the circuit court improperly analyzed the procedural unconscionability of the Customer Agreement as a whole. It claimed that challenges to the procedural unconscionability of the Customer Agreement should be determined by an arbitrator, not by the circuit court.
In the new opinion released Wednesday, Justice James Donovan wrote, "We conclude that the degree of procedural unconscionability regarding the arbitration provision in the Customer Agreement is insufficient to render the arbitration provision unenforceable on that basis."
Donovan pointed out that DirectTV's Customer Agreement begins with the following language, printed in capital letters and in boldface type:
"IF YOU DO NOT ACCEPT THESE TERMS, PLEASE NOTIFY US IMMEDIATELY AND WE WILL CANCEL YOUR SERVICE. IF YOU INSTEAD DECIDE TO RECEIVE OUR SERVICE, IT WILL MEAN THAT YOU ACCEPT THESE TERMS AND, ACCORDINGLY, THEY WILL BE LEGALLY BINDING ON YOU."
He also pointed out that DirecTV's dispute resolution provision in the Customer Agreement is identifed with the heading, "RESOLVING DISPUTES," which states in boldface, capital letters, "ARBITRATION MEANS YOU WAIVE YOUR RIGHT TO A JURY TRIAL."
"Nothing in this record suggests that the plaintiff could not locate, read, or understand these provisions," Donovan wrote.
He added that in this case "there are circumstances, including DirecTV's failure to inform Bess of the arbitration provision prior to or at the time that she purchased its satellite television service, that evidence a degree of procedural unconscionability."
"But, after considering the circumstances of the transaction, we find that the degree of procedural unconscionability in the Customer Agreement is insufficient to render the arbitration provision unenforceable," Donovan wrote.
He also concluded that evidence doesn't support the plaintiff's claim that class arbitration would be cost-prohibitive.
"...[T]the circuit court erred in determining that the arbitration provision was substantively unconscionable on that basis," he wrote,
When Bess signed up for DirecTV in November 1999 she received a copy of the company's Customer Agreement, which notified her of the late fee and contained a dispute-resolution clause.
That clause stated that "any Claim either of us asserts will be resolved only by binding arbitration."
The agreement also stated that it would take effect unless the customer canceled service.
Justice Stephen Spomer concurred. Justice Bruce Stewart concurred in part and dissented in part.
"I concur with the majority in its decision that the issue of procedural unconscionability should be determined by the court, not the arbitrator," Stewart wrote. "I also concur in its determination that the circuit court erred in finding that the arbitration provision of the Customer Agreement is substantively unconscionable because class arbitration would be cost-prohibitive for the plaintiff.
"I respectfully dissent, however, from the decision of the majority that the arbitration provision in the Customer Agreement is not procedurally unconscionable," he wrote.
"The arbitration provision was printed in single-spaced lines of very small font on the last two panels of a multipaneled pamphlet, which DirecTV mailed to Bess along with her monthly bill after Bess had already acquired satellite television equipment, the equipment had already been installed, and Bess had already contracted to receive DirecTV service.
"Accordingly, Bess had not seen and could not have seen the arbitration provision before entering into the contract with DirecTV."