Howse v. DirecTV, LLC

Citations: 221 F. Supp. 3d 1339; 2016 U.S. Dist. LEXIS 150372; 2016 WL 6433018Docket: Case No: 6:16-cv-594-Orl-40TBS

Court: District Court, M.D. Florida; October 31, 2016; Federal District Court

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Defendant DirecTV, LLC's Amended Motion to Compel Arbitration regarding Plaintiff Trevor Howse's claims under the Electronic Fund Transfer Act (EFTA) and the Florida Consumer Collection Practices Act has been granted. Howse ordered a two-year satellite television subscription on January 7, 2015, but canceled it on July 20, 2015. Following cancellation, he was billed a $340 early termination fee and had a debit of $219.81 made from his account despite revoking authorization. Howse filed suit on April 7, 2016, alleging unauthorized debiting.

The court finds that parties can agree to arbitration, which is favored by law, and that a party cannot be compelled to arbitrate disputes not agreed upon. Arbitration clauses are governed by state contract law, and courts must stay proceedings pending arbitration if a valid clause exists. Howse does not dispute the applicability of the arbitration clause but argues against it on two grounds: first, that the clause is unconscionable under Florida law, requiring both procedural and substantive unconscionability for invalidation; and second, that his EFTA claim is non-arbitrable due to a congressional mandate. The court will address these issues to determine the validity of the arbitration clause.

Both procedural and substantive unconscionability must be present to invalidate an arbitration agreement, but they do not require equal levels of presence. The Florida Supreme Court employs a sliding scale approach: a more substantively oppressive arbitration clause requires less procedural oppression to be deemed unconscionable, and vice versa. However, if either component is absent, the clause cannot be considered unconscionable. 

In the case presented, Howse argues procedural unconscionability, claiming he was not informed of the arbitration clause before subscribing to DirecTV, as the door-to-door salesman failed to provide a copy of the contract. He contends that he was unaware of the arbitration requirement and faced penalties if he wished to reject it. 

However, the record indicates that Howse was given multiple opportunities to review the contract and its terms. He received an order confirmation email immediately after subscribing, which included links to the contract and terms and conditions, advising him to review them. Additionally, he was informed that a copy would be sent within 24 hours and that he could change or cancel his order before installation. On the day of installation, Howse signed a digital work order acknowledging receipt of the contract. Thus, he had ample opportunity to read and reject the arbitration clause prior to service commencement, undermining his claim of procedural unconscionability.

DirecTV would not have imposed an early cancellation fee on Howse if he had canceled his order prior to January 10, 2015, when service began, allowing him a three-day window to cancel without penalty. The arbitration clause in the contract is not procedurally unconscionable due to a lack of notice or opportunity to reject it without penalty. Howse argues that the contract is an adhesion contract, indicating that he had no negotiating power, thus being compelled to accept the terms, including the arbitration clause. Florida courts recognize that while adhesion contracts may suggest a lack of meaningful choice, their mere presence does not automatically imply procedural unconscionability. For such a finding, additional factors, such as deceptive sales practices or obscured contract language, must exist. Courts have upheld adhesion contracts when consumers have alternative service options. DirecTV acknowledges its contract is likely an adhesion contract, but asserts that this alone does not imply procedural unconscionability. The contract is well-structured, with a clearly labeled arbitration clause, and Howse has not claimed difficulty in understanding the contract terms. The contract explicitly states that customers can reject it and seek services elsewhere. Consequently, the court concludes that the arbitration clause is enforceable, as Howse has not established procedural unconscionability.

Howse contends that his claim under the Electronic Fund Transfer Act (EFTA) should not be subject to arbitration due to a congressional mandate that overrides the federal policy favoring arbitration as established by the Federal Arbitration Act (FAA). Typically, the FAA mandates enforcement of arbitration agreements for statutory claims unless there is a clear congressional intent to preclude such waivers. To demonstrate this intent, a party must show that Congress intended to limit judicial remedies for the statutory rights involved, which can be found in the statute's text, legislative history, or any inherent conflict with the statute's objectives.

Howse cites 15 U.S.C. § 1693m(g), which allows claims under the EFTA to be brought in any competent court, and 15 U.S.C. § 1693z, which prohibits waivers of rights conferred by the EFTA. He argues that a mandatory arbitration clause in his contract with DirecTV waives his right to pursue his claim in court under § 1693m(g). However, this interpretation is flawed; § 1693m(g) merely identifies federal district courts as a forum for EFTA claims, as clarified in case law.

Further, the Supreme Court has previously ruled that similar statutory provisions do not grant substantive rights to access courts but provide a venue for liability. Consequently, Howse also misinterprets § 1693z, which addresses the non-waiver of substantive rights and remedies but does not pertain to the ability to bring claims in federal court. Statutory interpretation principles support that Congress did not intend to prevent the waiver of judicial remedies for EFTA claims. The language used in the statute is permissive ("may"), indicating a lack of intent to create a substantive right to litigate EFTA claims in federal court or to prohibit arbitration.

Section 1693m(g) allows for non-judicial resolution of EFTA (Electronic Funds Transfer Act) violations, including arbitration. The Supreme Court has consistently upheld the application of the Federal Arbitration Act (FAA) in cases involving statutory rights that do not explicitly prohibit arbitration, suggesting that congressional silence on arbitration in the EFTA indicates its permissibility. Courts have ruled that EFTA claims are arbitrable, as evidenced in cases such as Johnson v. W. Suburban Bank, Byrd v. SunTrust Bank, and Guadagno v. E*Trade Bank. Howse did not prove that Congress intended to eliminate judicial remedy waivers for EFTA violations, leading to the conclusion that his claim against DirecTV is subject to arbitration as per their agreement. Consequently, the Court granted the Defendant’s Amended Motion to Compel Arbitration, ordered the case proceedings to be stayed, and instructed the Clerk to close the file while retaining jurisdiction for post-arbitration motions. Additionally, the parties are required to submit joint status reports regarding arbitration progress every ninety days, starting January 30, 2017. Howse’s billing statement supports the timeline of his service beginning on January 10, 2015.