U.S. Supreme Court Upholds DIRECTV's Arbitration Agreement

Volume 14, Issue 28
December 15, 2015

US Supreme Court

The U.S. Supreme Court continued to protect arbitration agreements by ruling on Monday, December 14, 2015 in the case of DIRECTV v. Imburgia, that federal law governed the consumer arbitration agreement used by DIRECTV.

This case, discussed in Volume 14, Issue 23 of KZA's Employer Report, involved DIRECTV's use of arbitration agreements with consumers to require that all claims relating to its service agreement be decided by binding arbitration on an individual basis. The arbitration agreement specifically prohibited class action arbitrations. In an attempt to work around certain states that banned class action waivers, such as California, the agreement provided that in these states, the entire agreement was inapplicable. However, the agreement still provided that the Federal Arbitration Act (FAA) governed its terms.

The California court had refused to enforce DIRECTV's arbitration agreement and instead allowed the consumer to continue her lawsuit in court against DIRECTV. The Supreme Court disagreed and held that the consumer was required to arbitrate her claims against DIRECTV as provided for in the arbitration agreement.

This ruling is helpful to employers that require arbitration agreements with their employees because it affirms and strengthens the long-standing federal policy, under the FAA, to favor arbitration. To read the Court's decision, click here.

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.