A class-action suit filed by a group of California DirecTV (NYSE: T) subscribers over early cancellation fees has presented a vexing issue for the justices of the U.S. Supreme Court.
According to published reports, initial arguments in the case appear to have split Supreme Court justices on how the case should be decided. In their hearing of the topic this week, some justices seemed to worry why they were dipping their toe into a relatively minor issue. Other justices worried that they would set a precedent that would encourage additional lawsuits over arbitration between customers and companies.
It was widely expected in March, when the Supreme Court agreed to hear the case, that it would order the situation to be decided in arbitration. The High Court's conservative justices, after all, have long been skeptical of class-action suits, which they see as nest-feathering for trial lawyers and costly for companies like DirecTV.
California's more liberal state courts, meanwhile, tend to believe that consumers won't receive fair rulings in arbitration processes.
The DirecTV case has been championed by Santa Monica, Calif.-based Consumer Watchdog, which sued the satellite operator in 2008 claiming customers were wrongly charged up to $480 after they moved into locations they said could not receive satellite service.
DirecTV lawyers note that recent Supreme Court rulings call for individual arbitration in such disputes. They specifically cite a 2011 case filed in San Diego, Calif., by a group of consumers that said AT&T Mobility overcharged them. The High Court reversed a 9th Circuit Court claim and threw out the class action claim.
But the DirecTV complaint sits among five California-based class-action suits that are proving more vexing for the Supreme Court to rule on. According to the Los Angeles Times, Justice Antonin Scalia said California's state judges, including those ruling on the DirecTV matter, are using legal "gimmicks" to circumvent clauses that would mandate the case to arbitration.
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