A California appeals court’s ruling against DIRECTV’s attempt to throw a consumer class action into arbitration should stand, Professor Richard Frankel wrote an amicus curiae brief filed with the U.S. Supreme Court on behalf of a number of arbitration and contract law scholars from across the country on July 24.

The California Court of Appeal ruled that DIRECTV customers who had sued the company for improperly charging early termination fees even after they moved to homes located outside its coverage area could pursue their claim in court rather than be forced into binding arbitration.

DIRECTV appealed the California ruling to the U.S. Supreme Court, contending that customers signed an arbitration agreement that prohibits them from pursuing class actions.  Attorneys for the company argue that federal arbitration law should trump state contract law.

The legal battle tests both the meaning of the arbitration provision and the authority of states to enforce contracts, Frankel said.

“Normally, a state court decides matters of state contract law,” Frankel said. “The brief emphasizes to the court that DIRECTV wants federal courts to overstep their authority, effectively disrespecting states in an area of state law.”

The outcome is important, Frankel said.  

“It could give federal courts ample ground to continue to override states in what’s a states’ rights issue,” Frankel said. “Especially for a court that cares about states’ rights, it’s important to keep that federalism role in perspective.”