Greg Masters v. Directv, Inc.

FILED
NOT FOR PUBLICATION NOV 19 2009
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
GREG MASTERS, on behalf of himself No. 08-55825
and all others similarly situated,
D.C. No. 2:08-cv-00906-FMC-
Plaintiff - Appellee, VBK
v.
MEMORANDUM *
DIRECTV, INC., a California corporation;
et al.,
Defendants - Appellants.
JOHN MURPHY, on behalf of himself, No. 08-55830
and those similarly situated,
D.C. No. 2:07-cv-06465-FMC-
Plaintiff - Appellee, VBK
v.
DIRECTV, INC.; et al.,
Defendants - Appellants.
Appeal from the United States District Court
for the Central District of California
Florence-Marie Cooper, District Judge, Presiding
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Argued and Submitted November 2, 2009
Pasadena, California
Before: SCHROEDER, SILER, ** and IKUTA, Circuit Judges.
Under California’s choice of law analysis, as articulated in Nedlloyd Lines
B.V. v. Superior Court, 834 P.2d 1148, 1151–52 (Cal. 1992), California law
applies because California has both a fundamental policy against the enforceability
of class-action waivers and has a materially greater interest than Montana or
Georgia. A California appellate court has held that the class-action waiver at issue
is unconscionable under California law. See Cohen v. DirecTV, Inc., 48 Cal. Rptr.
3d 813, 823 (Cal. Ct. App. 2006). Additionally, multiple California courts have
held that California has a “fundamental policy” against enforcing this type of class-
action waiver. See, e.g., Klussman v. Cross Country Bank, 36 Cal. Rptr. 3d 728,
736, 741 (Cal. Ct. App. 2005); America Online, Inc. v. Superior Court, 108 Cal.
Rptr. 2d 699, 712 (Cal. Ct. App. 2001).
No California court has ruled that this fundamental policy applies only to
protecting California residents, and because we have no basis for creating such a
limitation, we must conclude that the “fundamental policy” prong of the Nedlloyd
**
The Honorable Eugene E. Siler, Jr., Senior United States Circuit
Judge for the Sixth Circuit, sitting by designation.
-2-
test is met in this case. In the foundational case on class action waivers in
California, Discover Bank v. Superior Court (Discover Bank I), 113 P.3d 1100
(Cal. 2005), the California Supreme Court held that class-action waivers that
“cheat large numbers of consumers out of individually small sums of money” are
unconscionable, “at least to the extent the obligation at issue is governed by
California law.” Id. at 1110. The California Supreme Court confined its holding
to class action waivers governed by California law, but made no similar limitation
as to California consumers; we decline to do so here. See also Brack v. Omni Loan
Co., Ltd., 80 Cal. Rptr. 3d 275, 278, 285–86 (Cal. Ct. App. 2008) (applying a
California “fundamental policy” in favor of Brack, a “nonresident member of the
military stationed at Camp Pendleton”).
California has a materially greater interest than Montana or Georgia in the
current dispute because California is home to the sole defendant and because the
appellees assert claims under California law alone. Cf. Discover Bank v. Superior
Court (Discover Bank II), 36 Cal. Rptr. 3d 456, 461–62 (Cal. Ct. App. 2005).
Moreover, California has “demonstrated by statute” id., its determination that class
action waivers are unenforceable. See Cal. Civ. Code § 1751 (2009). Because the
current dispute is brought as a nationwide class action, neither Montana nor
Georgia can claim any special interest in having its laws apply to this dispute; each
-3-
state in which putative class members reside, whether it is California, Montana, or
Georgia, has the same interest in protecting its own residents. See Discover Bank
II, 36 Cal. Rptr. 3d at 462.
Finally, this conclusion does not contradict Washington Mutual Bank v.
Superior Court, 15 P.3d 1071 (Cal. 2001), because that case did not address “the
enforceability of class action waivers in contracts of adhesion,” Discover Bank I,
113 P.3d at 1109 n.3, the situation alleged in this case.
AFFIRMED.
-4-