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Dispute Resolution Keyed to Carbonneau, 8th Ed.
Cable Connection v. DIRECTV
Citation:
190 P.3d 586 (2008)Facts
DIRECTV, a satellite television broadcaster, contracted with retail dealers using a “residential dealer agreement” in 1996 and a “sales agency agreement” in 1998. Both agreements included arbitration clauses, but neither mentioned classwide arbitration. In 2001, dealers from four states filed a class action lawsuit in Oklahoma claiming DIRECTV wrongfully withheld commissions and assessed improper charges. After DIRECTV moved to compel arbitration, and following the U.S. Supreme Court’s decision in Bazzle, the matter was submitted to arbitration in Los Angeles. The arbitration clause required the arbitrators to apply California substantive law but follow federal procedural law and AAA rules. It also specifically stated that “the arbitrators shall not have the power to commit errors of law or legal reasoning, and the award may be vacated or corrected on appeal to a court of competent jurisdiction for any such error.” A majority of the arbitration panel decided that even though the contract was silent on classwide arbitration, such arbitration was permitted under California law. DIRECTV petitioned to vacate the award, arguing the arbitrators exceeded their authority and committed legal error. The trial court vacated the award, but the Court of Appeal reversed, holding that contractual provisions for expanded judicial review were unenforceable.
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