DIRECTV, Inc. v. Imburgia , 135 S. Ct. 1547 ( 2015 )

(Slip Opinion) OCTOBER TERM, 2015 1
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
DIRECTV, INC. v. IMBURGIA ET AL.
CERTIORARI TO THE COURT OF APPEAL OF CALIFORNIA,
SECOND APPELLATE DISTRICT, DIVISION ONE
No. 14–462. Argued October 6, 2015—Decided December 14, 2015
Petitioner DIRECTV, Inc., and its customers entered into a service
agreement that included a binding arbitration provision with a class-
arbitration waiver. It specified that the entire arbitration provision
was unenforceable if the “law of your state” made class-arbitration
waivers unenforceable. The agreement also declared that the arbi-
tration clause was governed by the Federal Arbitration Act. At the
time that respondents, California residents, entered into that agree-
ment with DIRECTV, California law made class-arbitration waivers
unenforceable, see Discover Bank v. Superior Court, 36 Cal. 4th 148,
113 P. 3d 1100. This Court subsequently held in AT&T Mobility LLC
v. Concepcion, 563 U. S. 333, however, that California’s Discover
Bank rule was pre-empted by the Federal Arbitration Act, 9 U. S. C.
§2.
When respondents sued petitioner, the trial court denied
DIRECTV’s request to order the matter to arbitration, and the Cali-
fornia Court of Appeal affirmed. The court thought that California
law would render class-arbitration waivers unenforceable, so it held
the entire arbitration provision was unenforceable under the agree-
ment. The fact that the Federal Arbitration Act pre-empted that Cal-
ifornia law did not change the result, the court said, because the par-
ties were free to refer in the contract to California law as it would
have been absent federal pre-emption. The court reasoned that the
phrase “law of your state” was both a specific provision that should
govern more general provisions and an ambiguous provision that
should be construed against the drafter. Therefore, the court held,
the parties had in fact included California law as it would have been
without federal pre-emption.
Held: Because the California Court of Appeal’s interpretation is pre-
2 DIRECTV, INC. v. IMBURGIA
Syllabus
empted by the Federal Arbitration Act, that court must enforce the
arbitration agreement. Pp. 5–11.
(a) No one denies that lower courts must follow Concepcion, but
that elementary point of law does not resolve the case because the
parties are free to choose the law governing an arbitration provision,
including California law as it would have been if not pre-empted.
The state court interpreted the contract to mean that the parties did
so, and the interpretation of a contract is ordinarily a matter of state
law to which this Court defers, Volt Information Sciences, Inc. v.
Board of Trustees of Leland Stanford Junior Univ., 489 U. S. 468,
474. The issue here is not whether the court’s decision is a correct
statement of California law but whether it is consistent with the
Federal Arbitration Act. Pp. 5–6.
(b) The California court’s interpretation does not place arbitration
contracts “on equal footing with all other contracts,” Buckeye Check
Cashing, Inc. v. Cardegna, 546 U. S. 440, 443, because California
courts would not interpret contracts other than arbitration contracts
the same way. Several considerations lead to this conclusion.
First, the phrase “law of your state” is not ambiguous and takes its
ordinary meaning: valid state law. Second, California case law—that
under “general contract principles,” references to California law in-
corporate the California Legislature’s power to change the law retro-
actively, Doe v. Harris, 57 Cal. 4th 64, 69–70, 302 P. 3d 598, 601–
602—clarifies any doubt about how to interpret it. Third, because
the court nowhere suggests that California courts would reach the
same interpretation in any other context, its conclusion appears to re-
flect the subject matter, rather than a general principle that would
include state statutes invalidated by other federal law. Fourth, the
language the court uses to frame the issue focuses only on arbitra-
tion. Fifth, the view that state law retains independent force after
being authoritatively invalidated is one courts are unlikely to apply
in other contexts. Sixth, none of the principles of contract interpreta-
tion relied on by the California court suggests that other California
courts would reach the same interpretation elsewhere. The court ap-
plied the canon that contracts are construed against the drafter, but
the lack of any similar case interpreting similar language to include
invalid laws indicates that the antidrafter canon would not lead Cali-
fornia courts to reach a similar conclusion in cases not involving arbi-
tration. Pp. 6–10.
225 Cal. App. 4th 338, 170 Cal. Rptr. 3d 190, reversed and remanded.
BREYER, J., delivered the opinion of the Court, in which ROBERTS,
C. J., and SCALIA, KENNEDY, ALITO, and KAGAN, JJ., joined. THOMAS, J.,
filed a dissenting opinion. GINSBURG, J., filed a dissenting opinion, in
which SOTOMAYOR, J., joined.
Cite as: 577 U. S. ____ (2015) 1
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash-
ington, D. C. 20543, of any typographical or other formal errors, in order
that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
_________________
No. 14–462
_________________
DIRECTV, INC., PETITIONER v. AMY
IMBURGIA, ET AL.
ON WRIT OF CERTIORARI TO THE COURT OF APPEAL OF
CALIFORNIA, SECOND APPELLATE DISTRICT
[December 14, 2015]
JUSTICE BREYER delivered the opinion of the Court.
The Federal Arbitration Act states that a “written pro-
vision” in a contract providing for “settle[ment] by arbitra-
tion” of “a controversy . . . arising out of ” that “contract . . .
shall be valid, irrevocable, and enforceable, save upon
such grounds as exist at law or in equity for the revocation
of any contract.” 9 U. S. C. §2. We here consider a Cali-
fornia court’s refusal to enforce an arbitration provision in
a contract. In our view, that decision does not rest “upon
such grounds as exist . . . for the revocation of any con-
tract,” and we consequently set that judgment aside.
I
DIRECTV, Inc., the petitioner, entered into a service
agreement with its customers, including respondents Amy
Imburgia and Kathy Greiner. Section 9 of that contract
provides that “any Claim either of us asserts will be re-
solved only by binding arbitration.” App. 128. It then sets
forth a waiver of class arbitration, stating that “[n]either
you nor we shall be entitled to join or consolidate claims in
arbitration.” Id., at 128–129. It adds that if the “law of
your state” makes the waiver of class arbitration unen-
2 DIRECTV, INC. v. IMBURGIA
Opinion of the Court
forceable, then the entire arbitration provision “is unen-
forceable.” Id., at 129. Section 10 of the contract states
that §9, the arbitration provision, “shall be governed by
the Federal Arbitration Act.” Ibid.
In 2008, the two respondents brought this lawsuit
against DIRECTV in a California state court. They seek
damages for early termination fees that they believe vio-
late California law. After various proceedings not here
relevant, DIRECTV, pointing to the arbitration provision,
asked the court to send the matter to arbitration. The
state trial court denied that request, and DIRECTV
appealed.
The California Court of Appeal thought that the critical
legal question concerned the meaning of the contractual
phrase “law of your state,” in this case the law of Califor-
nia. Does the law of California make the contract’s class-
arbitration waiver unenforceable? If so, as the contract
provides, the entire arbitration provision is unenforceable.
Or does California law permit the parties to agree to waive
the right to proceed as a class in arbitration? If so, the
arbitration provision is enforceable.
At one point, the law of California would have made the
contract’s class-arbitration waiver unenforceable. In 2005,
the California Supreme Court held in Discover Bank v.
Superior Court, 36 Cal. 4th 148, 162–163, 113 P. 3d 1100,
1110, that a “waiver” of class arbitration in a “consumer
contract of adhesion” that “predictably involve[s] small
amounts of damages” and meets certain other criteria not
contested here is “unconscionable under California law
and should not be enforced.” See Cohen v. DirecTV, Inc.,
142 Cal. App. 4th 1442, 1446–1447, 48 Cal. Rptr. 3d 813,
815–816 (2006) (holding a class-action waiver similar to
the one at issue here unenforceable pursuant to Discover
Bank); see also Consumers Legal Remedies Act, Cal. Civ.
Code Ann. §§1751, 1781(a) (West 2009) (invalidating class-
action waivers for claims brought under that statute). But
Cite as: 577 U. S. ____ (2015) 3
Opinion of the Court
in 2011, this Court held that California’s Discover Bank
rule “ ‘stands as an obstacle to the accomplishment and
execution of the full purposes and objectives of Congress’ ”
embodied in the Federal Arbitration Act. AT&T Mobility
LLC v. Concepcion, 563 U. S. 333, 352 (2011) (quoting
Hines v. Davidowitz, 312 U. S. 52, 67 (1941)); see Sanchez
v. Valencia Holding Co., LLC, 61 Cal. 4th 899, 923–924,
353 P. 3d 741, 757 (2015) (holding that Concepcion applies
to the Consumers Legal Remedies Act to the extent that it
would have the same effect as Discover Bank). The Fed-
eral Arbitration Act therefore pre-empts and invalidates
that rule. 563 U. S., at 352; see U. S. Const., Art. VI, cl. 2.
The California Court of Appeal subsequently held in this
case that, despite this Court’s holding in Concepcion, “the
law of California would find the class action waiver unen-
forceable.” 225 Cal. App. 4th 338, 342, 170 Cal. Rptr. 3d
190, 194 (2014). The court noted that Discover Bank had
held agreements to dispense with class-arbitration proce-
dures unenforceable under circumstances such as these.
225 Cal. App. 4th, at 341, 170 Cal. Rptr. 3d, at 194. It
conceded that this Court in Concepcion had held that the
Federal Arbitration Act invalidated California’s rule. 225
Cal. App. 4th, at 341, 170 Cal. Rptr. 3d, at 194. But it
then concluded that this latter circumstance did not
change the result—that the “class action waiver is unen-
forceable under California law.” Id., at 347, 170 Cal. Rptr.
3d, at 198.
In reaching that conclusion, the Court of Appeal re-
ferred to two sections of California’s Consumers Legal
Remedies Act, §§1751, 1781(a), rather than Discover Bank
itself. See 225 Cal. App. 4th, at 344, 170 Cal. Rptr. 3d, at
195. Section 1751 renders invalid any waiver of the right
under §1781(a) to bring a class action for violations of that
Act. The Court of Appeal thought that applying “state law
alone” (that is, those two sections) would render unen-
forceable the class-arbitration waiver in §9 of the contract.
4 DIRECTV, INC. v. IMBURGIA
Opinion of the Court
Id., at 344, 170 Cal. Rptr. 3d, at 195. But it nonetheless
recognized that if it applied federal law “then the class
action waiver is enforceable and any state law to the
contrary is preempted.” Ibid. As far as those sections
apply to class-arbitration waivers, they embody the Dis-
cover Bank rule. The California Supreme Court has rec-
ognized as much, see Sanchez, supra, at 923–924, 353
P. 3d, at 757, and no party argues to the contrary. See
Supp. Brief for Respondents 2 (“The ruling in Sanchez
tracks respondents’ position precisely”). We shall conse-
quently refer to the here-relevant rule as the Discover
Bank rule.
The court reasoned that just as the parties were free in
their contract to refer to the laws of different States or
different nations, so too were they free to refer to Califor-
nia law as it would have been without this Court’s holding
invalidating the Discover Bank rule. The court thought
that the parties in their contract had done just that. And
it set forth two reasons for believing so.
First, §10 of the contract, stating that the Federal Arbi-
tration Act governs §9 (the arbitration provision), is a
general provision. But the provision voiding arbitration if
the “law of your state” would find the class-arbitration
waiver unenforceable is a specific provision. The court
believed that the specific provision “ ‘is paramount to’ ” and
must govern the general. 225 Cal. App. 4th, at 344, 170
Cal. Rptr. 3d, at 195 (quoting Prouty v. Gores Technology
Group, 121 Cal. App. 4th 1225, 1235, 18 Cal. Rptr. 3d 178,
185–186 (2004); brackets omitted).
Second, the court said that “ ‘a court should construe
ambiguous language against the interest of the party that
drafted it.’ ” 255 Cal. App. 4th, at 345, 170 Cal. Rptr. 3d,
at 196 (quoting Mastrobuono v. Shearson Lehman Hutton,
Inc., 514 U. S. 52, 62 (1995)). DIRECTV had drafted the
language; to void the arbitration provision was against its
interest. Hence the arbitration provision was void. The
Cite as: 577 U. S. ____ (2015) 5
Opinion of the Court
Court of Appeal consequently affirmed the trial court’s
denial of DIRECTV’s motion to enforce the arbitration
provision.
The California Supreme Court denied discretionary
review. App. to Pet. for Cert. 1a. DIRECTV then filed a
petition for a writ of certiorari, noting that the Ninth
Circuit had reached the opposite conclusion on precisely
the same interpretive question decided by the California
Court of Appeal. Murphy v. DirecTV, Inc., 724 F. 3d 1218,
1226–1228 (2013). We granted the petition.
II
No one denies that lower courts must follow this Court’s
holding in Concepcion. The fact that Concepcion was a
closely divided case, resulting in a decision from which
four Justices dissented, has no bearing on that undisputed
obligation. Lower court judges are certainly free to note
their disagreement with a decision of this Court. But the
“Supremacy Clause forbids state courts to dissociate
themselves from federal law because of disagreement with
its content or a refusal to recognize the superior authority
of its source.” Howlett v. Rose, 496 U. S. 356, 371 (1990);
cf. Khan v. State Oil Co., 93 F. 3d 1358, 1363–1364 (CA7
1996), vacated, 522 U. S. 3 (1997). The Federal Arbitra-
tion Act is a law of the United States, and Concepcion is
an authoritative interpretation of that Act. Consequently,
the judges of every State must follow it. U. S. Const., Art.
VI, cl. 2 (“[T]he Judges in every State shall be bound” by
“the Laws of the United States”).
While all accept this elementary point of law, that point
does not resolve the issue in this case. As the Court of
Appeal noted, the Federal Arbitration Act allows parties to
an arbitration contract considerable latitude to choose
what law governs some or all of its provisions, including
the law governing enforceability of a class-arbitration
waiver. 225 Cal. App. 4th, at 342–343, 170 Cal. Rptr. 3d,
6 DIRECTV, INC. v. IMBURGIA
Opinion of the Court
at 194. In principle, they might choose to have portions of
their contract governed by the law of Tibet, the law of pre-
revolutionary Russia, or (as is relevant here) the law of
California including the Discover Bank rule and irrespec-
tive of that rule’s invalidation in Concepcion. The Court of
Appeal decided that, as a matter of contract law, the
parties did mean the phrase “law of your state” to refer to
this last possibility. Since the interpretation of a contract
is ordinarily a matter of state law to which we defer, Volt
Information Sciences, Inc. v. Board of Trustees of Leland
Stanford Junior Univ., 489 U. S. 468, 474 (1989), we must
decide not whether its decision is a correct statement of
California law but whether (assuming it is) that state law
is consistent with the Federal Arbitration Act.
III
Although we may doubt that the Court of Appeal has
correctly interpreted California law, we recognize that
California courts are the ultimate authority on that law.
While recognizing this, we must decide whether the deci-
sion of the California court places arbitration contracts “on
equal footing with all other contracts.” Buckeye Check
Cashing, Inc. v. Cardegna, 546 U. S. 440, 443 (2006). And
in doing so, we must examine whether the Court of Ap-
peal’s decision in fact rests upon “grounds as exist at law
or in equity for the revocation of any contract.” 9 U. S. C.
§2. That is to say, we look not to grounds that the Califor-
nia court might have offered but rather to those it did in
fact offer. Neither this approach nor our result “steps
beyond Concepcion” or any other aspect of federal arbitra-
tion law. See post, at 9 (GINSBURG, J., dissenting) (here-
inafter the dissent).
We recognize, as the dissent points out, post, at 4, that
when DIRECTV drafted the contract, the parties likely
believed that the words “law of your state” included Cali-
fornia law that then made class-arbitration waivers unen-
Cite as: 577 U. S. ____ (2015) 7
Opinion of the Court
forceable. But that does not answer the legal question
before us. That is because this Court subsequently held in
Concepcion that the Discover Bank rule was invalid. Thus
the underlying question of contract law at the time the
Court of Appeal made its decision was whether the “law of
your state” included invalid California law. We must now
decide whether answering that question in the affirmative
is consistent with the Federal Arbitration Act. After
examining the grounds upon which the Court of Appeal
rested its decision, we conclude that California courts
would not interpret contracts other than arbitration con-
tracts the same way. Rather, several considerations lead
us to conclude that the court’s interpretation of this arbi-
tration contract is unique, restricted to that field.
First, we do not believe that the relevant contract lan-
guage is ambiguous. The contract says that “[i]f . . . the
law of your state would find this agreement to dispense
with class arbitration procedures unenforceable, then this
entire Section 9 [the arbitration section] is unenforceable.”
App. 129. Absent any indication in the contract that this
language is meant to refer to invalid state law, it presum-
ably takes its ordinary meaning: valid state law. Indeed,
neither the parties nor the dissent refer us to any contract
case from California or from any other State that in-
terprets similar language to refer to state laws authorita-
tively held to be invalid. While we recognize that the
dissent believes this phrase to be “ambiguous,” post, at 7,
9, or “anomalous,” post, at 10, we cannot agree with that
characterization.
Second, California case law itself clarifies any doubt
about how to interpret the language. The California
Supreme Court has held that under “general contract
principles,” references to California law incorporate the
California Legislature’s power to change the law retroac-
tively. See Doe v. Harris, 57 Cal. 4th 64, 69–70, 302 P. 3d
598, 601–602 (2013) (holding that plea agreements, which
8 DIRECTV, INC. v. IMBURGIA
Opinion of the Court
are governed by general contract principles, are “ ‘ “deemed
to incorporate and contemplate not only the existing law
but the reserve power of the state to amend the law or
enact additional laws” ’ ” (quoting People v. Gipson, 117
Cal. App. 4th 1065, 1070, 12 Cal. Rptr. 3d 478, 481
(2004))). And judicial construction of a statute ordinarily
applies retroactively. Rivers v. Roadway Express, Inc., 511
U. S. 298, 312–313 (1994). As far as we are aware, the
principle of California law announced in Harris, not the
Court of Appeal’s decision here, would ordinarily govern
the scope of phrases such as “law of your state.”
Third, nothing in the Court of Appeal’s reasoning sug-
gests that a California court would reach the same inter-
pretation of “law of your state” in any context other than
arbitration. The Court of Appeal did not explain why
parties might generally intend the words “law of your
state” to encompass “invalid law of your state.” To the
contrary, the contract refers to “state law” that makes the
waiver of class arbitration “unenforceable,” while an in-
valid state law would not make a contractual provision
unenforceable. Assuming—as we must—that the court’s
reasoning is a correct statement as to the meaning of “law
of your state” in this arbitration provision, we can find
nothing in that opinion (nor in any other California case)
suggesting that California would generally interpret
words such as “law of your state” to include state laws
held invalid because they conflict with, say, federal labor
statutes, federal pension statutes, federal antidiscrimina-
tion laws, the Equal Protection Clause, or the like. Even
given our assumption that the Court of Appeal’s conclu-
sion is correct, its conclusion appears to reflect the subject
matter at issue here (arbitration), rather than a general
principle that would apply to contracts using similar
language but involving state statutes invalidated by other
federal law.
Fourth, the language used by the Court of Appeal fo-
Cite as: 577 U. S. ____ (2015) 9
Opinion of the Court
cused only on arbitration. The court asked whether “law
of your state” “mean[s] ‘the law of your state to the extent
it is not preempted by the [Federal Arbitration Act],’ or
‘the law of your state without considering the preemptive
effect, if any of the [Federal Arbitration Act].’ ” 225 Cal.
App. 4th, at 344, 170 Cal. Rptr. 3d, at 195. Framing the
question in such terms, rather than in generally applica-
ble terms, suggests that the Court of Appeal could well
have meant that its holding was limited to the specific
subject matter of this contract—arbitration.
Fifth, the Court of Appeal reasoned that invalid state
arbitration law, namely the Discover Bank rule, main-
tained legal force despite this Court’s holding in Concep-
cion. The court stated that “[i]f we apply state law alone
. . . to the class action waiver, then the waiver is unen-
forceable.” 225 Cal. App. 4th, at 344, 170 Cal. Rptr. 3d, at
195. And at the end of its opinion it reiterated that “[t]he
class action waiver is unenforceable under California law,
so the entire arbitration agreement is unenforceable.” Id.,
at 347, 170 Cal. Rptr. 3d, at 198. But those statements do
not describe California law. See Concepcion, 563 U. S., at
344, 352; Sanchez, 61 Cal. 4th, at 923–924, 353 P. 3d, at
757. The view that state law retains independent force
even after it has been authoritatively invalidated by this
Court is one courts are unlikely to accept as a general
matter and to apply in other contexts.
Sixth, there is no other principle invoked by the Court
of Appeal that suggests that California courts would reach
the same interpretation of the words “law of your state”
in other contexts. The court said that the phrase “law
of your state” constitutes “ ‘a specific exception’ ” to the
agreement’s “ ‘general adoption of the [Federal Arbitration
Act].’ ” 225 Cal. App. 4th, at 344, 170 Cal. Rptr. 3d, at 195.
But that tells us nothing about how to interpret the words
“law of your state” elsewhere. It does not answer the
relevant question: whether those words encompass laws
10 DIRECTV, INC. v. IMBURGIA
Opinion of the Court
that have been authoritatively held invalid. Cf. Prouty,
121 Cal. App. 4th, at 1235, 18 Cal. Rptr. 3d, at 185–186
(specific words govern only “when a general and a particu-
lar provision are inconsistent”).
The court added that it would interpret “ ‘ambiguous
language against the interest of the party that drafted it,’ ”
namely DIRECTV. 225 Cal. App. 4th, at 345, 170 Cal.
Rptr. 3d, at 196 (quoting Mastrobuono, 514 U. S., at 62).
The dissent adopts a similar argument. See post, at 7–9.
But, as we have pointed out, supra, at 8, were the phrase
“law of your state” ambiguous, surely some court would
have construed that term to incorporate state laws invali-
dated by, for example, federal labor law, federal pension
law, or federal civil rights law. Yet, we have found no
such case. Moreover, the reach of the canon construing
contract language against the drafter must have limits, no
matter who the drafter was. The fact that we can find no
similar case interpreting the words “law of your state” to
include invalid state laws indicates, at the least, that the
antidrafter canon would not lead California courts to
reach a similar conclusion in similar cases that do not
involve arbitration.
* * *
Taking these considerations together, we reach a con-
clusion that, in our view, falls well within the confines of
(and goes no further than) present well-established law.
California’s interpretation of the phrase “law of your state”
does not place arbitration contracts “on equal footing with
all other contracts,” Buckeye Check Cashing, Inc., 546
U. S., at 443. For that reason, it does not give “due regard
. . . to the federal policy favoring arbitration.” Volt Infor-
mation Sciences, 489 U. S., at 476. Thus, the Court of
Appeal’s interpretation is pre-empted by the Federal
Arbitration Act. See Perry v. Thomas, 482 U. S. 483, 493,
n. 9 (1987) (noting that the Federal Arbitration Act pre-
Cite as: 577 U. S. ____ (2015) 11
Opinion of the Court
empts decisions that take their “meaning precisely from
the fact that a contract to arbitrate is at issue”). Hence,
the California Court of Appeal must “enforc[e]” the arbi-
tration agreement. 9 U. S. C. §2.
The judgment of the California Court of Appeal is re-
versed, and the case is remanded for further proceedings
not inconsistent with this opinion.
It is so ordered.
Cite as: 577 U. S. ____ (2015) 1
THOMAS, J., dissenting
SUPREME COURT OF THE UNITED STATES
_________________
No. 14–462
_________________
DIRECTV, INC., PETITIONER v. AMY
IMBURGIA, ET AL.
ON WRIT OF CERTIORARI TO THE COURT OF APPEAL OF
CALIFORNIA, SECOND APPELLATE DISTRICT
[December 14, 2015]
JUSTICE THOMAS, dissenting.
I remain of the view that the Federal Arbitration Act
(FAA), 9 U. S. C. §1 et seq., does not apply to proceedings
in state courts. See Allied-Bruce Terminix Cos. v. Dobson,
513 U. S. 265, 285–297 (1995) (dissenting opinion); see
also Preston v. Ferrer, 552 U. S. 346, 363 (2008) (same);
Buckeye Check Cashing, Inc. v. Cardegna, 546 U. S. 440,
449 (2006) (same); Green Tree Financial Corp. v. Bazzle,
539 U. S. 444, 460 (2003) (same); Doctor’s Associates, Inc.
v. Casarotto, 517 U. S. 681, 689 (1996) (same). Thus, the
FAA does not require state courts to order arbitration.
Accordingly, I would affirm the judgment of the California
Court of Appeal.
Cite as: 577 U. S. ____ (2015) 1
GINSBURG, J., dissenting
SUPREME COURT OF THE UNITED STATES
_________________
No. 14–462
_________________
DIRECTV, INC., PETITIONER v. AMY
IMBURGIA, ET AL.
ON WRIT OF CERTIORARI TO THE COURT OF APPEAL OF
CALIFORNIA, SECOND APPELLATE DISTRICT
[December 14, 2015]
JUSTICE GINSBURG, with whom JUSTICE SOTOMAYOR
joins, dissenting.
It has become routine, in a large part due to this Court’s
decisions, for powerful economic enterprises to write into
their form contracts with consumers and employees no-
class-action arbitration clauses. The form contract in this
case contains a Delphic provision stating that “if the law of
your state” does not permit agreements barring class
arbitration, then the entire agreement to arbitrate be-
comes unenforceable, freeing the aggrieved customer to
commence class-based litigation in court. This Court
reads that provision in a manner most protective of the
drafting enterprise. I would read it, as the California
court did, to give the customer, not the drafter, the benefit
of the doubt. Acknowledging the precedent so far set by
the Court, I would take no further step to disarm consum-
ers, leaving them without effective access to justice.
I
This case began as a putative class action in state court
claiming that DIRECTV, by imposing hefty early-
termination fees, violated California consumer-protective
legislation, including the Consumers Legal Remedies Act
(CLRA), Cal. Civ. Code Ann. §1750 et seq. (West 2015).
App. 58. DIRECTV did not initially seek to stop the law-
2 DIRECTV, INC. v. IMBURGIA
GINSBURG, J., dissenting
suit and compel bilateral arbitration. See id., at 52–53.
The reason for DIRECTV’s failure to oppose the litigation
is no mystery. The version of DIRECTV’s service agree-
ment applicable in this case (the 2007 version) requires
consumers to arbitrate all disputes and to forgo class
arbitration. Id., at 128–129. If the relevant provision
stopped there, the Court’s recent precedent, see American
Express Co. v. Italian Colors Restaurant, 570 U. S. ___
(2013); AT&T Mobility LLC v. Concepcion, 563 U. S. 333(2011), would control, and DIRECTV could have resisted
the lawsuit. But DIRECTV’s form contract continued:
The entire arbitration clause is unenforceable “[i]f . . . the
law of your state would find” unenforceable the agree-
ment’s class-arbitration prohibition. App. 129. At the time
plaintiff-respondents Imburgia and Greiner commenced
their court action, class-arbitration bars like the one in
DIRECTV’s agreement were per se unenforceable as un-
conscionable under the law of California. See Discover
Bank v. Superior Court, 36 Cal. 4th 148, 162–163, 113
P. 3d 1100, 1110 (2005).
Nearly three years into the litigation, this Court held in
Concepcion, 563 U. S., at 338–351, that the Federal Arbi-
tration Act (FAA), 9 U. S. C. §1 et seq., preempts state
rules that render class-arbitration bans unenforceable.
DIRECTV then moved to halt the long-pending lawsuit
and compel bilateral arbitration. App. to Pet. for Cert. 4a.
The California Superior Court denied DIRECTV’s motion,
No. BC398295 (Super. Ct. Los Angeles Cty., Cal., Jan. 26,
2012), App. to Pet. for Cert. 17a–20a, and the Califor-
nia Court of Appeal affirmed. The Court of Appeal first
observed that, under the California law DIRECTV con-
fronted when it drafted the clause in question, provisions
relinquishing the right to proceed under the CLRA on
behalf of a class would not be enforced. 225 Cal. App. 4th
338, 342, 170 Cal. Rptr. 3d 190, 194 (2014). The question
dispositive of DIRECTV’s motion, the California court
Cite as: 577 U. S. ____ (2015) 3
GINSBURG, J., dissenting
explained, trains on the meaning of the atypical contrac-
tual phrase “the law of your state”: “does it mean ‘the law
of your state to the extent it is not preempted by the FAA,’
or ‘the law of your state without considering the preemp-
tive effect, if any, of the FAA’?” Id., at 344, 170 Cal. Rptr.
3d, at 195.
In resolving this question, the California court empha-
sized that DIRECTV drafted the service agreement, giving
its customers no say in the matter, and reserving to itself
the right to modify the agreement unilaterally at any
time. Id., at 345, 170 Cal. Rptr. 3d, at 196. See also Brief
for Respondents 1–2. DIRECTV used the same take-it-or-
leave-it contract everywhere it did business. Ibid. “[ T]o
protect the party who did not choose the language from an
unintended or unfair result,” the California court applied
“the common-law rule of contract interpretation that a
court should construe ambiguous language against the
interest of the party that drafted it.” 225 Cal. App. 4th, at
345, 170 Cal. Rptr. 3d, at 196 (quoting Mastrobuono v.
Shearson Lehman Hutton, Inc., 514 U. S. 52, 62–63
(1995)). That rule was particularly appropriate in this
case, the court reasoned, for, “as a practical matter, it
seems unlikely that plaintiffs anticipated in 2007 that the
Supreme Court would hold in 2011 that the FAA
preempts” state-law protection against compelled class-
arbitration waivers. 255 Cal. App. 4th, at 345, 170 Cal.
Rptr. 3d, at 196 (internal quotation marks omitted).
II
The Court today holds that the California Court of
Appeal interpreted the language in DIRECTV’s service
agreement so unreasonably as to suggest discrimination
against arbitration in violation of the FAA. Ante, at 8. As
I see it, the California court’s interpretation of the “law of
your state” provision is not only reasonable, it is entirely
right.
4 DIRECTV, INC. v. IMBURGIA
GINSBURG, J., dissenting
Arbitration is a matter of “consent, not coercion.” Stolt-
Nielsen S. A. v. AnimalFeeds Int’l Corp., 559 U. S. 662,
681 (2010) (internal quotation marks omitted). The FAA
“requires courts to enforce privately negotiated agree-
ments to arbitrate, like other contracts, in accordance with
their terms.” Volt Information Sciences, Inc. v. Board of
Trustees of Leland Stanford Junior Univ., 489 U. S. 468,
478 (1989). “[T]he interpretation of private contracts is
ordinarily a question of state law, which this Court does
not sit to review.” Id., at 474. See also First Options of
Chicago, Inc. v. Kaplan, 514 U. S. 938, 944 (1995) (when
interpreting arbitration agreements, courts “should apply
ordinary state-law principles that govern the formation of
contracts”). Historically, this Court has respected state-
court interpretations of arbitration agreements. See
Mastrobuono, 514 U. S., at 60, n. 4; Volt Information
Sciences, 489 U. S., at 484. Indeed, in the more than 25
years between Volt Information Sciences and this case, not
once has this Court reversed a state-court decision on the
ground that the state court misapplied state contract law
when it determined the meaning of a term in a particular
arbitration agreement. Today’s decision is a dangerous
first.
Beyond genuine debate, DIRECTV originally meant the
“law of your state” clause to refer to its customer’s home
state law untouched by federal preemption. As DIRECTV
explained in a state-court filing, the clause prevented
enforcement of the arbitration agreement in those States,
California among them, where the class-arbitration pro-
scription was unenforceable as a matter of state law, while
requiring bilateral arbitration in States that did not out-
law purported waivers of class proceedings. App. 52 (“The
Customer Agreement between DIRECTV and its custom-
ers provides that the customer’s home state laws will
govern the relationship, and that any disputes will be
resolved in individual arbitration if the customer’s home
Cite as: 577 U. S. ____ (2015) 5
GINSBURG, J., dissenting
state laws enforce the parties’ arbitration agreement.”
(emphasis added)).
According to DIRECTV, because the class-arbitration
ban, post-Concepcion, is enforceable in all States, this case
must now be resolved, if at all, in bilateral arbitration.
The Court agrees. After Concepcion, the Court maintains,
it no longer matters whether DIRECTV meant California’s
“home state laws” when it drafted the 2007 version of its
service agreement. But Concepcion held only that a State
cannot compel a party to engage in class arbitration when
the controlling agreement unconditionally prohibits class
procedures. See 563 U. S., at 351 (“Arbitration is a matter
of contract, and the FAA requires courts to honor parties’
expectations,” so parties may consent to class procedures
even though such procedures “may not be required by
state law.”). Just as a contract itself may provide for class
arbitration, so the parties may choose to be bound by a
particular state law, in this case, the CLRA, even if the
FAA would otherwise displace that state law. Hall Street
Associates, L. L. C. v. Mattel, Inc., 552 U. S. 576, 586
(2008) (“[T]he FAA lets parties tailor some, even many,
features of arbitration by contract, including . . . procedure
and choice of substantive law.”).1 “In principle,” the Court
acknowledges, parties “might choose to have portions of
their contract governed by the law of Tibet, [or] the law of
pre-revolutionary Russia.” Ante, at 6; see Brief for Peti-
tioner 20 (observing that the FAA would allow parties “to
——————
1 FAA preemption is distinct from federal preemption in other con-
texts. Unlike “state laws invalidated by, for example, federal labor law,
federal pension law, or federal civil rights law,” ante, at 10, state laws
are preempted by the FAA only to the extent that they conflict with the
contracting parties’ intent. See Mastrobuono v. Shearson Lehman
Hutton, Inc., 514 U. S. 52, 59 (1995) (“[I]n the absence of contractual
intent to the contrary, the FAA would pre-empt” a particular state law.
(emphasis added)); Brief for Law Professors as Amicus Curiae 10 (“FAA
preemption cannot occur without reference to a particular agreement of
the parties. . . .”).
6 DIRECTV, INC. v. IMBURGIA
GINSBURG, J., dissenting
bind themselves by reference to the rules of a board
game”). Pre-revolutionary Russian law, but not Califor-
nia’s “home state laws” operative and unquestionably
valid in 2007? Makes little sense to me.
Nothing in Concepcion or the FAA nullifies provisions of
the CLRA. They hold sway when parties elect judicial
resolution of their disputes, and should similarly control
when parties choose that consumer-protective law to
govern their arbitration agreements. See Volt Information
Sciences, 489 U. S., at 475 (where parties had “incorpo-
rat[ed] . . . California rules of arbitration into their agree-
ment,” they had “no FAA-guaranteed right to compel
arbitration” on terms inconsistent with those California
rules).2 Thus, even after Concepcion, one could properly
refer to the CLRA’s class-waiver proscription as “Califor-
nia law.” To repeat, the dispositive question in this case is
whether the parties intended the “law of your state” provi-
sion to mean state law as preempted by federal law, as the
Court today reads the provision, or home state law as
framed by the California Legislature, without considering
the preemptive effect of federal law, as the California
court read it.
The latter reading is the better one. DIRECTV had no
occasion to refer to “the law of [its customer’s] state” had it
meant to incorporate state law as preempted by the FAA.
That is, DIRECTV, like virtually every other company
with a similar service agreement, could have employed a
——————
2 The Court refers to the relevant California law as the “Discover
Bank rule” and suggests that, “under ‘general contract principles,’
references to California law incorporate the California Legislature’s
power to change the law retroactively.” Ante, at 7. But despite this
Court’s rejection of the Discover Bank rule in Concepcion, the California
Legislature has not capitulated; it has retained without change the
CLRA’s class-waiver prohibition. The Discover Bank rule relied on an
interpretation of the FAA, see 36 Cal. 4th 148, 162–173, 113 P. 3d 1100,
1100–1117 (2005); in contrast, the CLRA’s class-waiver proscription
reflects California’s legislative policy judgment.
Cite as: 577 U. S. ____ (2015) 7
GINSBURG, J., dissenting
clause directly conditioning enforceability of the arbitra-
tion agreement on the exclusion of class arbitration.
Indeed, DIRECTV has done just that in service agree-
ments both before and after 2007. App. 121 (the 2004
version provides that “[a] Court may sever any portion of
[the arbitration agreement] that it finds to be unenforce-
able, except for the prohibition on class or representative
arbitration”); Brief for Respondents 35–36 (stating that
the June 2015 version of DIRECTV’s agreement provides
that “[a] court may sever any portion of [the arbitration
agreement] that it finds to be unenforceable, except for the
prohibition on [class arbitration]” (internal quotation
marks omitted)). Had DIRECTV followed this pattern in
its 2007 form contract, the arbitration agreement, post-
Concepcion, unquestionably would have been enforceable
in all States. In the 2007 version, however, DIRECTV
chose a different formulation, one referring to the “law of
[its customer’s] state.” I would not translate that term to
be synonymous with “federal law.” If DIRECTV meant to
exclude the application of California legislation, it surely
chose a bizarre way to accomplish that result.
As earlier noted, see supra, at 3, and as the California
court appreciated, courts generally construe ambiguous
contractual terms against the drafter. See Mastrobuono,
514 U. S., at 63 (“Respondents drafted an ambiguous
document, and they cannot now claim the benefit of the
doubt.”). This “common-law rule of contract interpreta-
tion,” id., at 62, reflects the principle that a party should
not be permitted to write an ambiguous term, lock another
party into agreeing to that term, and then reap the benefit
of the ambiguity once a dispute emerges. The rule has
particular force where, as here, a court is interpreting a
“standardized contrac[t]” that was not the product of
bilateral bargaining. Restatement (Second) of Contracts
§206, Comment a (1979).
Allowing DIRECTV to reap the benefit of an ambiguity
8 DIRECTV, INC. v. IMBURGIA
GINSBURG, J., dissenting
it could have avoided would ignore not just the hugely
unequal bargaining power of the parties, but also their
reasonable expectations at the time the contract was
formed. See Mastrobuono, 514 U. S., at 63 (it is particu-
larly appropriate to construe terms against the drafter
where the other party had no reason to anticipate or in-
tend the drafter’s preferred result). See also Trans World
Airlines, Inc. v. Franklin Mint Corp., 466 U. S. 243, 262
(1984) (“[C]ontract[s] . . . are to be read in the light of the
conditions and circumstances existing at the time they
were entered into, with a view to effecting the objects and
purposes of the [parties] thereby contracting.” (quoting
Rocca v. Thompson, 223 U. S. 317, 331–332 (1912); ellipsis
in original)). At the time DIRECTV imposed this agree-
ment on its customers, it assumed that the arbitration
clause would be unenforceable in California. App. 52
(explaining in state-court filing that, “[b]ecause California
law would not enforce the arbitration agreement . . . ,
DIRECTV has not sought and will not seek to arbitrate
disputes with California customers”). Likewise, any Cali-
fornia customer who read the agreement would scarcely
have understood that she had submitted to bilateral arbi-
tration of any and all disputes with DIRECTV. She cer-
tainly would have had no reason to anticipate the Court’s
decision in Concepcion, rendered four years later, or to
consider whether “law of your state” is a chameleon term
meaning California legislation when she received her
service contract, but preemptive federal law later on.
DIRECTV primarily responds that the FAA requires
construction of all terms in arbitration agreements in
favor of arbitrability. True, this Court has found in the
FAA a “federal policy favoring arbitration.” Ante, at 10
(quoting Volt Information Sciences, 489 U. S., at 476). But
the Court has also cautioned that an arbitration-favoring
presumption applies “only where it reflects, and derives its
legitimacy from, a judicial conclusion that arbitration of a
Cite as: 577 U. S. ____ (2015) 9
GINSBURG, J., dissenting
particular dispute is what the parties intended because
their express agreement to arbitrate was validly formed[,
is] legally enforceable[,] and [is] best construed to encom-
pass the dispute.” Granite Rock Co. v. Teamsters, 561
U. S. 287, 303 (2010). DIRECTV acknowledges that “[t]his
case . . . involves a threshold dispute over the enforceabil-
ity of the parties’ arbitration agreement” in its entirety.
Reply Brief 7. Like the California court, I would resolve
that dispute by employing traditional rules of contract
interpretation sans any arbitration-favoring presumption,
including the rule that ambiguous language should be
construed against the drafter. See supra, at 3, 7.
III
Today’s decision steps beyond Concepcion and Italian
Colors. There, as here, the Court misread the FAA to
deprive consumers of effective relief against powerful
economic entities that write no-class-action arbitration
clauses into their form contracts. In Concepcion, 563
U. S., at 336, customers brought a class action claiming
that AT&T Mobility had improperly charged $30.22 in
sales tax while advertising cellular telephones as free.
AT&T Mobility’s form consumer contract contained a
mandatory arbitration clause and a class-arbitration
proscription. Because consumers lacked input into the
contractual terms, and because few rational consumers
would go through the hassle of pursuing a $30.22 claim in
bilateral arbitration, the California courts deemed the
arbitration agreement unenforceable as unconscionable.
See id., at 365 (BREYER, J., dissenting) (“ ‘[T]he maximum
gain to a customer for the hassle of arbitrating a $30.22
dispute is still just $30.22.’ ” (quoting Laster v. AT&T
Mobility LLC, 584 F. 3d 849, 856 (CA9 2009))); Carnegie v.
Household Int’l, Inc., 376 F. 3d 656, 661 (CA7 2004) (“The
realistic alternative to a class action is not 17 million
individual suits, but zero individual suits, as only a luna-
10 DIRECTV, INC. v. IMBURGIA
GINSBURG, J., dissenting
tic or a fanatic sues for $30.”), cert. denied, 543 U. S. 1051(2005). Nonetheless, the Court held that the FAA man-
dated enforcement of the entire arbitration agreement,
including the class-arbitration ban. Concepcion, 563 U. S.,
at 343. Two years later, in Italian Colors, 570 U. S., at ___
(slip op., at 5), the Court reaffirmed that class-arbitration
prohibitions are enforceable even where claimants “have
no economic incentive to pursue their . . . claims individu-
ally in arbitration.” Today, the Court holds that consum-
ers lack not only protection against unambiguous class-
arbitration bans in adhesion contracts. They lack even the
benefit of the doubt when anomalous terms in such con-
tracts reasonably could be construed to protect their
rights.3
——————
3 It has not always been this way. In Wilko v. Swan, 346 U. S. 427,
435, 438 (1953), the Court unanimously held that an arbitration clause
in a brokerage agreement was unenforceable. The Court noted that the
Securities Act was “drafted with an eye to the disadvantages under
which buyers labor” when negotiating brokerage agreements, id., at
435, and described arbitration as less protective of the rights of stock
buyers than litigation, id., at 435–437. The Court later overruled
Wilko, rejecting what it described as Wilko’s “suspicion of arbitration as
a method of weakening the protections afforded in the substantive law.”
Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U. S. 477,
481 (1989). See also Gilmer v. Interstate/Johnson Lane Corp., 500
U. S. 20, 33 (1991) (relying on Rodriguez de Quijas to conclude that
“[m]ere inequality in bargaining power . . . is not a sufficient reason
to hold that arbitration agreements are never enforceable in the em-
ployment context”). Similarly, before Italian Colors, the Court had
suggested that “the existence of large arbitration costs could preclude a
litigant . . . from effectively vindicating her federal statutory rights in
the arbitral forum,” and when that is so, an arbitration agreement may
be unenforceable. Green Tree Financial Corp.-Ala. v. Randolph, 531
U. S. 79, 90 (2000). Although the Court in Italian Colors did not
expressly reject this “effective vindication” principle, the Court’s refusal
to apply the principle in that case suggests that the principle will no
longer apply in any case. See 570 U. S., at ___ (slip op., at 15) (KAGAN,
J., dissenting); CompuCredit Corp. v. Greenwood, 565 U. S. ___, ___–___
(2012) (GINSBURG, J., dissenting) (slip op., at 1–2) (criticizing the Court
Cite as: 577 U. S. ____ (2015) 11
GINSBURG, J., dissenting
These decisions have predictably resulted in the depri-
vation of consumers’ rights to seek redress for losses, and,
turning the coin, they have insulated powerful economic
interests from liability for violations of consumer-
protection laws. See N. Y. Times, Nov. 1, 2015, p. A1, col.
5 (“By inserting individual arbitration clauses into a soar-
ing number of consumer and employment contracts, com-
panies [have] devised a way to circumvent the courts and
bar people from joining together in class-action lawsuits,
realistically the only tool citizens have to fight illegal
or deceitful business practices.”). Studies confirm that
hardly any consumers take advantage of bilateral arbitra-
tion to pursue small-dollar claims. Resnik, Diffusing
Disputes: The Public in the Private of Arbitration, the
Private in Courts, and the Erasure of Rights, 124 Yale
L. J. 2804, 2900–2910 (2015) (Resnik, Diffusing Disputes).
Because consumers lack bargaining power to change the
terms of consumer adhesion contracts ex ante, “[t]he pro-
viders [have] won the power to impose a mandatory, no-
opt-out system in their own private ‘courts’ designed to
preclude aggregate litigation.” Resnik, Fairness in Num-
bers: A Comment on AT&T v. Concepcion, Wal-Mart v.
Dukes, and Turner v. Rogers, 125 Harv. L. Rev. 78, 133
(2011). See also Miller, Simplified Pleading, Meaningful
Days in Court, and Trials on the Merits: Reflections on the
Deformation of Federal Procedure, 88 N. Y. U. L. Rev. 286,
323 (2013) (“[P]owerful economic entities can impose no-
class-action-arbitration clauses on people with little or no
bargaining position—through adhesion contracts involving
securities accounts, credit cards, mobile phones, car rent-
als, and many other social amenities and necessities.”).4
——————
for ignoring a federal statutory “right to sue” and for holding “that
credit repair organizations can escape suit by providing in their take-it-
or-leave-it contracts that arbitration will serve as the parties’ sole
dispute-resolution mechanism”).
4 The Consumer Financial Protection Bureau recently published a
12 DIRECTV, INC. v. IMBURGIA
GINSBURG, J., dissenting
The proliferation of take-it-or-leave-it agreements mandat-
ing arbitration and banning class procedures, and this
Court’s readiness to enforce such one-sided agreements,
have disabled consumers from “shop[ping] to avoid arbi-
tration mandates.” Resnik, Diffusing Disputes 2839. See
also id., at 2872 (“[T]he numbers of clauses mandating
arbitration are soaring across many sectors.”).
The Court has suggested that these anticonsumer out-
comes flow inexorably from the text and purpose of the
FAA. But Congress passed the FAA in 1925 as a response
to the reluctance of some judges to enforce commercial
arbitration agreements between merchants with relatively
equal bargaining power. Moses, Arbitration Law: Who’s in
Charge? 40 Seton Hall L. Rev. 147, 170–171 (2010). See
also id., at 170 (contract disputes between merchants have
been a proper subject of arbitration since the 1600’s). The
FAA’s purpose was to “make the contracting party live up
to his agreement.” H. R. Rep. No. 68–96, at 1 (1924). See
also Moses, supra, at 147 (Congress sought to “provide
federal courts with procedural law that would permit the
enforcement of arbitration agreements between merchants
in diversity cases.”). Congress in 1925 could not have
anticipated that the Court would apply the FAA to render
consumer adhesion contracts invulnerable to attack by
parties who never meaningfully agreed to arbitration in
the first place. See Resnik, Diffusing Disputes 2860 (“The
merchants and lawyers who forged the public law of arbi-
tration in the United States sought federal legislation to
enforce consensual agreements.” (emphasis added)).
Nor does the text of the FAA compel this result. Section
2, on which the Court relied in Concepcion, Italian Colors,
——————
study documenting the proliferation of mandatory arbitration clauses
containing class-arbitration waivers in consumer financial-services
contracts, as well as the vanishingly small number of claims brought by
financial-services consumers in bilateral arbitration. See Consumer
Financial Protection Bureau, Arbitration Study §1, pp. 9–13 (2015).
Cite as: 577 U. S. ____ (2015) 13
GINSBURG, J., dissenting
and this case, prescribes simply that arbitration provi-
sions are to be treated the same as other contractual
terms: “[a] written provision in . . . a contract evidencing a
transaction involving commerce to settle by arbitration a
controversy . . . shall be valid, irrevocable, and enforce-
able, save upon such grounds as exist at law or in equity
for the revocation of any contract.” 9 U. S. C. §2. As
Justice O’Connor observed when the Court was just be-
ginning to transform the FAA into what it has become,
“the Court has abandoned all pretense of ascertaining
congressional intent with respect to the Federal Arbitra-
tion Act, building instead, case by case, an edifice of its
own creation.” Allied-Bruce Terminix Cos. v. Dobson, 513
U. S. 265, 283 (1995) (concurring opinion). See also Miller,
supra, at 324 (“[O]ver the years the Act has been trans-
formed by the Supreme Court through constant expansion
into an expression of a ‘federal policy’ favoring arbitration,
whether it involves a bilateral business dispute or not.”).
The Court’s ever-larger expansion of the FAA’s scope
contrasts sharply with how other countries treat manda-
tory arbitration clauses in consumer contracts of adhesion.
A 1993 European Union Directive forbids binding consum-
ers to unfair contractual terms, defined as those “not . . .
individually negotiated” that “caus[e] a significant imbal-
ance in the parties’ rights and obligations . . . to the detri-
ment of the consumer.” Coun. Directive 93/13, Art. 3,
1993 O. J. (L. 95) 31. A subsequent EU Recommendation
interpreted this Directive to bar enforcement of one-party-
dictated mandatory consumer arbitration agreements.
Comm’n Recommendation 98/257, 1998 O. J. (L. 115) 34
(“The consumer’s recourse to the out-of-court procedure
may not be the result of a commitment prior to the mate-
rialisation of the dispute, where such commitment has the
effect of depriving the consumer of his right to bring an
action before the courts for the settlement of the dis-
pute.”). As a result of this Directive and Recommendation,
14 DIRECTV, INC. v. IMBURGIA
GINSBURG, J., dissenting
disputes between providers and consumers in the EU are
arbitrated only when the parties mutually agree to arbi-
tration on a “post-dispute basis.” Sternlight, Is the U. S.
Out on a Limb? Comparing the U. S. Approach to Manda-
tory Consumer and Employment Arbitration to That of the
Rest of the World, 56 U. Miami L. Rev. 831, 847–848
(2002) (emphasis deleted); see id., at 852 (enforcement of
mandatory arbitration clauses in consumer contracts of
adhesion “is quite rare, if not nonexistent,” outside the
United States).
* * *
The California Court of Appeal appropriately applied
traditional tools of state contract law to interpret
DIRECTV’s reference to the home state laws of its cus-
tomers. Demeaning that court’s judgment through harsh
construction, this Court has again expanded the scope of
the FAA, further degrading the rights of consumers and
further insulating already powerful economic entities from
liability for unlawful acts. I resist the Court’s bent, and
would affirm the judgment of the California Court of
Appeal.