Injunctive relief is to stop future misdeeds to benefit public, not a class, split 9th Circuit panel says

An arbitration agreement between a cable company and a subscriber can be enforced as the plaintiff failed to seek public injunctive relief which would have waived the agreement, a 9th U.S. Circuit Court of Appeals panel held on Friday.

Comcast Cable Communications LLC will get a chance to arbitrate a putative class action alleging that it violated privacy laws by collecting data from subscribers without consent.

According to the split panel's majority opinion, Comcast had moved to compel arbitration because of the plaintiff's subscriber agreement. But the district court said the arbitration agreement was invalid since the plaintiff sought public injunctive relief, referring to California case law.

9th Circuit Judge Daniel P. Collins, with the assent of Judge Lawrence VanDyke, wrote in the majority opinion, "The relief sought here is not the equivalent of a simple prohibition on running a false advertisement or a mandatory injunction to obtain certain licenses or to make additional public disclosures in advertising. On the contrary, each form of relief would require either consideration of which particular consents each subscriber has or has not given or examination of which individualized disclosures have or have not been made. Administering an injunction of this sort, on this scale, is patently incompatible with the procedural simplicity envisioned by bilateral arbitration."

Mark A. Perry, partner at Gibson, Dunn & Crutcher LLP argued the case on behalf of Comcast and declined to comment Friday.

Karla Gilbride, senior attorney at Public Justice who argued the case on behalf of the plaintiff, Brendan Hodges, said in an email that California law gives people the right to seek injunctive relief to stop corporations from breaking the law in a way that harms the general public.

"Comcast put language in its contract with customers that barred them from exercising that right, but the California Supreme Court said in a case called McGill v. Citibank that contract provisions that prevent people from seeking public injunctive relief are illegal," Gilbride said.

In remanding, Collins instead held that non-waivable public injunctive relief is limited to injunctions seeking to prevent future violations of the law to benefit the general public, not a particular class. Under this standard, Hodges did not seek public injunctive relief, and therefore the arbitration agreement should be enforced. Hodges v. Comcast Cable Communications LLC, 2021 DJDAR 9477 (filed Sept. 10, 2021).

In a dissent, 9th Circuit Judge Marsha S. Berzon wrote, "The majority has failed to provide a convincing rationale for the distinction it draws in this case between relief benefiting consumers who contract with businesses and relief benefiting consumers who are exposed to advertisements. Because the distinction is untenable and I believe it would be rejected by the California Supreme Court, I dissent."

Gilbride said she was disappointed with the court's decision. "Mr. Hodges sought an injunction to require Comcast to be upfront with potential customers about its privacy practices and not to collect anyone's data without their consent," Gilbride said. "Such an injunction would benefit the general public, all of whom are potential Comcast customers who should be able to know the truth about what Comcast does with private information. We're very disappointed with this opinion, which we believe is an incorrect interpretation of California law."