California Court Says Comcast Arbitration Provision Does Not Block Consumer Action for Public Injunctive Relief
In late 2023, a California appellate court found that an arbitration provision in a consumer contract that prohibited collective injunctive relief did not operate to prevent a consumer from bringing a lawsuit for public injunctive relief under California’s consumer protection laws. In Ramsey v. Comcast Cable Communications, LLC, a Comcast customer brought suit against Comcast, alleging that Comcast offers “secret rebates” to certain customers in violation of California’s consumer protection laws. The plaintiff sought various forms of injunctive and declaratory relief, including a permanent injunction requiring Comcast to halt its practice of issuing secret discounts, and injunctive relief requiring Comcast to utilize only truthful advertisements, statements and representations to ensure consumers are aware of all price reductions and discounts offered by Comcast.
The plaintiff had accepted the terms of Comcast’s subscriber agreements, which provided that disputes would be resolved through individual arbitration, and stated that the arbitrator could only award injunctive relief in favor of the individual seeking relief and not on behalf of any third party. The California Supreme Court previously held in McGill v. Citibank, N.A., 2 Cal. 5th 945 (2017) that a predispute arbitration provision that waives a plaintiff’s right to seek public injunctive relief in any forum is contrary to California public policy and thus unenforceable under California law. In Ramsey, Comcast argued that McGill was inapplicable because Ramsey was seeking private, rather than public, injunctive relief.
The Court of Appeals found that the plaintiff was seeking public injunctive relief, which the California Supreme Court defined as relief that has the primary purpose and effect of prohibiting unlawful acts that threaten future injury to the public. In contrast, private injunctive relief has the primary purpose or effect of redressing or preventing injury to an individual plaintiff or group of similarly-situated individuals. The Court noted that injunctions against a defendant’s deceptive acts and practices—such as the injunctions sought by the plaintiff—generally benefit the public directly, but do not benefit the individual plaintiff directly, because the plaintiff has already been injured by the defendant’s conduct.
The Court rejected Comcast’s argument that the injunction would only benefit a limited group of existing Comcast subscribers, noting that the relief the plaintiff sought would require Comcast to make truthful advertisements and make consumers aware of all price reductions and rebates, which would benefit both existing Comcast subscribers and any member of the public considering signing up with Comcast. In concluding that this qualified as public injunctive relief, the Court declined to follow the Ninth Circuit’s recent decision in Hodges v. Comcast Cable Communications, LLC, 21 F.4th 535 (9th Cir. 2021), in which the court found that public injunctive relief must benefit the entire public “as a diffuse whole.” The Court instead followed other California appellate courts that concluded that “a requested injunction cannot be deemed to be private simply because a business could not possibly advertise to, or enter into agreements with, every person in California,” as such a holding “would allow the business to continue violating [consumer protection laws] because consumers harmed by the unlawful practices would be unable to act as a private attorney general and seek redress on behalf of the public.”
The case is Ramsey v. Comcast Cable Communications, LLC, No. H049949 (Cal. Ct. App. 6th Dist.)