Nordeman v. Dish Network LLC

Background

Leonard Nordeman brought a breach-of-contract lawsuit against Dish Network LLC concerning an agreement for residential television services. The agreement provided “America’s Top 200” service for a fixed monthly price of $61.93, which Dish allegedly guaranteed would not increase during the contract period. Nordeman alleged that Dish later added services and billed him for amounts that were not due. He said he terminated the contract after discovering the alleged breaches, and that Dish then reported him to credit agencies, causing significant damage to his credit.

The complaint asserted two causes of action: breach of contract and breach of the implied covenant of good faith and fair dealing. Nordeman also alleged that the agreement was a home-solicitation contract under the California Home Solicitation Sales Act and that Dish did not provide the required three-day cancellation provision.

The agreement and related documents contained provisions requiring informal dispute resolution before a dispute could proceed to individual, binding arbitration. The documents stated that the Federal Arbitration Act governed the arbitration provision. Nordeman also signed a Digital Home Advantage Plan Agreement stating that he had received, read, understood, and agreed to the agreement’s terms, including the related arbitration terms.

The Motion

Dish moved to dismiss the lawsuit or, alternatively, stay the litigation pending arbitration. Dish argued that Nordeman was required to use the informal dispute-resolution process before bringing his claims. Nordeman opposed the motion, arguing that he had not signed the documents supporting Dish’s motion and that the signatures were not identical. He also argued that the contract was an unenforceable home-solicitation contract that he had rescinded, meaning canceled so that the contract’s obligations would be extinguished.

Court’s Analysis

The court explained that whether parties agreed to arbitration is generally decided under ordinary state-law contract principles. Under California law, the party seeking to compel arbitration must prove by a preponderance of the evidence that an arbitration agreement exists.

The court concluded that Dish met its burden of showing that Nordeman’s signatures were authentic. Dish submitted a declaration from its Vice President of Billing and Credit describing its electronic-signature procedures. The declaration stated that installation technicians presented customers with the required agreements, that customers ordinarily signed them electronically on a tablet, and that Dish did not provide services unless the customer signed the agreements. Based on that evidence and the agreements bearing Nordeman’s signatures, the court found that the signatures were authenticated.

The court then considered Nordeman’s argument under the California Home Solicitation Sales Act. The Act applies to certain contracts for goods or services of $25 or more made somewhere other than the seller’s appropriate business premises. It allows a buyer in such a transaction to cancel within three business days, and it allows cancellation until the seller provides the required information. The court noted that a contract violating the statute may be illegal and unenforceable, including its arbitration clause.

Dish argued that the Act did not apply because the parties had formed an oral contract during a telephone call before the written documents were signed. Nordeman disputed that evidence. The court found the telephone-call transcript ambiguous because it could be understood to show that no agreement was reached during the call. The court declined to resolve that issue at this stage, stating that the evidence could be considered after the parties had an opportunity for discovery.

The court determined that, at the pleading stage, it appeared possible that the agreement was covered by the Home Solicitation Sales Act. If so, the absence of the required cancellation provision could mean that Nordeman’s cancellation prevented Dish from enforcing rights under the agreement, including arbitration. For that reason, the court held that Dish’s motion had to be denied.

Disposition

The court denied Dish’s motion to dismiss or stay the litigation. The opinion did not decide whether Nordeman ultimately proved his breach-of-contract or good-faith-and-fair-dealing claims. The court vacated the scheduled hearing and decided the motion without oral argument.