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REPORTED

IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 2169 September Term, 2001

JOHN A. MATTINGLY, SR. v. HUGHES ELECTRONICS CORPORATION, ET AL.

Sonner, Adkins, Moylan, Charles E., Jr. (Retired, Specially Assigned) JJ.

Opinion by Adkins, J.

Filed: November 4, 2002

In an effort to initiate a class action lawsuit, John A. Mattingly, Sr., appellant, sued DIRECTV, Inc. and its parent company, Hughes Electronics Corporation ("Hughes"), appellees, for charging an illegal $2.81 late fee to his account for satellite television services. The Circuit Court for St. Mary's County

agreed with DIRECTV and Hughes that Mattingly is bound by an arbitration "Customer clause that DIRECTV inserted one into its standard Mattingly

Agreement"

approximately

month

after

subscribed to its service, and dismissed the complaint without prejudice, to allow arbitration of the dispute. In this appeal, Mattingly challenges that dismissal. He

raises numerous issues, which we condense and restate as follows: I. Did the circuit court err in holding that Mattingly agreed to the arbitration clause by failing to cancel his DIRECTV service? Did the circuit court err in holding that Mattingly agreed to arbitrate his claims against Hughes, who was not a party to the agreement, but merely the corporate parent of DIRECTV?

II.

III. Is the arbitration clause unconscionable? IV. Did the circuit court err in rejecting Mattingly's efforts to enforce an alleged "settlement agreement"?

We shall hold that the circuit court erred in finding that Mattingly agreed to an amendment adding the arbitration clause because there is no evidence in this record to show that DIRECTV gave him "written notice describing the change," as required under the terms of its customer agreement. For this reason, we will

reverse the judgment in favor of DIRECTV.

As to Hughes, however,

we shall affirm the judgment, because Mattingly has not stated a claim upon which relief could be granted against Hughes. Our decisions on the first two issues make it unnecessary to reach Mattingly's clause is alternative contention As to the that the arbitration "settlement

unconscionable.

so-called

agreement," we conclude that the court correctly denied relief. FACTS AND LEGAL PROCEEDINGS After purchasing satellite television equipment at Circuit City in Waldorf, Mattingly subscribed to DIRECTV's satellite

television service.

In a February 20, 1997 telephone call, he

agreed to accept DIRECTV service subject to the terms of a customer agreement that would later be mailed to him. DIRECTV activated the satellite service while Mattingly was still on the telephone. The next day, DIRECTV sent Mattingly an invoice, along with a "Customer Agreement" effective "August 28, 1996, until replaced" (the "1996 Agreement"). receipt of services This agreement stated that "Customer's Customer's acceptance of and

constitutes

agreement to all terms and conditions of this Agreement."

One of

those conditions was a "change of terms" clause, which provided: DIRECTV reserves the right to change these terms and conditions . . . . If any changes are made, [DIRECTV] will send you a written notice describing the change and its effective date. If a change is not acceptable to you, you may cancel your service. If you do not cancel your service, your continued receipt of any service is considered to be your 2

acceptance of that change. Another term of the 1996 Agreement was that Mattingly agreed that "if [his] payment is not received by DIRECTV before [his] next statement is issued, [he] may be charged an Administrative Late Fee" of up to $5.00. Less than a month after Mattingly's subscription began, on March 18, 1997, DIRECTV mailed a new Customer Agreement to

Mattingly (the "1997 Agreement"). The 1997 Agreement differed from the 1996 Agreement in that it included an arbitration clause. That clause stated that any claim "arising out of, or relating to, this Agreement or any services provided by DIRECTV which cannot be settled by the parties shall be resolved according to binding arbitration[.]" It is undisputed that Mattingly did not cancel his DIRECTV service, and indeed, that he has continued to be a DIRECTV customer. By invoice dated July 17, 1999, DIRECTV charged Mattingly a "late fee" of $2.81 for a "past due amount" of $56.12. "Terms and Conditions," "Administrative Late Fee," and In the other

clauses printed on the back of DIRECTV's invoice, there is no mention of arbitration. Mattingly paid the July 1999 late fee and his outstanding balance, then filed suit in an attempt to initiate a class action on behalf of other subscribers challenging the legality of the late fee. On August 6, 1999, he sued DIRECTV and Hughes claiming that

3

(1) the DIRECTV invoices were mailed so late in the month that there was an unreasonably or unconscionably short period in which to make timely payment, resulting in frequent charges for an "administrative relationship late fee," the and late (2) there was no reasonable the actual

between

payment

fee

and

administrative expenses incurred in processing late payments. On September 7, 1999, Mattingly amended his complaint, seeking certification as a class action. He asserted four counts in his First Amended Class Action Complaint: (1) violations of the

Maryland Consumer Protection Act, codified at Md. Code (1975, 2000 Repl. Vol., 2001 Cum. Supp.),

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