Aanderud v. Super. Ct.
F073277
| Cal. Ct. App. | Jul 26, 2017Background
- Larry and Margaret Aanderud signed a 20-year solar power purchase agreement (SPPA) with Vivint Solar; the SPPA included a mandatory arbitration clause that waived jury trial and barred class or representative actions.
- The Aanderuds sued in superior court seeking rescission, declaratory relief, and UCL injunctive relief on behalf of themselves and a proposed class, alleging violations of solicitation and home improvement laws and lack of cancellation notice.
- Vivint Solar petitioned to compel arbitration and to limit relief to individual arbitration under the SPPA’s class-action waiver and a delegation clause assigning arbitrability issues to the arbitrator; the trial court ordered individual arbitration and dismissed class claims without prejudice.
- The Aanderuds argued the arbitration clause (and its delegation clause) was procedurally and substantively unconscionable, failed minimum procedural fairness standards for consumer arbitration, and that UCL injunctive claims are not subject to compulsory arbitration.
- The Court of Appeal treated the appeal as a writ petition, held the SPPA’s delegation clause was clear and unmistakable and not revocable for unconscionability, vacated trial-court findings on enforceability and dismissal of class claims, and remanded for the arbitrator to decide arbitrability and scope (including class and public-injunctive-relief issues).
Issues
| Issue | Plaintiff's Argument (Aanderud) | Defendant's Argument (Vivint) | Held |
|---|---|---|---|
| Whether order compelling arbitration is immediately reviewable | Death-knell doctrine applies because dismissal of class claims effectively ends class litigation | Arbitration orders are normally interlocutory; death-knell doesn’t apply | Court treated appeal as writ of mandate and exercised discretion to review |
| Whether delegation clause (arbitrator decides scope/enforceability) is «clear and unmistakable» | Clause is ambiguous and unconscionable given adhesive form and limited consumer sophistication | Clause explicitly delegates interpretation, validity, and scope to arbitrator and incorporates JAMS rules | Delegation clause is clear and unmistakable and enforceable; arbitrator decides arbitrability/scope |
| Whether delegation clause is unconscionable (procedural/substantive) | Procedurally unconscionable (adhesion, surprise); substantively unconscionable due to prohibitive arbitration costs | JAMS consumer standards require company to absorb most costs; Vivint concedes it will pay under those standards | Procedural unconscionability exists but clause is not substantively unconscionable; delegation clause remains enforceable |
| Whether class claims and UCL public-injunctive relief are arbitrable | UCL public-injunctive relief cannot be waived in arbitration per California law; class claims should not be dismissed by court | Arbitration clause bars class claims and delegates scope to arbitrator | Arbitrability of class claims and the enforceability of any public-injunctive-relief waiver are for the arbitrator to decide; trial court’s contrary findings vacated |
Key Cases Cited
- Armendariz v. Foundation Health Psychcare Servs., 24 Cal.4th 83 (2000) (establishes procedural and substantive unconscionability framework for consumer arbitration)
- Moncharsh v. Heily & Blase, 3 Cal.4th 1 (1992) (California Arbitration Act policy favoring enforcement of arbitration agreements)
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (parties may agree to delegate gateway arbitrability questions to arbitrator)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (who decides arbitrability depends on party agreement)
- McGill v. Citibank, N.A., 2 Cal.5th 945 (2017) (pre-dispute waivers of the right to seek public injunctive relief under California consumer protection laws are unenforceable)
- Sandquist v. Lebo Automotive, Inc., 1 Cal.5th 233 (2016) (analysis that allocation of who decides arbitrability is governed by party agreement and state law)
- Tiri v. Lucky Chances, Inc., 226 Cal.App.4th 231 (2014) (delegation-clause unconscionability must be proved specifically; party opposing arbitration bears burden)