Aanderud v. Superior Court of Kern Cnty.
221 Cal. Rptr. 3d 225
Cal. Ct. App. 5th2017Background
- Larry and Margaret Aanderud signed a 20-year Solar Power Purchase Agreement (SPPA) with Vivint Solar; the agreement included a mandatory arbitration clause with a class-action waiver and a delegation clause assigning arbitrability questions to the arbitrator.
- The Aanderuds allege statutory violations (home solicitation/home improvement law), sought rescission individually, and sought classwide declaratory and UCL injunctive relief.
- Vivint moved to compel arbitration of the Aanderuds' claims and to enforce the class-action waiver; the trial court ordered individual claims to arbitration and dismissed class claims without prejudice.
- The Aanderuds challenged the arbitration clause as procedurally and substantively unconscionable, argued the delegation clause was unenforceable, and maintained statutory injunctive (UCL) claims are not subject to compulsory arbitration.
- The appellate court treated the appeal as a writ of mandate, found the delegation clause "clear and unmistakable," and held arbitrability (including enforceability and class waiver issues) must be decided by the arbitrator; the court vacated portions of the trial court's order that resolved those delegated issues and dismissed the class claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity/enforceability of delegation clause | Delegation clause is not clear and is unconscionable (procedural + substantive) | Clause clearly delegates arbitrability to arbitrator; incorporation of JAMS rules reinforces delegation | Delegation clause is clear and unmistakable and not revocable for unconscionability; arbitrator decides arbitrability |
| Procedural & substantive unconscionability of arbitration clause | Adhesive form, surprise to unsophisticated signer, and prohibitive costs make clause unconscionable | JAMS consumer policy (minimum standards) limits consumer fees; clause not shown to be substantively unconscionable here | Unconscionability challenges to the arbitration clause (including cost issues) are for the arbitrator to decide; trial court erred by resolving them |
| Class-action waiver / availability of class arbitration | Waiver prevents effective relief and class claims; UCL public injunctive relief may be nonwaivable | Waiver is part of the arbitration agreement and enforceable; claims are arbitrable individually | Whether the class waiver is enforceable and whether class arbitration is available are questions for the arbitrator; trial court's dismissal of class claims vacated |
| Arbitration of UCL public injunctive claims | Public injunctive relief claims are not subject to mandatory pre-dispute arbitration under California law (or such waivers are unenforceable) | UCL claims fall within broad arbitration clause and are arbitrable | Whether the UCL public injunctive claim can be compelled to arbitration and whether a waiver of public injunctive relief is enforceable are for the arbitrator to resolve (trial court erred to decide) |
Key Cases Cited
- Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4th 83 (Cal. 2000) (standards for procedural and substantive unconscionability in consumer arbitration)
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (U.S. 2010) (parties may contractually delegate arbitrability to arbitrator; delegation prerequisites)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S. 1995) (who decides arbitrability depends on parties' agreement)
- Sandquist v. Lebo Automotive, Inc., 1 Cal.5th 233 (Cal. 2016) (allocation of arbitrability questions depends on party agreement; arbitrator may decide class-arbitration scope if delegated)
- McGill v. Citibank, N.A., 2 Cal.5th 945 (Cal. 2017) (pre-dispute waiver of public injunctive relief under UCL is unenforceable)
- Moncharsh v. Heily & Blase, 3 Cal.4th 1 (Cal. 1992) (CAA establishes a comprehensive arbitration scheme and favors enforcement)