We will treat this appeal as a petition for writ of mandate. We conclude that the delegation clause is enforceable and therefore it is the arbitrator, not the court, who is required to determine the enforceability of the arbitration provision and whether it covers class claims. Accordingly, we will issue a peremptory writ of mandate commanding the trial court to vacate that portion of its order in which it found the arbitration provision is not unconscionable or unenforceable, the claims asserted in the complaint are arbitrable, and the arbitration provision's prohibition against bringing class claims is enforceable. We also vacate the order dismissing the class claims. In all other respects, the peremptory writ challenging the order compelling arbitration is denied.
In July 2014, the Aanderuds entered into a 20-year solar power purchase agreement (SPPA) with Vivint Solar. Vivint Solar agreed to install a solar power generating system on the Aanderuds' property, while the Aanderuds agreed to purchase all the solar power generated by that system. Vivint Solar completed installation of the system on the roof of the Aanderuds' home the following month. According to the Aanderuds, there were delays in completing the work and as of February 2015, Vivint Solar had not completed the installation or interconnection of the system to the power grid. The Aanderuds sent Vivint Solar a notice of cancellation and rescission of the agreement, but Vivint Solar did not remove the system or restore their home to its pre-installation condition.
The Aanderuds filed this lawsuit in September 2015. They allege that Margaret allowed a Vivint Solar salesperson, who appeared at her home unannounced, to make a sales presentation regarding Vivint Solar's solar power products and services. During the presentation, the salesperson explained that under the SPPA, Vivint Solar would design and install the solar power system on the Aanderuds' property, bear all associated costs, interconnect the system with the Aanderuds' utility provider, and service and maintain the system at its sole cost and expense for the entire 20-year contract term. The Aanderuds' only responsibility was to pay Vivint Solar a flat fee of $.15 per kilowatt hour for all solar power the Aanderuds used. The salesperson produced a copy of the pre-printed form SPPA, explained its terms in about five minutes, and showed Margaret where to initial, telling her that she could execute the SPPA for her husband. Margaret then initialed the agreement for both herself and Larry, who was in another room and not present during the presentation. The salesperson did not verbally explain the three-day right to cancel.
The Aanderuds allege the SPPA violated the California home improvement and home solicitation laws in numerous ways, and as a proximate result of these violations, they were unaware of the true scope and extent of their obligations and potential liabilities, Margaret was unaware of the number of kilowatt hours and corresponding
The complaint alleges three causes of action. In the first, the Aanderuds seek rescission and restitution as to themselves in their individual capacity.
Vivint Solar filed a petition to compel arbitration pursuant to an arbitration provision in the SPPA. That clause, entitled "5. Arbitration of Disputes," provides that if Vivint Solar's customer service department is unable to resolve the customer's concern, "You and We agree to resolve any Dispute (as defined below) through binding arbitration or small claims court instead of courts of general jurisdiction. BY SIGNING BELOW, YOU ACKNOWLEDGE AND AGREE THAT (I) YOU ARE HEREBY WAIVING THE RIGHT TO A TRIAL BY JURY; AND (II) YOU MAY BRING CLAIMS AGAINST US ONLY IN YOUR INDIVIDUAL CAPACITY, AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE PROCEEDING. You and We agree to arbitrate all disputes, claims and controversies arising out of or relating to (i) any aspect of the relationship between You and Us, whether based in contract, tort, statute or another legal theory; (ii) this Agreement or any other agreement concerning the subject matter hereof; (iii) any breach, default, or termination of this Agreement; and (iv) the interpretation, validity, or enforceability of this Agreement, including the determination of the scope or applicability of this Section 5 (each, a "Dispute ")."
The arbitration provision states how to institute an arbitration, which "shall be administered by JAMS pursuant to its Streamlined Arbitration Rules and Procedures (available at: http://www.jamsadr.com/rules-streamlined-arbitration, the "JAMS Rules ") and under the rules set forth in this Agreement." The arbitrator is bound by the terms of the agreement and is not permitted to award "punitive, special, exemplary, indirect, or consequential damages to either party." If the customer initiates arbitration, the customer is responsible to pay $250, and "[a]ll attorneys' fees, travel expenses, and other costs of the arbitration shall be borne by You and Us in accordance with the JAMS Rules and applicable law." The arbitration clause further provides that "[n]othing in this Section 5 shall preclude You or We from seeking provisional remedies in aid of arbitration from a court of competent jurisdiction."
In their petition, Vivint Solar argued that the Aanderuds' individual claims were subject to mandatory arbitration under the arbitration clause and asked the trial court to order arbitration of their claims and either dismiss the complaint with prejudice or stay the proceedings until conclusion of the
The Aanderuds opposed the petition, arguing (1) the arbitration provision does not provide the minimum protections required for arbitration of the non-waivable statutory rights alleged in the complaint; (2) the arbitration provision is unconscionable; (3) the delegation of the threshold issue of arbitrability to the arbitrator contained in the arbitration provision is unenforceable; and (4) the UCL claims are not subject to arbitration. The Aanderuds submitted Margaret's declaration in support of their opposition, in which she explained what occurred during the salesperson's presentation; stated that she did not see the arbitration provision or read it before signing the SPPA, and it was not explained to her; she did not see the additional terms and conditions that were on the back of the SPPA, and she could not read them even with her glasses on; and she had no prior experience negotiating contracts, she graduated high school in 1957, she had no other formal education, and she had been a homemaker since 1969. She also stated that she and her husband live on a fixed income and could not afford to pay the costs of arbitration.
The Aanderuds asked the trial court to take judicial notice of (1) the "JAMS Streamlined Arbitration Rules & Procedures"; (2) the representative fee schedules for JAMS arbitrators that handle breach of warranty and contract matters; (3) the "JAMS Policy on Consumer Arbitrations Pursuant to Pre-Dispute Clauses Minimum Standards of Procedural Fairness"; (4) a sample copy of the pre-printed SPPA that Vivint Solar uses in California that is identical to the Aanderuds' SPPA; and (5) the federal poverty guidelines. In addition, the Aanderuds' co-counsel declared that he spoke with a JAMS case management employee who advised there was a $1,200 filing fee and $5,000 retainer to set up an arbitration, and the arbitrator would determine later the additional deposit requirements for the actual arbitration hearing.
In reply, Vivint Solar argued the arbitration provision did not prevent the Aanderuds from pursuing their statutory rights and was not unconscionable. Vivint Solar also argued the delegation clause was clear and unmistakable, and therefore compelled arbitration of the Aanderuds' claims. Finally, Vivint Solar asserted the UCL claims were subject to arbitration.
The trial court granted the petition as to the individual claims asserted in the complaint. The trial court found that the arbitration clause was neither procedurally nor substantively unconscionable, and all of the claims were arbitrable, including the UCL claims. The trial court dismissed the class claims without prejudice and stayed the action pending the final decision in arbitration.
The Aanderuds contend the trial court erred in sending their individual claims to arbitration and dismissing the class claims. Specifically, they assert the arbitration provision and the delegation clause contained in the SPPA are unenforceable, and their statutory injunctive relief claims are not subject to arbitration under California law, which they contend applies rather than the Federal Arbitration Act (FAA) (
I. Appealability
A trial court order compelling arbitration ordinarily is reviewable only after the arbitration is complete and a party
The death knell doctrine applies when an order "(1) amounts to a de facto final judgment for absent plaintiffs, under circumstances where (2) the persistence of viable but perhaps de minimis individual plaintiff claims creates a risk no formal final judgment will ever be entered ...." ( In re Baycol Cases I and II (2011)
While Vivint Solar appears to concede the dismissal of the class claims without prejudice amounts to a de facto final judgment, it contends the death knell doctrine does not apply because, unlike the denial of class certification where remaining claims are often impractical to pursue on an individual basis, there is no suggestion the Aanderuds, or individual members of the putative class, would be deprived of an effective remedy. Vivint Solar asserts there is little risk that an effective final judgment will not be entered here because the relief the Aanderuds seek is not "de minimis" and there is no suggestion they could not secure counsel to represent them in the arbitration
We need not decide whether the Aanderuds' appeal comes within the death knell doctrine. Instead, we exercise our discretion to treat the appeal as a petition for writ of mandate. "[W]hen warranted by the circumstances, immediate review of an order granting a motion to compel arbitration may be obtained by a petition for writ of mandate." ( Garcia v. Superior Court (2015)
II. Arbitration Generally and the Standard of Review
California and federal law both favor enforcement of valid arbitration agreements. ( Armendariz v. Foundation Health Psychcare Services, Inc. (2000)
"When deciding whether the parties agreed to arbitrate a certain matter (including arbitrability), courts generally ... should apply ordinary state-law principles that govern the formation of contracts." ( First Options of Chicago, Inc. v. Kaplan (1995)
A petition to compel arbitration is simply a suit in equity seeking specific performance of a contract. ( Engineers & Architects Assn. , supra ,
We begin with the delegation clause, as it disposes of the parties' contentions.
The Aanderuds concede the arbitration provision contains a delegation clause, which delegates the issue of the enforceability of the SPPA, including the determination of the scope or applicability of the arbitration provision, to the arbitrator. As Vivint Solar points out, under this provision it is up to the arbitrator, not the trial court, to determine enforceability of the arbitration provision. The Aanderuds, however, contend the delegation clause is not enforceable because it is not clear and unmistakable and is unconscionable.
Here, although the parties raised the issue of the enforceability of the delegation clause below, the trial court did not explicitly decide the issue. Instead, it found that the arbitration agreement was not unconscionable and only the Aanderuds' individual claims were arbitrable. Since the trial court decided the enforceability of the arbitration provision itself, we presume it impliedly found the delegation clause did not apply. Accordingly, we must determine whether the trial court erred in so finding.
"[C]ourts presume that the parties intend courts, not arbitrators, to decide ... disputes about 'arbitrability,' ... such as 'whether the parties are bound by a given arbitration clause,' or 'whether an arbitration clause in a concededly binding contract applies to a particular type of controversy.' " ( BG Group, PLC v. Republic of Argentina (2014) ---U.S. ----, [
"Just as the arbitrability of the merits of a dispute depends upon whether the parties agreed to arbitrate that dispute, ... so the question 'who has the primary power to decide arbitrability' turns upon what the parties agreed about that matter." ( First Options, supra,
"There are two prerequisites for a delegation clause to be effective. First, the language of the clause must be clear and unmistakable. [Citation.] Second, the delegation must not be revocable under state contract defenses such as fraud, duress, or unconscionability." ( Tiri, supra,
Here, the arbitration provision states that the parties "agree to arbitrate all disputes, claims and controversies arising out of or relating to ... (iv) the interpretation, validity, or enforceability of this Agreement, including the determination of the scope or applicability of this Section 5 [the "Arbitration of Disputes" section]. ..." This language delegates to the arbitrator questions of arbitrability and is clear and unmistakable evidence that the parties intended to arbitrate arbitrability. (See, e.g., Malone v. Superior Court (2014)
This is not the only evidence of the parties' intent to contractually delegate issues of arbitrability to a decision maker other than the court. An arbitration provision's reference to, or incorporation of, arbitration rules that give the arbitrator the power or responsibility to decide issues of arbitrability may constitute clear and unmistakable evidence the parties intended the arbitrator to decide those issues. (See Rodriguez v. American Technologies, Inc. (2006)
The Aanderuds contend that other portions of the SPPA show that the delegation clause is ambiguous, rather than clear and unmistakable. In light of the "clear and unmistakable" standard, courts have refused to enforce seemingly express delegations of arbitrability if they are rendered ambiguous in the face of a contradictory provision. For example, in Baker v. Osborne Development Corp. (2008)
The Aanderuds argue that, as in Baker , the SPPA's severability provision renders the delegation clause ambiguous because the severability provision
Since the parties clearly and unmistakably intended that the issue of arbitrability be determined by the arbitrator, we turn to the issue of whether the delegation clause is unconscionable. An agreement to arbitrate is invalid if it is both procedurally and substantively unconscionable. (§ 1281;
Procedural unconscionability arises in the making of the agreement, focusing on "the oppression that arises from unequal bargaining power and the surprise to the weaker party that results from hidden terms or the lack of informed choice." ( Ajamian , supra ,
Even though the delegation clause is procedurally unconscionable, the Aanderuds have not shown that it is substantively unconscionable. Substantive unconscionability focuses on " ' "overly harsh" ' or ' "one-sided" ' results." (
The arbitration provision addresses the costs of arbitration. It provides: "If You initiate arbitration, You shall be responsible to pay $250. All attorneys' fees, travel expenses, and other costs of the arbitration shall be borne by You and Us in accordance with the JAMS Rules and applicable law." The JAMS Rules require each party to pay "its pro rata share of JAMS fees and expenses as set forth in the JAMS fee schedule in effect at the time of the commencement of the Arbitration, unless the Parties agree on a different allocation of fees and expenses." The Aanderuds
As the Aanderuds recognize, there is a JAMS policy on consumer arbitrations pursuant to pre-dispute arbitration provisions that provides for "Minimum Standards of Procedural Fairness" (the minimum standards). The policy lists ten minimum standards that apply to all JAMS arbitrations where, as here, "a company systematically places an arbitration clause in its agreements with individual consumers and there is minimal, if any, negotiation between the parties as to the procedures or other terms of the arbitration clause." The policy provides that "JAMS will administer arbitrations" pursuant to mandatory pre-dispute arbitration clauses in consumer agreements "only if the contract arbitration clause and specified applicable rules comply with" the ten "minimum standards of fairness."
The seventh minimum standard provides: "With respect to the cost of the arbitration, when a consumer initiates arbitration against the company, the only fee required to be paid by the consumer is $250, which is approximately equivalent to current Court filing fees. All other costs must be borne by the company including any remaining JAMS Case Management Fee and all professional fees for the arbitrator's services. When the company is the claiming party initiating an arbitration against the consumer, the company will be required to pay all costs associated with the arbitration."
Vivint Solar concedes on appeal that in light of this provision, it will be required to pay all fees and costs associated with the arbitration.
In sum, the delegation clause here is clear and unmistakable, and it is not revocable under unconscionability principles. Vivint Solar asserts that if we conclude the delegation clause is enforceable, we should affirm the trial court's order and not reach the Aanderuds' arguments concerning enforceability of the arbitration provision, as those are properly reserved for the arbitrator. We agree that it is the arbitrator who will consider the conscionability of the agreement and the scope of the arbitration clause, including whether the class arbitration is available under the arbitration provision, and whether the provision purports to waive the Aanderuds' right to seek public injunctive relief in all fora and, if so, what impact this has on the enforceability of the arbitration provision as a whole. (See McGill v. Citibank, N.A. (2017)
Given this, we cannot simply affirm the trial court's order, as the trial court itself decided issues reserved for the arbitrator, including that the arbitration provision was not procedurally or substantively unconscionable, all of the Aanderuds' claims were arbitrable, and the class claims should be dismissed. Accordingly, while we affirm the trial court's order compelling arbitration, we vacate those portions of the order in which the trial court made findings that are reserved for the arbitrator and dismissed the class claims.
DISPOSITION
The appeal from the order granting Vivint Solar's motion to compel arbitration is
WE CONCUR:
HILL, P.J.
MEEHAN, J.
Notes
Undesignated statutory references are to the Code of Civil Procedure.
Courts in other reported decisions have held that the mere incorporation of arbitration rules into an arbitration agreement, absent other evidence of the parties' intent, is insufficient to show a clear and unmistakable agreement to have arbitrators decide their own jurisdiction. (Ajamian, supra, 203 Cal.App.4th at pp. 788-791,
The other cases the Aanderuds rely on also are distinguishable, as the agreements involved instances of actual ambiguity and none provided for small claims court jurisdiction. (Pinela, supra,
Provisional remedies include attachment and temporary protective orders, writs of possession, preliminary injunctions and temporary restraining orders, and the appointment of a receiver. (§ 1281.8, subd. (a).)
We note the SPPA clause that provides that "[a]ll attorneys' fees, travel expenses, and other costs of the arbitration shall be borne by You and Us in accordance with the JAMS Rules and applicable law" may be in tension with the above provision of the minimum standards, and that this tension cannot be resolved in favor of the SPPA if arbitration is to proceed through JAMS. The SPPA, however, allows for severability if an arbitrator determines that any provision is "invalid, prohibited, or otherwise unenforceable."