Dekker v. Vivint Solar, Inc.

Background

Plaintiffs filed a proposed class action against Vivint Solar, Inc., Vivint Solar Holdings, Inc., Vivint Solar Developer, LLC, and Vivint Solar Provider, LLC. The plaintiffs alleged violations of California’s Consumer Legal Remedies Act and Unfair Competition Law based on Vivint’s sales practices and solar contracts. According to the complaint, the contracts required customers to buy all power generated by their solar panels, not just the power they used.

Juan Bautista separately sought relief under California’s Translation Act for himself and similarly situated customers. The opinion states that Bautista speaks Spanish, not English; that the salesperson solicited his business in Spanish; that Bautista agreed to a contract written in English; and that Vivint did not provide him with a Spanish translation.

Vivint moved to compel arbitration under the contracts’ arbitration provision. A March 24 order required the English-speaking plaintiffs to arbitrate their claims but ruled that the English-language arbitration provision did not bind Bautista. Vivint appealed that ruling as it applied to Bautista and then asked the district court to stay, or pause, proceedings on his claims while the appeal was pending.

Legal standard

The court said that deciding whether to stay proceedings pending an appeal from denial of a motion to compel arbitration is discretionary. Vivint, as the party seeking the stay, had the burden to show that the circumstances justified one. The court considered four factors: whether Vivint was likely to succeed on appeal, whether Vivint would suffer irreparable harm without a stay, whether a stay would substantially harm other interested parties, and where the public interest lay. The court applied a sliding-scale approach, under which a stronger showing on one factor can offset a weaker showing on another.

Analysis

The court found that Vivint had presented a serious legal question because no federal court of appeals precedent directly addressed whether the arbitration provision was valid and enforceable against Bautista. But the court did not find that this showing justified a stay by itself.

On irreparable harm, Vivint argued that it would waste substantial time and resources litigating during the appeal if the court of appeals later reversed the March 24 order and required arbitration. The court rejected that argument, reasoning that discovery conducted in the court proceedings could also be used in arbitration if Bautista were later sent to arbitration.

The court found that the balance of hardships favored Bautista. The opinion states that Vivint sought to enforce a liquidated-damages provision against him, considered him to have defaulted on a debt because he had not paid the amount Vivint claimed, and that the debt burdened him while the litigation continued. The court agreed that a stay could prolong his financial uncertainty and further harm his credit, as well as the credit of others similarly situated.

On the public-interest factor, Vivint relied on the federal policy favoring arbitration and argued that a stay would save time and effort if the appeal succeeded. The court rejected that reasoning because it assumed that the arbitration provision was valid and enforceable against Bautista. The court also identified the countervailing public interest in access to federal courts and speedy, efficient, and just relief.

Disposition

Judge William Alsup concluded that Vivint had not met its burden and denied Vivint’s motion to stay proceedings pending appeal. The order did not alter the earlier ruling concerning which plaintiffs were required to arbitrate.