Dekker v. Vivint Solar, Inc.

Background

The plaintiffs sued Vivint Solar, Inc., Vivint Solar Holdings, Inc., Vivint Solar Developer, LLC, and Vivint Solar Provider, LLC under California laws concerning unlawful liquidated damages, consumer protection, unfair competition, and contract translations. Only Juan Bautista’s claims were relevant to this motion. The opinion states that Bautista is a native Spanish speaker with virtually no English proficiency. A Vivint representative allegedly discussed a solar system with him in Spanish but obtained his signature on an English agreement without providing a Spanish translation.

Vivint later sent Bautista demands for payment, including a $2,000 bill that allegedly could increase to nearly $18,000, followed by a demand for $22,946.99 plus solar-system removal costs, court costs, and applicable taxes. In an earlier order, the court found that the language barrier prevented contract formation on the pleadings and dismissed Bautista’s liquidated-damages claims while inviting him to seek permission to amend. The earlier order also compelled arbitration as to other plaintiffs who had signed arbitration agreements; the opinion states that Bautista and Gerrie Dekker had not signed such agreements.

Bautista asked to add claims under California’s Translation Act, including related claims for damages and injunctive relief under the Consumer Legal Remedies Act (CLRA) and the Unfair Competition Law (UCL). He also sought a declaration that Vivint’s contracts were unenforceable against him and similarly situated consumers. Alternatively, he sought to reassert his liquidated-damages claims if the court found that he had a contract with Vivint.

Legal standard

Federal Rule of Civil Procedure 15 generally requires courts to allow amendment when justice requires, unless there is undue delay, bad faith, repeated failure to fix deficiencies, undue prejudice, or futility. Vivint opposed the proposed amendments only as futile. The court therefore evaluated whether the proposed claims alleged enough facts to be facially plausible—that is, enough facts to support a reasonable inference of liability rather than mere speculation. The court generally limited its review to the proposed amended complaint and materials properly incorporated into it.

Timeliness

Vivint argued that the proposed Translation Act, CLRA, and UCL claims were untimely because Bautista signed the agreement in 2014 but sued in 2019. The court declined to decide the applicable limitations period for the Translation Act at this stage. It noted that some decisions applied a one-year period, while the Translation Act’s rescission remedy could point to a four-year period. The court stated that it would decide which period applied at summary judgment after further briefing.

The court also held that the claims were not entirely barred even under a one-year period. Bautista alleged that Vivint renewed its enforcement efforts in 2018 and 2019. Applying the possible theory that a series of later wrongs can create separate accrual dates, the court concluded that the 2018 and 2019 demands remained within the CLRA and UCL limitations periods and at least partially within the possible Translation Act limitations periods. The court did not consider a declaration from Bautista or a Better Business Bureau complaint because those materials were outside the proposed complaint.

Rescission and the Translation Act

The court held that Bautista’s proposed direct Translation Act claim failed because rescission was the remedy provided by that statute, and a party seeking rescission must allege willingness and ability to return everything of value received in the transaction. The proposed complaint alleged that Vivint’s solar system generated power for Bautista’s home and that Vivint sought payment for that power. Although the request to remove the solar system could be understood as an allegation that Bautista was willing and able to return the system, the complaint did not allege willingness and ability to repay overdue energy bills.

The court rejected plaintiffs’ argument that this repayment requirement applied only when a consumer-credit contract or consumer lease had been sold or assigned to a financial institution. It also rejected reliance on a declaration from Bautista asserting that Vivint had already recovered the benefits, because that information had to be pleaded in the complaint rather than supplied in a reply declaration. The court therefore denied without prejudice leave to assert the direct Translation Act claims and related injunctive relief under the CLRA and the related UCL claim based on unlawful conduct.

CLRA requirements

The CLRA requires a plaintiff to file a venue affidavit at the same time as the complaint. The court held that Bautista had not filed the required affidavit with the proposed amended complaint, and a reply could not cure that failure. The court also considered the CLRA’s separate requirement that a company receive at least 30 days’ advance notice by certified registered mail of a specific alleged violation before a damages claim is filed.

The notice letter discussed Bautista’s limited English proficiency, the English-only agreement, and alleged warranty problems. But the court concluded that the letter did not notify Vivint of an underlying Translation Act violation. Because the notice had to precede the complaint by at least 30 days, the court held that this defect could not be cured by amendment. It denied with prejudice leave to add the Translation Act-based CLRA damages claim.

UCL claims

The proposed UCL claim based on unlawful conduct failed because it depended on the Translation Act claim, which failed for lack of allegations concerning restitution. The court separately held that the same conduct could support a UCL unfairness claim. It reasoned that requiring a consumer who negotiated in Spanish to accept an English agreement without a Spanish copy could violate the public policy embodied in the Translation Act, even if the conduct was not successfully pleaded as a direct Translation Act violation. Leave to assert the related UCL unfairness claim was therefore granted.

Liquidated-damages claims

The court then addressed Bautista’s alternative claim that, if he had a contract with Vivint, its charges were unlawful liquidated damages. Liquidated damages are contractually fixed amounts intended to compensate for a breach. Under California law, a consumer-contract provision is generally invalid as a penalty unless the amount reasonably relates to damages that were difficult to determine when the contract was made. A charge that merely gives a customer a genuine alternative to continuing performance, however, may not be a penalty.

The court found that Bautista plausibly alleged that Vivint’s charges were unlawful liquidated damages. According to the allegations, Vivint demanded most of the remaining twenty years of payments, along with amounts already due and removal costs, even though the customer would no longer receive future energy and Vivint would recover the solar system. The court viewed the five-percent discount on remaining payments as potentially insufficient to create a rational alternative to continuing the agreement. It therefore granted leave to reassert the liquidated-damages claims and allowed the related CLRA and UCL claims to proceed.

Disposition

The court granted in part and denied in part leave to amend. It denied without prejudice leave to assert Bautista’s direct Translation Act claims, related CLRA injunctive relief, and related UCL unlawfulness claim. It denied with prejudice leave to assert the related CLRA damages claim. It granted leave to assert the related UCL unfairness claim and to reassert the liquidated-damages claims. The order reminded the plaintiffs that May 29 was the final date for amendment under the court’s permissive Rule 15 standard, after which amendment would be governed by the stricter standard in Rule 16(b)(4).