Dekker v. Vivint Solar, Inc.

Background

Eight plaintiffs, described as solar-panel system customers, sued Vivint Solar, Inc. and other defendants over alleged unfair business practices. In an earlier order, the court compelled the plaintiffs to arbitrate their claims. Each plaintiff then filed a separate arbitration complaint with JAMS on April 29, 2020.

Under the applicable JAMS rules, each consumer had to pay a $250 filing fee and the non-consumer party had to pay a $1,500 filing fee. The plaintiffs timely paid their fees. The dispute concerned whether the defendants timely paid their fees in five matters involving Barajas, Hilliard, Hulsey, Piini, and Rogers. The plaintiffs conceded that the defendants were not late in the Chong, Thompson, and Runyon matters.

JAMS’s invoices stated in bold type that payment was “due upon receipt.” JAMS also sent notices of intent to initiate arbitration that listed later payment dates. The defendants treated those later dates as the deadlines. The plaintiffs argued that the invoice date began the 30-day period under California Code of Civil Procedure § 1281.97.

The defendants paid the outstanding fees on June 26, 2020, after the plaintiffs had withdrawn the five matters from arbitration and filed this motion.

Legal issue

Section 1281.97 provides that a drafting party materially breaches an arbitration agreement when it fails to pay required arbitration fees within 30 days after the due date. The statute allows the consumer or employee to withdraw the claim from arbitration, seek adjudication in court, and recover attorney’s fees resulting from the breach. The breaching party may also face monetary sanctions under § 1281.99.

The defendants argued that § 1281.97 did not apply because it was part of the California Code of Civil Procedure and because the court had compelled arbitration under the Federal Arbitration Act rather than the California Arbitration Act.

Court’s reasoning

The court rejected both arguments. It ruled that § 1281.97 changes substantive contract law by defining the failure to pay arbitration fees on time as a material breach. The court also ruled that the statute applies even when arbitration was compelled under the Federal Arbitration Act. In the court’s view, the statute supports the federal policy favoring efficient and timely arbitration rather than conflicting with it.

The court interpreted “due date” to mean the date the defendants received the JAMS invoices, because the invoices stated that payment was due upon receipt. The later dates in JAMS’s notices did not change the original due date. The court reasoned that allowing repeated extensions or later dates to restart the 30-day period could delay arbitration and undermine the purpose of § 1281.97.

Disposition

The court granted the plaintiffs’ motion to vacate the March 24 order compelling arbitration as to Barajas, Rogers, Hulsey, Piini, and Hilliard. It ordered the defendants to pay the plaintiffs’ reasonable attorney’s fees and costs incurred in bringing the motion. The parties were ordered to meet and confer and stipulate to the amount of those fees and costs. The opinion did not vacate the arbitration order as to Chong, Thompson, or Runyon.