Dekker v. Vivint Solar, Inc.

Background

The plaintiffs sued Vivint Solar, Inc., and other defendants over alleged unfair business practices involving solar-panel installations and power-purchase agreements. According to the allegations described in the order, Vivint’s contracts require customers to pay for solar-generated electricity over a 20-year term and contain liquidated-damages provisions that plaintiffs say impose unlawful penalties on dissatisfied customers.

Plaintiffs sought permission under Federal Rule of Civil Procedure 15 to file a third amended complaint. They proposed revising their claim under California Business and Professions Code Section 17200, adding damages and restitution claims under the California Consumer Legal Remedies Act (CLRA), and adding a restitution claim under Section 17200. A June 2021 order had granted Vivint’s motion for judgment on the pleadings, and that ruling was pending before the court of appeals.

Legal standard

The court held that Rule 15’s liberal standard governed the motion rather than the stricter Rule 16 standard. Rule 15 generally allows amendment when justice requires, while requiring consideration of bad faith, undue delay, prejudice, whether amendment would be futile, and whether the plaintiff previously amended the complaint. An amendment is futile when the proposed allegations would not state a legally sufficient claim.

Section 17200 allegations

Vivint argued that the proposed amendments did not correct the deficiencies previously identified in the Section 17200 claim. The court agreed that plaintiffs had not meaningfully addressed the alleged unfairness based on a contract-translation issue involving Mr. Bautista. Merely adding the word “unconscionable” did not explain how that theory met the governing standards for an unfair-practices claim.

The court also found that the proposed allegations about the power-purchase agreement’s cumulative remedies, transfer provisions, and requirement that customers pay for all electricity generated by the system were separate from the translation issue. Those allegations nevertheless sufficiently alleged that Vivint imposed or threatened to impose oppressive and unethical contract provisions. The court therefore granted the motion to amend with respect to those allegations, while recognizing that they did not cure the translation-based theory.

CLRA damages and restitution

The court granted the motion to add a damages claim under the CLRA. Plaintiffs alleged, among other things, that Vivint imposed or sought to impose unenforceable termination fees, and the court found those allegations sufficient under Rule 8 for purposes of the amendment motion.

The court denied the motion to add restitution claims under the CLRA and Section 17200. It explained that restitution in this setting requires plaintiffs to show that legal remedies, such as damages, are inadequate. Plaintiffs did not allege or explain why damages were inadequate and did not distinguish their restitution request from their damages request. The court therefore found the proposed restitution claims futile.

Disposition

The court stated that plaintiffs’ motion for leave to file a third amended complaint was GRANTED IN PART and DENIED IN PART. It granted the motion to add the specified allegations concerning allegedly unfair power-purchase-agreement provisions and to add a CLRA damages claim. It denied the motion to add restitution claims under the CLRA and Section 17200.