Background
Plaintiffs Roberto Diaz de Leon and Gregory McGriff sued Solar Mosaic, LLC, alleging that an arbitration agreement was unenforceable under California law because it denied them a forum to seek public injunctive relief. The district court denied Solar Mosaic’s motion to compel arbitration. Solar Mosaic appealed, but shortly after filing its opening brief, it filed a voluntary petition for bankruptcy and an automatic stay. The bankruptcy court later confirmed a Chapter eleven plan providing for liquidation rather than reorganization. Solar Mosaic subsequently argued that the case was moot because it could no longer lawfully operate as a business.
The court’s reasoning
The court noted that the mootness questions raised by the bankruptcy were highly fact-intensive and the facts regarding the wind-down were unclear. Because Solar Mosaic raised these issues only in its reply brief and a request for judicial notice, the plaintiffs had not had a full opportunity to respond. The court determined it was appropriate to dismiss the appeal and remand for further proceedings so the district court could consider these new facts, potential discovery, mootness issues, or a motion under Federal Rule of Civil Procedure sixty-one point b.
What it means going forward
The appeal is dismissed, and the case returns to the district court for a determination of whether the plaintiffs’ claims survive the defendant’s bankruptcy liquidation. The district court may need to grant discovery or consider a motion to alter or amend judgment based on the changed circumstances.