Pay the ARB or Go to Back to Court

Cvejic v. Skyview Capital, No. B318880 (D2d8 Jun. 28, 2023)

Code of Civil Procedure § 1281.98 says that in an employment or consumer case, a party that drafted an arbitration agreement is in material breach of the agreement when it fails to pay the arbitration provider’s fees within 30 days of their due date. In the event of such a breach the employee or consumer can, among other things, withdraw from the arbitration and refile his or her claim in court. Section 1281.99, then, requires the court to impose a monetary sanction for the breach, and gives the court discretion to also impose evidentiary, issue, terminating, or contempt sanctions.

Here, Employer successfully compelled a case into arbitration. But it failed to pay a hearing fee within 30 days of its due date. The arbitrator tried to extend the date for week and the Employer paid within that window. The arbitrator ruled that § 1281.98 was not in play because Employer complied. But Employee went to court and filed Section 1281.98 Election to Withdraw from Arbitration. The trial court granted the request and imposed a monetary sanction.

Employee first argues that the order wasn’t appealable. But, in dissolving the stay entered in connection with the prior motion to compel, the trial court was effectively denying a motion to compel arbitration. That’s an appealable order.

So far as the merits, the trial court was right. The Legislature’s point in enacting § 1281.98 was to curb arbitration abuse. It does not give the Employer the right to cure a missed payment, or the arbitrator to unilaterally extend the due date after a material breach. And it is for the court, not the arbitrator to determine the validity of the withdrawal.

Affirmed.