Deadline for Payment of Arbitration Fees Made Clear by Appeals Court
If there was any question before, a recent California Court of Appeal decision has now put all doubt to rest with a clear interpretation of Code of Civil Procedure section 1281.98(a)(1), regarding payment of arbitration fees. This subsection provides:
In an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration provider, that the drafting party pay certain fees and costs during the pendency of an arbitration proceeding, if the fees or costs required to continue the arbitration proceeding are not paid within 30 days after the due date, the drafting party is in material breach of the arbitration agreement, is in default of the arbitration, and waives its right to compel the employee or consumer to proceed with that arbitration as a result of the material breach.
Employers with arbitration agreements should take due note of the First District Court of Appeal’s announcement in Doe v. Superior Court of the City and County of San Francisco. In its ruling, it found that a strict interpretation of the meaning of the word “paid” in the statute was required. The court noted that dropping a check in the mailbox only for the arbitrator to have received it after the 30-day due date does not meet the requirement of section 1281.98(a)(1). As the court determined:
In this writ proceeding, we strictly enforce the 30-day grace period in section 1281.98(a)(1) and conclude fees and costs owed for a pending proceeding must be received by the arbitrator within 30 days after the due date. We do not find that the proverbial check in the mail constitutes payment and agree with petitioner that real parties’ payment, received more than 30 days after the due date established by the arbitrator, was untimely.
Thus, arbitration proceeding fees and costs must be in the arbitrator’s hands within 30 days of the due date; a postmark date stamped on or before the deadline will not suffice. Employers should be cautious with fee deadlines going forward to avoid any risk of delay. Should you choose to use the traditional form of snail mail, make sure the check is sent well in advance of the due date so that its arrival is timely, taking into account potential post office delays. The consequences of late arrival of payment might mean a waiver of arbitration as the form of resolution used to resolve the dispute at hand.
If you have questions about arbitration agreements and whether your company should have one, contact the experts at Rosasco Law Group APC.
