Arbitration: Employer Did Not Blow 30-Day Payment Window Under CCP § 1281.98 Because Employee Did Not Properly Serve The Arbitration Demand, Allowing For Payment Later

Denial Of Motion To Compel Arbitration Is Reversed And Matter Ordered To Arbitration.

               CCP § 1281.98 is the 30-day window for an employer to pay arbitration expenses under penalty of going to court rather than arbitration under the contractual arbitration clause with employee.  This statute has produced much litigation; and, as we have indicated on past posts, the California Supreme Court is considering whether the statute is preempted by the Federal Arbitration Act (an issue generating a split among intermediate appellate courts).  However, some of the cases are fact specific, as is the one we discuss now.

               In Thompson v. SF Markets, LLC (dba Sprouts Farmers Market), Case No. A167659 (1^st Dist., Div. 5 Sept. 23, 2024) (unpublished), employee filed a putative class action which drew employer’s response to file a motion to compel arbitration under a contractual arbitration clause, which motion was unopposed and granted.  Eight months later, employee submitted an arbitration demand for his individual claims.  However, he did not serve the demand properly as required by the arbitration agreement.  Employer paid the arbitration invoice over 30 days after email receipt from JAMS.  The lower court determined (1) the employee had complied with the earlier order in the first court action to arbitrate through his service efforts; and (2) employer had not complied with § 1298.98, thereby denying a renewed order for arbitration after employee filed a second putative class action in superior court.

               The appellate court reversed and directed that the arbitration take place per the parties’ arbitration agreement.  The central issue was whether employer had paid late, with the 1/5 DCA determining that employee had failed to properly initiate arbitration through defective service on employer (CCP § 1281.97(a)(2)) such that employer’s late payment was appropriate given that the prior invoice was of no force and employee had not substantially complied with service requirements.  It also found no waiver by employer’s subsequent payment.