California Court of Appeals Reinforces Strict Limits on Arbitration Fee Payment Deadline
California Court of Appeals Reinforces Strict Limits on Arbitration Fee Payment Deadline

The California Court of Appeals recently revisited the issue of the draconian deadline for paying arbitration fees established by California Code of Civil Procedure section 1281.97.  In Suarez v. Superior Court of San Diego County, the new twist that prompted appellate court review was that the 30-day grace period to pay the arbitration fees ended on January 1, 2023.  Because January 1, 2023 was a holiday, the employer argued that the arbitration payment deadline was extended by statute under Code of Civil Procedure sections 12 and 1010.6.

More specifically, and among several arguments, the employer asserted that Code of Civil Procedure section 12 extends certain deadlines that fall on a holiday, including the arbitration fee payment deadline. Because both January 1 and 2, 2023, were holidays, the grace period for payment should have been extended to January 3, 2023.  Further, Code of Civil Procedure section 1010.6 automatically adds two business days when documents are “served” electronically, and so the deadline should have been extended to January 5, 2023.

While the Suarez court assumed for the sake of the employer’s argument that Code of Civil Procedure section 12 applied to the situation, it rejected the employer’s theory that an additional two days should have been added pursuant to section 1010.6.  The court pointed to an important distinction in the language of the statute: it “governs the service of documents in an action filed with the court.” (Emphasis in original.)  The court then noted that an arbitration proceeding is not “an action filed with the court.”  Further, the arbitration invoice required by section 1281.97 is “provided” to the parties, but is not “served”.  The court further expounded on the definition of “service” which involves sending copies of documents filed with the court to opposing parties in the litigation, as opposed to the act of “providing” an invoice “that governs the economic relationship between the provider and the parties.”

The court then addressed the employer’s alternative argument that the employee’s failure to pay his share of the initial arbitration management fees (which did not exceed the initial filing fee normally required in Superior Court) resulted in the employee failing the “initiate an arbitration”, thus preempting any material breach by the employer.  Referring directly to the language in the statute, the court rejected the employer’s bid to shift the burden back on the employee.  Rather, the employee’s only obligation is to comply with certain “filing requirements” to initiate the arbitration; once the employee has done so, it becomes the employer’s obligation to pay the fees within 30 days of the date that such payment is due.

While this author applauds the employer’s creativity and effort in testing the limits of California Code of section 1281.97, the result is unsurprising.  California courts have now held repeatedly that the arbitration fee deadlines established in the Code of Civil Procedure cannot be circumvented.  Employers must therefore carefully adhere to the fee obligations when they attempt to enforce a binding arbitration provision or agreement.

This publication is published by the law firm of Ervin Cohen & Jessup LLP. The publication is intended to present an overview of current legal trends; no article should be construed as representing advice on specific, individual legal matters. Articles may be reprinted with permission and acknowledgment. ECJ is a registered service mark of Ervin Cohen & Jessup LLP. All rights reserved.


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